Professional Responsibility Outline I. Law, Lawyers, and Ethics A. Four General Areas 1. prohibited assistance 2. conformity 3. confidentiality 4.

conflicts B. Major Attempts to Codify Ethics Rules 1. 1908- canons published 2. 1969- Model Code of Professional Responsibility 3. 1983- Model Rules of Professional Conduct 4. 2000- ABA appoints Ethics 2000 Commission to make changes in rules C. Spaulding v. Zimmerman (1962)- does party have duty to disclose adverse evidence to the court when presenting a settlement agreement? 1. P suing D for car accident; doctor for D examines P and finds P has aneurysm that has gone unnoticed, but will be hurt Ds case 2. court vacates settlement b/c D has withheld relevant information when presenting settlement agreement to court 3. absent fraud, court usually wont void settlement b/c of w/holding of adverse evidence from court D. Rules 1. MR 3.3(a)(1)- lawyer cannot make false statement to court or fail to correct a false statement of material fact 2. MR 3.3(a)(2)- lawyer must disclose adverse authority to the tribunal if it is controlling in the jurisdiction and has not been disclosed by opposing counsel 3. MR 3.3(a)(3)- if your witness/client testifies falsely, and you know it is false, you musta. remonstrate with witness/client and tell them that you have obligation to get the testimony corrected b. if the witness wont remedy the situation, you must withdraw b/c it is an ethical breach to continue with known false testimony on the record c. if withdrawal is not possible or will not remedy the situation, the advocate must make disclosure to the court as is reasonably necessary to remedy the situation; this disclosure is made even if it does break duty of confidentiality E. Commonwealth v. Stenhach (1986)- does atty have duty to turn over evidence it has obtained through communications with his client? 1. D lawyers knew where murder weapon was; they went and got it, but didnt turn it over to prosecution 2. rule- lawyers can examine a piece of evidence for a reasonable amount of time then return it to its source unaltered; if they dont return it, they must turn it over to other side 3. however, the information that was received from client that led to its discovery is privileged Conformity to the Law A. Rules 1. MR 1.2(d)- atty shall not counsel a client to engage in, or assist a client in crime or fraud; but, atty may counsel client in legal consequences of actions; requires actual knowledge; three instances where the lawyer is not liable civilly to client or non-clienta. defamation to the other party during trial b. if the client urges the lawyer to maliciously prosecute a non-client, usually no liability to non-client c. if lawyer urges client to break a contract

II.

B.

C.

D.

E.

F. G.

2. MR 4.1(a)- in course of representing client, an atty shall not knowingly make a false statement of material fact to a third party 3. MR 4.1(b)- atty shall not fail to disclose a material fact that would be necessary to avoid committing crime or fraud by client, unless the material fact is confidential under 1.6 United States v. Benjamin (1964)- can atty draft false documents to provide to client to defraud investors? 1. criminal prosecution for securities fraud; atty wrote opinion letter saying the securities are exempt from 1933 Act, but opinion letter is false; also made a list of assets for the company even though atty knew the company had no assets 2. court affirms convictions- atty violated 1.2(d) by assisting client in fraud, here on investors Greycas v. Proud (1987)- does atty owe duty to opposing party during representation? 1. D atty gave P letter assuring P of his clients financial soundness; never did title search 2. P sues D atty for professional negligence; D atty argues he owes no duty to P opposing party 3. to establish duty between Ds atty and P in lieu of privity, P must show intent of the atty-client relationship is to benefit third party; here, it was 4. atty violated 4.1(a)- no false statements to third parties How far may a lawyer go in assisting a client in unlawful conduct? 1. 348 of Rest Agency says if an agent knowingly makes representations, uses duress, or knowingly assists in the commission of tortious fraud or duress, his principal is subject to liability in tort to the injured person 2. Hazard three-part test to determine whether lawyer is acting unethically when assisting clienta. the client must be engaged in a course of conduct that violates the criminal law or is an intentional violation of a civil obligation, other than failure to perform a contract or failure to sustain a good faith claim to property b. the lawyer must have knowledge of the facts sufficient to reasonably discern that the clients course of conduct is such a violation c. the lawyer must facilitate the clients course of conduct either by giving advice that encourages the client to pursue the conduct or indicates how to reduce the risks of detection or by performing an act that substantially furthers the course of conduct SEC v. National Student Marketing (1978)- if attys in merger knowingly use a comfort letter with inaccurate financial figures, does it constitute aiding and abetting a 10b-5 violation? 1. SEC enforcement action against law firms engaged in merger b/t NSM and Interstate 2. on the day of the closing of the merger, the accountant calls atty and tells him the financials in the comfort letter are inaccurate 3. atty doesnt disclose this at closing 4. court finds the attys aided and abetted 10b-5 violation of fiduciary duty to shareholders 5. rule: alleged aider and abettor must have had a general awareness that his role was part of an overall activity that is improper, and that he knowingly and substantially assisted the violation Central Bank of Denver v. First Interstate Bank- no federal c/a for aiding and abetting in securities violations Barker v. Henderson, Franklin, Starnes & Holt (1986)- can atty still be liable for aiding and abetting securities violations if he had inconsequential role in the perpetration of the violation?

III.

1. c/a against atty for aiding and abetting securities violation stemming from misrepresentations in documents sent to SHs 2. court said no violation- D atty must have had significant role in the fraud; here, he just passed on the materials- didnt prepare or sign them H. Rules 1. MR 1.13(a)- lawyer for an organization represents the organization 2. MR 1.13(b)- if a lawyer for the organization learns that an officer, employee, or other associate of the org is violating or plans to violate a legal obligation to the company causing substantial injury to the organization, lawyer has to remedy it in best interest of organization; possible measures that may be undertakena. ask for reconsideration of the matter b. advise the corporation to get separate legal opinion on the matter c. refer the matter to a higher authority 3. MR 1.13(c)- if atty has referred matter to highest authority under 1.13(b) and no action undertaken, he may do noisy w/drawal under 1.16 4. MR 1.13(e)- lawyer for the org can represent directors, employees, etc. separately pursuant to limits under 1.7 5. SEC Rule 102(e)- SEC can discipline attys so as to maintain integrity of SEC I. Duties of the Corporations Lawyer Faced with Corporate Wrongdoing 1. In re Carter and Johnson (1981)- can atty be disciplined by SEC for failing to counsel CEO to publicly announce financial difficulties and attempts to keep company afloat? a. CEO and attys for corp knew of financial difficulties and attempts to stay afloat, but didnt reveal it publicly b. SEC found attys had engaged in unethical conduct by not forcing CEO to publicly reveal financial problems 2. Gutfreund- atty doesnt have to blow whistle on corporate client who is withholding material info; just have to take some ethical action 3. The Lincoln Savings and Loan Frauds (1992)- is atty liable for securities violation where it prepared false documents for company engaged in violations? a. owners of companies were running fraud to artificially inflate their profits b. law firm knew company had backdated files, destroyed appraisals, removed appraisals; also tacitly told company to remove damaging files; also sent opinion letter to state vouching for legality of scheme c. court said this was enough evidence to proceed with claim against law firm b/c they knew client was engaged in illegal activity and made no disclosure; also aided and abetted in violation of 1.2(d) 4. Kaye Scholer Matter- firm2 replaced guilty firm1 in Lincoln Savings and Loan Fraud Case; firm2 inserted itself b/t bank and bank examiners, acting like it was a litigation and not turning over documents; hit with $41 million fine; must disclose adverse info to govt agency if it is necessary to keep duty of candor to the tribunal Competence A. Rules 1. MR 1.1- atty shall provide competent representation to client; competent representation defined as legal knowledge, skill, thoroughness, and preparation reasonably necessary for the representation; client cannot waive the competency reqt 2. MR 1.2(a)- atty shall abide by clients decisions concerning the objectives of the representation, including whether to settle, whether to waive jury trial, and whether client will testify 3. MR 1.3- lawyer will act with reasonable diligence and promptness a. comment 2- work load must be controlled b. comment 3- procrastination should be avoided

IV.

comment 5- sole practitioner must prepare plan for client in even sole practitioner dies 4. MR 1.4- atty shall keep client promptly informed and respond to inquiries w/in reasonable time period B. Lucas v. Hamm (1961)- can third party beneficiaries to will sue atty who drew will if will ends up void due to mistake, and inheritance is lowered? 1. atty drew will leaving money to Ps; will ended up void b/c of rule a/g perpetuities; since will was void, the originally intended beneficiaries (Ps) got less money than they would have 2. court says atty may have duty to third party potential beneficiaries if it is reasonably foreseeable that the beneficiaries would sue him if there was mistake; but, court says no malpractice b/c rule a/g perpetuities is so complex, no rsbl lawyer can be held to know it 3. traditional common law rule said no duty to TH P unless fraud, collusion, or privity C. Smith v. Lewis (1975)- does atty breach duty of competence when he doesnt recognize retirement benefits of spouse are community property for divorce? 1. atty represented P in divorce; made mistake in not recognizing retirement benefits of spouse were community property 2. court says lawyer breached duty- atty expected to possess knowledge of the plain and elementary principles of law which are commonly known by wellinformed attys, and to discover additional rules of law which, although not commonly known, are readily found by standard research techniques Confidentiality A. Rules 1. MR 1.6 a. atty shall not reveal info relating to representation of a client (broader than atty-client rltnshp b/c it includes info learned from third party) b. atty may reveal confidential info i. to prevent death or substantial bodily harm ii. to secure advice about ethical obligations iii. as evidence on behalf of claim or prosecution against atty c. comment 12- atty only can disclose as much as is necessary to conform to the exception 2. MR 1.18(b)- person who discusses with atty the possibility of forming attyclient relationship is prospective client- privileged B. Attorney-Client Privilege 1. Basic Elements a. communication b. between lawyer (or agent of lawyer) and the client c. in confidence d. for the purpose of obtaining or providing legal assistance for the client 2. Basic Information a. fact that you are representing a certain client- not privileged b. fee details- not privileged c. name of client- generally not privileged d. location of client- generally not privileged 3. Atty-client privilege is narrower than 1.6 duty of confidentiality, which includes information learned from third parties. 4. Privilege is designed to foster open communication between atty and client. 5. Upjohn v. United States (1981)- in corporations, what communications between counsel and employees of corp are privileged? a. GC for Upjohn learns there may have been payments to Upjohn employees in contravention of federal law; sends out questionnaires to foreign vice presidents b. in subsequent investigation, govt subpoenas answers to questionnaires

c.

court said this was confidential information- dispatches of old control group test- privilege extends to communications between counsel and those persons in control of the corporation; applies new subject matter test- factual case-by-case inquiry d. additionally, Upjohn GC argued notes he made re questionnaires was privileged atty work product (thoughts and impressions of atty prepared in anticipation of litigation); ct required govt to show extreme hardship to get it 6. Exceptions to Atty-Client Privilege a. dispute concerning decedents disposition of property b. crime-fraud exception c. lawyer self-protection d. disputes in which a trustee or other fiduciary is charged with breach of fidy duty by beneficiary e. disputes b/t representatives of an organizational client and constituents of the organization 7. Waiver of Atty-Client Privilege a. atty-client privilege lasts past death of client; only may be waived in extreme cases b. von Bulow i. atty gave notes from interviews to prosecutors; court says this constituted waiver of the privilege ii. Dershowitz wrote some of communications with von Bulow in book; court says revelation of these communications waived privilege, but rest of communications were still privileged c. even inadvertent disclosure waives privilege (general rule) 8. Lewinsky (1998)- what is example of crime-fraud exception to atty-client privilege? a. govt subpoenaed Lewinsky to turn over evidence of relationship with Clinton; atty helps her draft affidavit saying no sex with Clinton; OIC subpoenas atty when they learn statement was untrue; atty says conversations were privileged b. here, even though atty was essentially innocent, crime-fraud exception applied b/c the communications were made in furtherance of a crime (fraud on the court) c. elements of crime-fraud exceptioni. client was engaged in or planning a criminal or fraudulent conduct when he sought advice of lawyer ii. attorneys assistance was obtained in furtherance of the criminal or fraudulent activity or was closely related to it 9. Meyerhofer v. Empire Fire and Marine Ins. Co. (1974)- can co-D atty turn over confidential information to P to prove he committed no wrongdoing? a. self defense exception to atty-client privilege arises generally wheni. client charges the atty with wrongdoing ii. atty sues the client (i.e., for fees) iii. TH P accuses the atty of wrongdoing in the representation b. here, company made public offering; Ps lost money on stock; allege 10b-5 violation against attys for misleading info in prospectus; no disclosure of atty fee in financial data in prospectus c. D atty sent confidential affidavit over to Ps to show that he wasnt involved in wrongdoing; ct: no ethical violation b/c it was in self defense C. Client Fraud 1. Kutak Commissions proposed draft of MR 1.6 would allow disclosure of confidential information to prevent substantial harm to the financial interests or property of a third party

c.

2. Ethics 2000 proposed draft of MR 1.6 would allow lawyer to disclose to prevent client from committing crime or fraud that is reasonably certain to result in substantial injury to the financial interests or property of a third party 3. Restatement allows disclosure of confidential information to rectify past client fraud (minority approach). 4. Klein v. Boyd (1998)- is atty co-author of disclosure documents liable to TH P investors for misleading info in docs? a. client has checkered history of securities fraud; investors sue atty for clients company for misstatements in disclosure packages b. court citesi. Kline- when a professional affirmatively gives information, there is general obligation to speak truthfully and not omit material info ii. Ackerman- if D atty authorizes the inclusion of his opinion letter with the offering documents, atty could be liable as a principal iii. ZZZZ Best- acctng firm had affirmative duty to include additional information that would make the documents not misleading c. court holds that atty author of client document may be liable to TH P investor if he had significant part in authoring documents 5. Schatz v. Rosenberg (1991)- is atty liable for misrepresenting clients financial worth in legal docs if he is just passing on information the client has provided? a. seller alleges buyers atty knew buyer was misstating financial worth in purchase of business b. court said that atty cannot be liable for the representations of a client if he only passes on the representations, even if the misrepresentations are included in legal docs 6. O.P.M. (1980)- is it ethics violation to continue representing a company that has committed past frauds (and some ongoing frauds)? a. OPM was running computer leasing scam; law firm caught onto fraud, hired ethics consultants who said no duty to disclose these past frauds; also, no w/drawal necessary b/c they couldnt predict future frauds b. consultants were wrong- fraud was ongoing c. law firm fined 7. What to Look for as a Lawyer to Avoid Corporate Fraud a. changes in practices of client b. turnover in clients advisors c. warning signs of dishonesty d. all the law that governs the situation e. go to law firm with diversified client base f. realize law firm is not invulnerable 8. FDIC v. OMelvaney (1992)- does law firm have affirmative duty to investigate past of client based on recent resignation of key officers and outside auditors? a. firm comes in and says they dont have to investigate past transgressions of client b. client has been scamming people; court said firm had duty to inquire about past scams of client based on recent resignations of outside auditors 9. SECs Proposed Broad Lawyer Conduct Rule Under Sarbanes-Oxley, Proposed Part 205 a. mechanism to go up the ladder b. steps up the ladderi. go to CLO and report what problem is

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ii. CLO must perform inquiry iii. if outside counsel believes the CLO has not performed proper inquiry, outside counsel must go to audit committee, CEO, BOD; can also go to QLCC iv. if nothing else works, there is whistleblower noisy withdrawal provision c. whistleblower noisy withdrawal provision- where an atty who has reported evidence of a material violation under the up-the-ladder provision, and not the QLCC provision, and nothing has happened from corp. or response hasnt come in reasonable time, and the [TRIGGER] lawyer reasonably believes that a violation is still occurring or is about to occur that will result in substantial injury to financial interest, the lawyer SHALL withdraw and says the w/drawal is based on professional obligations; lawyer must alsoi. notify company of withdrawal ii. notify the commission of the w/drawal w/in one day iii. disaffirm any statements he prepared or helped to prepare 10. The Cheek Report a. recommendations on how to change board to be more effective in rooting out corporate fraud i. substantial majority of bd should be independent ii. corporate governance committee to recommend independent directors iii. audit committee should be entirely independent iv. compensation committee should be entirely independent b. recommendations to change MRsi. MR 1.13 should be redrafted to say the lawyers duty to protect the client from harm should be emphasized ii. 1.6 should allow disclosure if chance of substantial financial loss iii. scienter should be reasonably should have known, not actual knowledge 11. People v. Fentress (1980)- is it violation of duty of confidentiality for atty to reveal potentially confidential info in emergency situation where client may kill himself? a. man calls atty, son of friend, and says he has just killed someone b. court says initial call from man to atty privileged even though it may not have been completely in contemplation of legal services c. conversation b/t atty and his mother after initial call waived privilege for anything he revealed d. but, no ethics violation for disclosure of confidential information b/c of gravity of situation 12. Hawkins v. Kings County (1979)- does atty have affirmative duty to reveal damaging information about clients mental health to court regarding his release? does atty have affirmative duty to warn mother about danger of son due to mental issues? a. atty didnt reveal to court his clients mental issues, so he was released; mother wanted client (her son) kept for his own safety; he subsequently committed suicide b. court applied reasonable lawyer standard- no duty to reveal damaging info of client to court c. under Tarasoff, here mother knew of danger and no specific info on intent to harm, so no affirmative duty to warn Duty to the Court A. Rules 1. MR 3.1- atty shall not bring a frivolous claim; must be meritorious

2. MR 3.2- atty must make rsbl efforts to expedite litigation 3. MR 3.3- atty shall not knowingly a. make false statement of material fact to court b. fail to disclose material fact to court when necessary to avoid assisting in fraud or crime by client c. fail to disclose to court adverse legal authority d. offer false evidence; if found out to be false, must take remedial measures 4. MR 3.4- atty must be fair to opposing counsel 5. MR 3.5- atty cannot attempt to influence or disrupt tribunal 6. MR 3.6- atty cannot make prejudicial statement about trial to press; can state claim, identity of persons involved, public info, scheduling, etc. 7. MR 3.7- atty cannot act as advocate in trial where he is likely to be a witness unless (does not apply if lawyer in firm is going to be called)a. the testimony is on an uncontested issue b. the testimony relates to the services rendered (i.e., fee dispute) c. dq of lawyer would be hardship on client 8. MR 3.8- special obligations of prosecutor in criminal cases (to ensure justice is served for defendant, more so than obligations of advocate) 9. MR 3.9- atty representing client b/f legislative or administrative tribunal shall disclose that the appearance is in a representative capacity B. Perjury 1. Committee v. Crary (1976)- violation of 3.3- offering false evidence to court a. atty had affair with client he represented in her divorce; during deposition, he just sat there while she testified falsely b. court finds violation of 3.3- witness was giving testimony he knew to be false; duty to court to remedy it 2. Jones v. Clinton (1998)- because of Lewinskys subsequent testimony to grand jury, her previous affidavit Bennett offered in court was false; so, Bennett remedied by sending letter to judge that said portions of her testimony were false 3. In re Attorney Discipline Matter (1994)- atty caught on tape by court reporter telling client to lie; violation and disbarment 4. Nix v. Whiteside (1986)- is it ethics violation if atty refuses to put on client who he reasonably believes is lying in criminal case? a. client told atty that he saw a gun on the man he stabbed; but, atty reasonably believes that the client is lying, so he refuses to put him on stand to testify he saw gun b. court says this is not a 6th am violation or an ethics violation b/c lawyer has obligation not to put on false testimony 5. Freedmans Trilemma- three conflicting obligationsa. learn everything the client knows about the case b. keep confident everything discussed c. act with candor to the court i. these may conflict ii. lawyer may wish to use selective ignorance, which goes against learning everything about the case C. Abusive Litigation Conduct 1. Solerwitz (1988)- atty disciplined for presenting repetitive claims to court that had already been decided by test case 2. Friedman v. Dozorc (1981)- after D wins case, can D sue atty for bringing frivolous claim against him? a. P sued D doctor for med mal; D doctor now becomes P and sues atty for bringing first action

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court says MR doesnt place on atty any duty to independently investigate the clients claim, so no malicious prosecution, abuse of process, or negligence c/a available c. bottom line- attys are almost always immune in filing the first complaint 3. Golden Eagle v. Burroughs Corp. (1986)- what constitutes a Rule 11 violation for failure to cite adverse authority? a. Rule 11- signature on pleading indicates the atty has conducted a reasonable inquiry and made a good faith argument well grounded in fact b. here, attys had failed to cite adverse authority in their motion for SJ; argued that the authority was distinguishable c. court said it must often defer to attys judgment so as not to place such a high burden on judge to decide what is frivolous and what is distinguishable 4. How far can atty go for a client? a. The Lecture i. telling the client what the law of the situation is, but implying what the client should tell you about the facts ii. on edge of ethical, but is okay b. hypo- can atty present alibi evidence that is true, but is based on the false testimony of victim of time of crime? yes, no such thing as suborning truthful testimony; atty is advocate for client c. court frowns upon intentional tricking of the court d. Turow- cant infringe on atty-client relationship to gather evidence for tangential criminal prosecution The Lawyer-Client Relationship A. Rules 1. MR 1.5- atty shall not charge unreasonable fees; contingent fee arrangement shall be in writing; no contingency fees in domestic relations matter or criminal case 2. MR 1.8- various prohibited conduct of atty during representation (i.e., accepting gifts, business transactions with clients) 3. MR 1.14- atty shall make reasonable efforts to maintain a normal atty-client relationship with a client who has diminished capacity; if client is at risk of substantial harm, the atty may seek to appoint a guardian, and in doing so may reveal 1.6 info necy to protect clients interests 4. MR 1.15- atty cannot commingle funds 5. MR 1.16(a) (mandatory withdrawal provision)- atty shall w/draw from representation of client if a. the representation will result in violation of ethics or law b. attys mental or physical condition impairs ability to represent client 6. MR 1.16 (b) (permissive withdrawal provision)- atty may w/draw from representation of client if a. no adverse effects on interests of client b. client is engaging in criminal or fraudulent acts c. representation will result in an unreasonable financial burden on the lawyer 7. MR 1.18- initial interview creates duty of competence; probably have to tell client at least of statute of limitations on claim; duty of confidentiality is created covering what is discussed in initial interview; also have to figure out if there is conflict; comment 5 says atty can condition interview so that any confidential information will not preclude atty from representing other side in litigation 8. MR 4.2- atty cannot directly contact party on other side without getting permission from other sides lawyer; anti-contact rule B. Relationship with Client

b.

1. Togstad v. Vesely, Otto, Miller & Keye (1980)- is atty who, during initial interview, tells client she probably doesnt have claim, liable for malpractice if there was a colorable claim? a. P entered D attys office and asked if he had claim against Dr. for med mal; D atty told P no claim; but, D atty had no experience in med mal cases b. was atty-client rltnshp established in this initial interview? i. court concludes there was a relationship ii. atty should have referred to another atty; should have checked on statute of limitations c. court uses subjective test- did the client have a reasonable belief that an atty-client relationship was formed? 2. Taint Shopping- client will have initial interviews with several law firms, sharing confidential information, in hopes of conflicting them out in subsequent litigation; to avoid, either condition interview so that no preclusion of you to represent other side, or do not get any disqualifying information during interview 3. Discharge a. atty often has to turn over file to client and new atty b. client may discharge atty with or without cause; but, at trial, judge may require it to be in good faith c. contingent fee lawyer who is discharged generally gets quantum meruit fees 4. Intl Telemeter Corp. v. Teleprompter Corp. (1979)- is client bound by settlement atty enters into if they gave atty authority to enter into settlement? a. atty entered into settlement on behalf of client; then, client refused to go forth with settlement; atty withdrew b. court enforced settlement b/c client gave atty authority to enter into settlement c. majority rule- attys do not have implied authority to enter into settlement 5. Jones v. Barnes (1983)- atty does not have duty to criminal defendant to present every issue the D wishes on appeal 6. In the Matter of Fordham (1996)- what constitutes an excessive fee? a. atty, who didnt take DUI cases, performed DUI services for client; bill came to $50,000 b. experts at trial testified this was in excess of normal fee c. court said that the service was competent and billing accurate, but the fee was clearly excessive d. factors to look ati. time and labor needed for the legal question involved ii. likelihood this will preclude atty from other engagements iii. fee customarily charged for similar services iv. amt involved and results obtained v. time limitations imposed by client vi. nature and length of relationship vii. experience of atty 7. Anti-Contact Rule (MR 4.2)- Niesig (1990)- who are considered parties to litigation so that direct contact with them by opposing party is prohibited under 4.2? a. P interviewed D corps employees without going through atty; question is whether they are party to litigation for purposes of 4.2 b. court adopted alter ego test- only those who have stake in the litigation or whose acts are imputed to the corporation are parties to the litigation

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8. Committee v. Mershon (1982)- can atty give legal advice to corporation he is an equity partner in? a. atty forms corporation with engineer and landowner and agrees to provide it legal services; atty is conflicted when corp dissolves b/c he is atty for corp but also a shareholder b. court adopts stranger rule- you have to give legal advice to business partner that a stranger to the deal would give 9. In re Neville- atty made transaction with third party that affected client; didnt disclose this to client, and was reprimanded 10. In re Passante- atty secured loan for company in return for stock options; court said this agreement was unenforceable as against ethical obligations 11. Various 1.8 prohibitionsa. cant accept interest in litigation b. atty shouldnt advance a client funds, except if in good faith and not to solicit clients c. presumption that gifts from clients are a/g rules d. shouldnt have sexual relationship with client unless it predates representation Conflicts of Interest A. Rules 1. MR 1.7- lawyer will not represent a client ifa. present client and client atty wants to take on are directly adverse b. representation of the new client will materially limit the lawyers responsibilities to the present client 2. MR 1.7-current client conflict (conflict b/t client you have and client you want to take on); 4 Cs approacha. who is the client? b. does a conflict exist? c. is the conflict consentable? (can representation be undertaken despite the conflict?) i. does the lawyer reasonably believe he will be able to provide competent and diligent representation to the client? ii. is it against the law? iii. are the two clients directly adverse to each other? iv. did the parties give informed consent in writing? d. did the client consent in writing to the representation despite the conflict? 3. MR 1.7 Commentsa. Comment 4- if a conflict arises after representation has begun, the atty has to w/draw unless he has gotten written consent under 1.7(b) b. Comment 6- clients may be taken on if they have adverse economic interests c. Comment 8- representation still prohibited if there is significant risk that atty cannot recommend or carry out an appropriate course of action for the client because of obligations to other clients d. Comment 10- discussions of atty a/b employment with law firm that represents opposing client may materially limit ability to represent original client e. Comment 11- attys must get informed consent if related by blood or marriage attys wish to represent clients on opposite sides f. Comment 12- no sex with client unless it pre-dated atty-client relationship g. Comment 13- someone else may pay for representation, but atty must remain loyal to client h. Comment 14- some conflicts are non-consentable

Comment 15- non-consentable if atty cannot reasonably conclude he can give competent and diligent representation (reasonable belief test) j. Comment 16- law may prohibit certain conflicting representations (i.e., both sides in a mediation, both sides in a criminal case) k. Comment 20- client doesnt have to sign the consent; just has to be in writing to impress upon client the importance l. Comment 21- client can revoke consent m. Comment 22- only specific waivers allow client to waive ability to object to future conflicts 4. MR 1.9- former client conflict a. atty should not take on new client if he had old client in same or substantially related matter and old client and new clients interests are materially adverse (unless old client gives written informed consent) b. atty shall not knowingly represent new client in same or substantially related matter that attys old firm represented a party (1) whose interests are materially adverse to new client and (2) atty has acquired confidential information (unless old client gives informed written consent) c. atty shall not reveal confidential information from a previous relationship with a client 5. MR 1.9 Commentsa. Comment 2- can represent a new client in a distinct matter even though the client is adverse to a former client so long as issue is different b. Comment 3- substantially related test; two factorsi. do the matters involve the same transaction or legal dispute, or ii. is there a substantial risk that confidential information as would normally have been obtained in the prior representation would materially advance the clients position in the subsequent matter? iii. inquiry is very fact specific; ct almost presumes that in the atty-client relationship, confidential information was passed 6. MR 1.10- conflict of one attorney is imputed to all other members of the firm, regardless of size B. Policy behind conflict rules1. preserve loyalty to client/ prevent betrayal of client 2. preserve independent judgment 3. preserve confidentiality C. Conflict with Current Clients 1. Westinghouse Elec. Corp. v. Kerr-McGee Corp. (1978)- can law firm represent association of companies in analysis of proposed legislation and a company that is suing the association in antitrust at the same time? (1.7 case) a. law firm represented association of oil company in analysis of proposed legislation; association granted interviews and handed over documents; then, law firm took on representation of Westinghouse in antitrust suit against association; firm tried to create wall between attorneys b. court found that Westinghouse and association of oil companies had adverse interests on substantially related matters- thus, a violation of 1.7; representation of one would be materially limited by rltnshp with other 2. IBM v. Levin (1978)- what constitutes a client for purposes of not being able to take on a new client adverse to a current client?

i.

law firm had accepted sporadic, but repeated representation for IBM on many different matters, but had none at the present time; signed on to sue IBM b. court said the pattern of repeated retainers supports the finding of a continuous relationship and creates a conflict 3. Clients may waive any objection to conflicts, but the agreements must be specific or will be found unenforceable. 4. Fiandaca v. Cunningham (1987)- can firm represent party in settlement negotiations when the settlement negotiations directly implicate the interests of another current client? a. firm representing Ps against state prison; firm also represents different Ps (P2) in a case against state to disallow conversion of womens school into prison; state gives settlement offer to first case that will directly implicate interests of P2 in other case b. court says conflict b/c settlement offer for P1 couldnt be considered competently b/c of effect on P2 5. Cuyler v. Sullivan (1980)- can atty represent separate Ds in separate prosecutions for their part in the same crime? a. atty represented defendants in separate prosecutions for part in same crime; first D convicted, others acquitted b. court said this was conflict- counsel actively represented conflicting interests, and it had an adverse effect on the attys performance (i.e., who to call as witness, what to admit) 6. State v. Callahan (1982)- can atty represent both sides of a transaction, when he has an allegiance to one side? a. atty drew up k for both sides of a transaction; but, he drew it up to where one side didnt have a foreclosable interest, but he represented to here that she did b. then, subsequently, when one side defaulted, she couldnt foreclose; court disbarred him D. Hot Potato Rule 1. if theres a conflict with two of your clients, you cant just drop one client for the other; would breach your duty of loyalty to one client 2. Picker- after merger, firm had conflict between two clients that carried over to newly-merged firm; couldnt cure conflict just by dropping one of the clients E. Lawyer for the Situation 1. Justice Brandeis advocated representing all sides in a transaction; said it would be more efficient and the lawyer could get to know the situation better 2. Hazard takes intermediate position, saying certain situations may require lawyer for situation, but it does tempt attys to take advantage of lack of adversaries and favor one side F. Essentially, when hired by an insurer to represent the insured, an atty must remain loyal to his client- the insured; information given by insured to atty is confidential as against the insurer. G. Former Client Conflicts 1. Brennans Inc. v. Brennans Restaurants, Inc. (1979)- can atty who represented entire company be retained to represent one half of company after company splits? (1.9 case) a. atty represented whole family, who jointly owned restaurants, in getting trademark registered b. family split, Ps and Ds fighting over possession of the trademark; atty retained to represent Ds c. 1.9 problem- atty is taking on new client (Ds) in same or substantially related matter against an old client

a.

VIII.

2. In re: American Airlines (1992)- what does it mean for a previous clients case to be substantially related to a new clients case against the old client? a. firm represented AA in three separate cases; now, Northwest wishes to retain firm in suit against AA; question is whether the three previous cases were on a substantially related matter to the present suit b. court says the matters are substantially related- firm is conflicted out c. courts have employed three different analyses for substantially relatedi. here, ct. said prior representation need only be akin to present action in a way that reasonable persons believe is important to the particular issues involved ii. 2nd Cir- has to be patently clear that the matter is identical or essentially the same iii. Rest 213 testa) does the current matter involve the work the lawyer performed for the former client, or (work test) b) is there a substantial risk that representation of the present client will involve the use of information acquired in the course of representing the former client, unless that information has become generally known (use test) H. Imputation of Conflict to other Lawyers in the Firm 1. Silver (1975)- degree of involvement of the lawyer may allow the new firm to represent a new client against a client of the old lawyers firm, if moving atty had little or no involvement in adverse client at old firm 2. Nemours Foundation (1986)- if atty who represented company moves to new firm, can new firm represent a client adverse to the old company? a. atty counsel for company at old firm; atty moves to new firm; new firm wants to represent client against company b. atty is definitely conflicted out b/c he gathered confidential info while counsel for company at old firm; but, court says new firm can represent adverse client b/c they had successfully created cone of silence around atty, not letting him reveal confidential information about company to new firm c. cone of silence factorsi. evidence of faithfulness to rule 1.6 ii. size of the firm iii. nature of the prior involvement of the tainted atty iv. extensiveness of the screening v. tendency to delay the trial 3. SIPC v. Vigman (1984)- can attys who previously sued a D while working for the govt then sue the same D on a related matter while in private practice for a different P? a. SEC attys had sued Ds in previous capacity as SEC attys; now, in private practice, the attys want to sue the same D in representation of a different P b. SEC refuses to consent c. court says attys are disqualified subject to 1.11, which says govt lawyers are subject to 1.9(c) 4. Restatement 124- atty doesnt taint other lawyers in firm if a. no confidential information that the tainted lawyer has will be significant in the subsequent matter b. the tainted lawyer is screened from involved lawyers c. all affected clients know of screening Who is the Client?

A. Rules 1. MR 1.13(a)- as a client for an organization, the client is the entity, not any individuals involved in the entity 2. MR 1.13(c)- permissive resignation; when representing the organization, and the directors dont respond adequately to your inquiry into their fraudulent practices, you may do noisy w/drawal 3. MR 1.13(d)- Miranda type warning; if lawyer has knowledge that the orgs interests are adverse to the individuals of the org with whom the atty is dealing, the atty has to tell the individuals that his client is the organization 4. MR 1.13(e)- consent section; atty representing an organization may also represent the individuals of the organization; but, organization may have to give consent under 1.7 (consent comes from official in organization) B. Representing an Organization 1. Meehan v. Hopps (1956)- is law firm disqualified from representing company against D director b/c they were D directors individual atty when they represented the company? a. derivative suit against company; D director in suit attempts to disqualify law firm from representing the company in the suit b/c he argues he is a former client of the company b. question is whether, in its capacity as counsel for company, law firm was atty for D director c. court applies subjective test- did D director have reasonable belief at any time that there was an atty-client relationship? ct says no; the law firm was representing the company at all times, and any information D director provided the firm is not confidential as to the company b/c it was provided by him in his capacity as an officer of the company 2. Fassihi v. Sommers (1981)- does atty for closely held corporation owe fidy duty to individual investor? a. Dr. Fassihi and Dr. Lopez form a closely held corporation; Lopez tells corps attys he wishes to oust Fassihi; also tells attys he has exclusive individual agreement w/ hospital for provision of services, so he can individually exclude Lopez if he wants; attys do not tell Fassihi of this b. Fassihi is ousted; sues atty for breach of fidy duty and fraud for failure to disclose Lopez had individual rltnshp with hospital c. ct says even though there was no atty-client relationship b/t attys and Fassihi individually (attys were counsel to corp, not Fassihi), a fidy duty existed b/c of the trust placed in attys by Fassihi; but, no duty to disclose the agreement d. Hazard calls these people almost clients 3. Garner v. Wolfinbarger (1970) [The Garner Doctrine]- can atty-client privilege b/t atty and corp be pierced? a. exception to a corporations atty-client privilege b. where SHs are in derivative suit, they can pierce atty-client privilege b/t atty and corp by showing good cause to need the information c. based on theory that, while atty is counsel to the corp, the advice he provides is to benefit the shareholders 4. Fickett v. Superior Court of Pima County (1976)- does atty for guardian owe fiduciary duty to the guardians ward? a. guardianship set up for ward; guardian defrauds estate of ward, selling stock, setting up business that fails; new guardian is appointed, and he sues first atty for first guardian for failing to discover guardian was defrauding estate b. court says atty of first guardian owed fidy duty to ward, based on multi-factor testi. extent to which the transaction was intended to affect the P ii. foreseeability of the harm to him

IX.

X.

iii. degree of certainty that the P suffered injury iv. closeness of connection b/t Ds conduct and injury suffered v. moral blame attached to the Ds conduct vi. policy of preventing future harm The Bar as a Legal and Social Institution A. Rules (8.1-8.5) (5.1-5.4) 1. MR 8.1- applicant to bar and attorney vouching for him cannot make false statement or fail to disclose material fact 2. MR 8.3- atty who knows another atty has committed violation of rules must inform professional authority; also applies to attys knowing of violation by judge; but, not if the disclosure would require disclosure of 1.6 information; lawyers assistance programs are excluded from this requirement to report 3. MR 8.4- what is professional misconduct? 4. MR 8.5- atty is subject to discipline in jx he works, not where misconduct occurs B. Three reqts to be admitted1. education from accredited law school 2. pass bar exam 3. pass character and fitness part C. In re Hale (1998)- should admitted racist be admitted to bar? 1. applicant to bar was admitted racist and head of racist church; had also written racist letter to newspaper 2. applicant makes constitutional challenge to denial of application 3. court says govts interest in having attys who adhere to equality is tantamount to first amendment right of applicant 4. dissent says that he should be admitted until this applicant shows his views will interfere with his ability to represent clients 5. applicant has admitted to future violation of MR 8.4, comment 3 D. In re Himmel (1988)- does atty who knows of past violation of rules have duty to report it to professional authority? 1. atty brought in to represent woman against her former atty for stealing some of the proceeds of her settlement; atty reaches settlement with former atty and agrees not to initiate disciplinary action 2. review board suspended atty for a year for not reporting former attys misconduct under 8.3 E. Joe Fortenberry Case (1979)- young atty in situation where he has to report when partner is lying 1. young atty didnt say anything when partner lied about having some documents at deposition; had obligation to say something under 8.3 b/c this was a violation of 3.3 candor and 3.4 fairness to opposing counsel 2. partner eventually confesses; partner gets thrown in jail for contempt of court; young atty doesnt make partner and dies eventually Regulation of Competition in Legal Services A. Rules 1. MR 5.5- atty shall not practice law in a jx where doing so makes it illegal or assist a nonlawyer in practicing law; what is practice of law is governed by state law 2. MR 5.6- atty shall not make a non-compete employment agreement 3. MR 7.1- atty shall not make false or misleading statements about his services 4. MR 7.2- atty may advertise 5. MR 7.3- atty shall not in-person, live telephone, or real-time electronic solicit employment unless solicitation is to another atty or someone with a close relationship; every advertisement must say advertising material B. Parsons (1999)- is computer program that allows user to input data and get preprinted legal form the unauthorized practice of law?

1. owner of Quicken software, which offers somewhat interactive computer legal advice by tailoring forms to meet the users needs, is accused of UPL 2. court says statute is not violation of first amendment rights b/c statute is substantially related to an important government interest C. What constitutes improper solicitation? 1. Ohralik (1978)- is restriction on in-person solicitation of accident victim unconstl violation of 1st am? a. atty learns of accident; directly solicits business of accident victim and passenger; sues for fee when she doesnt want representation anymore b. SC says this is unethical solicitation b/c it is strictly for pecuniary gain c. viol of 7.3 2. In re Primus- SC says in-person solicitation of client to get case with political issues is not unethical; essentially must look at the motive of the lawyer 3. Shapero- SC says targeted mailings are protected by the first amendment; target can ignore the letter and the state can approve the letter b/f it goes out 4. Went For It- SC says 30 day ban on solicitation to accident victims is not a burden on free speech; state has valid interest D. Birbower v. Superior Ct (1998)- can attys licensed only to practice in NY still get fee for agreement they draw up in CA? 1. attys countersue to enforce fee arrangement made in CA w/ CA company; but, none of the attys were licensed in CA 2. ct grants SJ against attys; dont get fee b/c this was unenforceable b/c attys werent licensed to practice in CA