19th annual professional responsibility seminar

z

z

RecentDEVELOPMENTS

presented by Geoffrey Stern

z

Defending Jacob A Test of Guilt + Innocence

presented by Judge Charles Schneider

z

presented by Jon Coughlan

zz

Rule 1.7 Current Client Conflicts

zz

A lawyer’s acceptance or continuation of representation creates a conflict of interest if:

1 the representation will be directly adverse to another current client, OR

2 there is a substantial risk that the lawyer’s ability to consider, recommend, or carry out an appropriate course of action for that client will be materially limited by the lawyer’s responsibilities to another client, a former client, or a third person or by the lawyer’s own personal interest

zz

Even with a conflict, lawyer may proceed, IF

zz

Lawyer provides competent + diligent representation to each affected client

Each affected client gives informed consent, confirmed in writing

Representation is not precluded by 1.7 (c)

AND

AND

zz

Informed

zz

Agreement by a person to a proposed course of conduct (having lawyer continue with representation) after the lawyer has communicated adequate information

and explanation of the material risks ofand reasonably available alternatives to

the proposed course of conduct

zz

Rule 1.9 Former Client Conflicts

zz

A lawyer who has formerly represented a client shall not thereafter represent another person:

1 In the same or a substantiallyrelated matter in which

2 the current client’s interests are materially adverse to the former client, UNLESS

The former client gives informed consent, confirmed in writing.

zz

Current vs. FormerClient Conflicts

zz

CURRENT FORMERDirect Adversity

Substantial risk that lawyer’s judgment will be materially limited

Each client waives

Only if same or substantially-related matter

Current + former client materially adverse in current matter

Former client waives

zz

Law firm with 150 lawyers and offices in

Cincinnati + Columbus

Cincinnati: Environmental lawyer – 3 year partner

Columbus: Transactional lawyer – 25 year partner

zz

Firm did environmental work for Client “A” a handful of times

over 10 yrs - last work was 2010

Columbus lawyer has long-standing relationship with

Client “B”

6/2014: Client “A” calls + asks for a review of environmental

questions about Akron property

Cincinnati lawyer looks at material + spends hour

advising Client “A”

Tells Client “A” he needs more information to provide more

detailed analysis

At client request, time is billed on an old closed matter

8/2014: Client “B” contacts Columbus lawyer and wants assistance with commercial

real estate purchase from “A” –Toledo property

Columbus lawyer starts working on transaction for Client “B”

zz

12/2014: “A” reneges on purchase agreement and wants

purchase money back

Cincinnati lawyer tells his Columbus partner – did one

hour’s worth of work for “A” in June and hasn’t heard from

them since

On behalf of Client “B” Columbus lawyer tells “A” that

purchase money has been forfeited

Columbus lawyer does conflicts check – finds out firm had

represented “A” on environmental matters and calls Cincinnati lawyer but

doesn’t tell him about possible litigation between “A” + “B”

zz

2/2015: “A” sends additional material to Cincinnati lawyer

for him to review

2/2015: “A” files suit against Client B. Columbus lawyer sends complaint to litigation partner

for prep of counterclaim

Cincinnati lawyer tries, unsuccessfully, to contact CEO of “A” to get info for conflicts

check

3/2015: Cincinnati lawyer gets info and runs formal conflicts

check to represent “A”

Has associate start review of materials

3/2015: Columbus lawyer runs formal conflicts check to represent B in litigation

zz

3/7/2015: Cincinnati lawyer learns that conflicts check

reveals that as he is opening a file for the environmental review for “A,” his Columbus partner is

currently representing “B” in “A v. B”

3/7/2015: Columbus lawyer learns that his junior Cincinnati partner is opening a file to do some environmental work for

“A” while he reviews the counter claim against “A” on behalf of B

zz

1. 2. 3.

1 1 1

Is there a conflict of interest between representation of “A” in environmental matter in Akron AND “B” in real estate

transaction now in litigation?

1. Yes2. No 3. I don’t know

zz

Type of Conflict

Former Client

Conflict

Current Client

Conflict

zz

1. 2. 3.

1 1 1

Is it a former client conflict or a current client conflict?

1. Former client conflict

2. Current client conflict

3. I don’t know

zz

1. 2.

1 1

Direct adversity between two current clientsOR substantial risk that lawyer’s ability to consider, recommend, or carry out an appropriate course of action for that client will be materially limited by lawyer’s responsibilities to another client conflict?

1. Direct adversity between 2 current clients

2. Substantial risk that lawyer’s judgment/actions will be materially limited

zz

Back to our LAWYERS…

Per direction ofsenior Columbus partner, Cincinnati

lawyer tries to contactCEO of “A” to request the

waiver

Columbus lawyer decides “A” is a

former client and tells Cincinnati lawyer

not to do any work on new matter

for “A” unless anduntil “A” waives

the conflict

zz

Lawyers for “A” in A v. B lawsuit request the Firm withdraws from

representing B in suit

zz

1. 2.

1 1

Should law firm withdraw?

1. Yes2. No

zz

“A” files motion to disqualify law firm because of conflict

of interest

zz

1. 2. 3.

1 1 1

Should law firm pay for the defense of the motion or ask

client to pay?

1. Law firm2. Ask client to pay3. How should I

know

zz

Judge asks Cincinnati partner

“At time you received call from “A” about environmental

question in June 2014, did you consider “A”

a firm client?”

At Disqualification Hearing...

Cincinnati partner “Yes, but I didn’t open it as

a new matter because they didn’t want me to.I did not expect to hear

from them again about that issue.”

zz

Corporate officers from “A” testify that they

considered Cincinnati partner their lawyer

on the environmental issue and fully

intended to get back to him with further

information

And they did get back to him

in 2/2015

zz

1. 2. 3.

1 1 1

So, what DOES determine whether an individual/entity

is a client?

1. The lawyer’s understanding

2. The client’s understanding

3. I don’t have clients so I don’t care

zz

OHIOStandard

zz

Did the individual/entity seek to form a professional relationship?

zz

Did the lawyer respond in a way that could create

a reasonable belief in the individual/entity that the relationship had been formed?

zz

What are the manifest

intentions of the attorney and the

prospective client?

zz

1. 2. 3.

1 1 1

Does it matter that Cincinnati office only started review of “A’s”

materials and never shared analysis with “A” of environmental issues?

1. Yes, it matters that nothing was shared with “A”

2. No, it doesn’t matter in the conflicts analysis

3. How should I know?

zz

If judge finds “A” was a former client what

happens?

The two matters are NOT the same or substantially related

NOT a former client conflict

zz

If judge finds “A” was a current client what

happens?

zz

When Columbus partner told Cincy partner –get a waiver before you do any further work

Remember – Columbus partner thought it was a former client

Let’s Go Back

zz

But the judge said it was a current client conflict…

zz

1. 2.

1 1

If the judge was right – current client conflict – any problem with

Cincy lawyer contacting CEO of “A” to seek a waiver?

1. Yes, definitely a problem to ask client for waiver under these circumstances

2. Nope, one is always able to contact one’s client to seek a waiver

zz

Judge thoughtBIG

problem…it was a

zz

Concluded that a firm which is aware it is representing directly adverse clients in

separate matters, yet seeks a waiver of the

conflict from one client despite firm’s knowledge that client is represented by counsel from another

firm, is acting in bad faith

By bypassing opposing counsel, the firm acts

with a dishonest purpose, moral obliquity, conscious

wrongdoing, and in breach of a duty, premised

on an ulterior motive to obtain a benefit or

advantage it could not otherwise obtain

zz

zz

Mid-sized law firm represents individual since early 1990s mostly in business transactions

Client buys and services debt

instruments – entersbusiness arrangement

with new partner

New partner to supply capital to buy

debt instruments, client to service debt instruments

Client + new partner agree to allocate ownership of debt

between client (1/3) + new partner (2/3)

zz

New partner’s investment to be

paid off from proceeds received

from debt instruments

Client + new partner agree to form

new LLC(1/3) + (2/3)

Client, using LLC, agrees to service debt instruments,

pay off new partner and then split profits with new partner

Client tells law firm to bill new LLC for all debt servicing work

done on newly acquired debt purchased withnew partners’ funds

Client shares all financial information

on debt purchases along with invoices from law firm with

new partner

THEN

zz

zz

New partner tells client “you have no ownership interest

in debt (I paid) + LLC never formally existed

(not filed with SOS office)

New partner sues client for ownership of all debt purchased under arrangement

Law firm represents client in suit brought

by new partner

New partner files motion to disqualify

law firm saying that law firm, all the while, was his lawyer too

Attaches all the financial info and invoices from law firm

All firm invoices were paid out of a bank

account in the name of non-existent LLC

zz

1. 2. 3. 4.

1 1 1 1

Was law firm representing client + new partner? Was law firm representing client + non-existent LLC?

Was law firm representing all three? Was law firm representing only client?

1. Client + new partner2. Client + non-existent

LLC3. All three4. Only client

zz

1. 2. 3.

1 1 1

Is it a former client conflict or a current client conflict?

1. Former client conflict2. Current client conflict3. I don’t know

zz

1. 2.

1 1

New partner’s lawyers in litigation requests that law firm withdraw

from representation of client

1. Yes2. No

zz

Firm lawyer assists agency to obtain Federal and State

grants to provide transportation for

3 counties

Grant contract says Federal government retains

interest in any property acquired with grant funds

Grant funds are used to purchase land

(transportation center),lawyer represented agency

in land purchase

3 years later, bank, long-standing firm client, asks firm to do title search on property in question for

possible mortgage to agency

zz

Firm handles closing for bank on new mortgage

to agency

Government tells firm deed needs to contain reference to our contingent interest

Firm thinks since this post-dates mortgage no impact on bank’s positionand doesn’t even notify

bank of new deed

Agency defaults on mortgage, Federal Judge’s

opinion says government’s interests

supercede bank’s interests in property

zz

Is there a conflict of interest?

zz

Is there a conflict of interest?

Law firm represented agency in obtaining grants and the closing on the purchase of the property

3 years later, law firm represented bank in title work and closing on subsequent mortgage on property

Law Firm omits reference to government interest in property in title

zz

1. 2. 3.

1 1 1

Is it a former client conflict or a current client conflict?

1. Former client conflict2. Current client conflict3. I don’t know

zz

Firm does trust for husband + wife in 2007

If both husband + wife pass, partner will be trustee

Fast forward, 2016 – firm represents Airport Authority

Airport Authority has dispute with husband and wife about renting space for their airplane

zz

1. 2. 3.

1 1 1

Does the fact that partner is potential successor trustee create a

conflict of interest for firm’s representation of Airport Authority?

1. Yes2. No3. I’m not

answering

zz

So what is the relevant question?

zz

Make sure your clients are happy ANDbe clear when they are former clients……

And be very clear who you do + do not represent

Preferably in writing

zz

Thank You!Jonathan E. CoughlanDirector, Kegler Brown Hill + [email protected]/coughlan614-462-5455

zz

presented by Chris Weber + Jason H. Beehler

zz

You are VP/General

Counsel

zz

In-House Counsel

zz

Kickback TRILOGY

Zuckerman Linick Kanter

zz

IHC for Glidden Refers cases to Zuckerman Z bills Glidden

IHC approves Z gives ½ fees to IHC

OSBA v. Zuckerman (1998)

zz

Rule 7.2(b)Professional Employment

zz

Rule 7.2(b)Lawyer shall not give anything of value to person for recommending lawyer’s services.

zz

Rule 1.5Fee sharing

zz

Rule 1.5Lawyers not in same firm may divide fees ONLY IF all of the following apply:Fees divided in proportion to services

performed by each lawyerClient gives written consent after full

disclosureClosing statement signed by client and all

lawyers in contingent fee caseTotal fee is reasonable

zz

One year Suspension

zz

zz

Same Same Same

SameNow we’re

talking about Linick (IHC)

OSBA v. Linick (1998)

zz

Rule 8.4Dishonesty,

deceit

zz

Rule 8.4It is professional misconduct for a lawyer to . . . engage in conduct involving dishonesty, fraud, deceit, or misrepresentation.

zz

One year Suspension

zz

The panel noted in mitigation . . . that Glidden

was happy with respondent’s performance

as a lawyer.

Majority Opinion

zz

“Sure, you stole $38,000 from us – but great work

on that brief!”

Glidden

zz

Linick was the mastermind and the beneficiary of the

scheme. His discipline should therefore be greater

than Zuckerman’s.

Lundberg Stratton

zz

zz

Same Same Same

Same Same

OSBA v. Kanter (1998)

zz

Let me make something very clear: Mr. Linick received no monies from me for work related to Glidden.

Kanter

zz

Two year Suspension

zz

“we strongly disapprove + condemn such practices.”

Court’s message on “kickbacks”

zz

Company “should be able to rely on IHC to

choose honestly among attorneys”

“we strongly disapprove + condemn such practices.”

“undermine lawyer/client relationship”

zz

zz

+ Shooting victims sue Sheriff+ Plaintiff sends preservation letter to Sherriff’s IHC

(Lane)+ Lane - no litigation hold+ Evidence destroyed – laptop, electronic data,

guns dissembled

Swofford v. Eslinger

zz

Swofford v. EslingerHeld:+ Notifying EEs not enough+ “Affirmative steps to monitor compliance”+ “bad faith destruction” – inference that evidence unfavorable+ Lane jointly/severally liable for fees/costs

zz

+ Capital sued over failure to disclose liens+ Capital’s IHC (Phelps) on notice of potential

litigation+ fails to: (1) issue litigation hold; (2) suspend doc

retention/destruction; (3) Search e-discovery properly

Surowiec v. Capital Title

zz

Surowiec v. Capital TitleHeld:+ Duty to preserve evidence+ Capital liable for fees/costs relating to later

proper discovery

zz

Cache v. Land O’Lakes+ Land O’Lakes IHC issued litigation hold+ But no steps to monitor compliance + Held: "litigation hold" without more insufficient+ IHC has duty to monitor compliance+ Ensure available responsive info produced

zz

+ IHC did not timely issue litigation hold+ No attempt to collect data+ Special Master appointed to investigate + IHC destroys info on morning of SM’s visit

PIC Group v. LandCoastInsulation

zz

PIC Group v. LandCoastInsulation

Held:+ Acted with “callous/careless attitude toward discovery”+ Ordered to produce contents of wiped computer+ Pay plaintiff’s attorney’s fees/costs+ Pay SM expenses+ Defendants pay – not carrier

zz

DiscoveryBEST PRACTICES

zz

Issue litigation hold

1

zz

Be specific

2

zz

Confirm receipt + compliance

3

zz

Suspend document destruction/purging

4

zz

Periodically monitor

5

zz

Attorney -Client PRIVILEGE

zz

Rule 1.6A lawyer shall not reveal information relating to the representation of client [unless otherwise permitted/required].

zz

IHC: non-legal/ businessfunctions

IHC: acts as lawyer

zz

+ Wrongful discharge + IHC - member of review committee + Plaintiff sought committee minutes/communications+ Where business and legal intertwine – “legal advice must

predominate” to be protected+ “when legal advice is merely incidental to business advice,

privilege does not apply”

Neuder v. Batelle

zz

Neuder v. Batelle

+ Committee’s primary purpose – terminate plaintiff+ A business purpose+ IHC acting in business capacity as committee

member+ IHC self serving affidavit insufficient

zz

Alomari v. ODPS

+ Relied on Neuder+ Where business/legal intertwine – “legal advice

must predominate” to be protected+ IHC at mtg to give legal advice+ A/C privilege applied

zz

Neuberger v. Lola Brown

+ Where “IHC involved, presumption that attorney’s input is more business than legal”

+ Apply “heightened scrutiny” to IHC communications+ Prevent corporate clients from hiding behind veil of

secrecy by using IHC as conduits of otherwise unprivileged info

zz

Lindley v. Life Investors Insur.

+ Business advice not privileged+ Must show “primarily a legal purpose”+ If mixed business/legal, redact only primarily legal+ If “inextricably intertwined,” does legal purpose

outweigh business purpose

zz

Henderson Apt. v. Miller

+ EEs must be seeking legal advice+ Cc IHC on communications not enoughProtection:+ Caption email – “confidential/for purpose of legal advice”+ “litigation related”

zz

Am I in Ethical Trouble?

zz

Rule 5.3“A lawyer having direct supervisory authority over nonlawyer shall make reasonable efforts to ensure that person’s conduct is compatible with professional obligations of lawyer”

zz

Mahoning Cty. Bar v. Lavelle

+ Assistant placed false information on documents and misled mortgage company

+ Forged respondent's signature + falsely notarized

zz

“[I]t is a lawyer's duty to establish a system of office procedure that

ensures delegated legal duties are completed

properly."

zz

Lawyer “violat[ed] the trust that his clients and others placed in him and

his office staff.”

zz

SupervisionBEST PRACTICES

zz

Instruct new employees

1

zz

Client confidentiality

2

zz

Accounting checks + balances

3

zz

Periodic team meetings + updates

4

zz

Am I in Ethical Trouble?

zz

Did you have reasonableprocedures

in place?

zz

Hauser v. TCP

+ Rule 1.13(b) - duty to report “up the ladder”

zz

+ IHC - Union Pacific+ IHC Defends depo of Yanez (UP employee)+ Yanez feared testimony would harm company+ IHC assured Yanez “I am your attorney”

Yanez v. Plummer

zz

+ Q’s by plaintiff’s counsel – denied seeing accident+ IHC cross examines Yanez + Shows signed document indicating he saw accident+ UP fires Yanez for dishonesty

Yanez v. Plummer

zz

Yanez v. Plummer+ Yanez sues for wrongful termination, legal

mal against IHC+ Held: IHC had conflict for representing UP

and Yanez+ IHC - equal duties of loyalty to both

zz

JOINTRepresentation

Both corp. + EE (i.e. litigation)

Identify potential conflicts

Get consent

Encourage right to seek independent counsel

No secrets

If conflict arises, get advance waiver to represent corp.

zz

Thank You!Christopher WeberKegler Brown Hill + [email protected]/weber614.462.5415

Jason BeehlerKegler Brown Hill + [email protected]/beehler614-462-5452

z