Conflict: You Snooze, You Lose?
January 31, 2011
I used to think a conflict of interest under Rule 1.9 could only be waived by agreement with the former client and could be raised as a means to disqualify an attorney person at any time. It appears the State Bar plans to change this notion. At its most recent quarterly meeting, the Ethics Committee adopted a new proposed opinion that recognizes that sufficient delay in raising a conflict of interest issue could constitute a waiver of the conflict, and an inability to use it to disqualify opposing counsel. The factors to consider in determining whether the “you snooze, you lose” rule would come into play are: (1) whether the lawyer’s failure to identify the conflict was unintentional, (2) whether the former client knew of the new representation, (3) the length of the delay in lodging the objection, (4) whether there was an opportunity to lodge an objection, (5) whether the former client was represented by counsel during the delay, (6) the reason the delay occurred, and (7) whether disqualification would result in substantial hardship for the new client. I think this proposed opinion is a good one, because it really only targets persons who attempt to use the conflict rules merely as a strategic sword to disqualify counsel and not because the new representation resulted in any prejudice to the former client.
Signing Up Clients: Use of Paralegal Could be UPL
November 2, 2010
In July 2010, the State Bar adopted “Guidelines for Use of Paralegals in Rendering Legal Services.” These guidelines prohibit paralegals from engaging in the practice of law and lawyers from assisting in such practice. Specifically, Guideline 2 states that “a lawyer may not delegate the following responsibilities or activities to a paralegal: establishing a client-lawyer relationship and the terms of the relationship; giving oral or written legal advice or a legal opinion to a client; interpretation of legal documents for a client[.]” If you are using paralegals exclusively to sign up clients, you may need rethink your business model. I believe this guideline requres that a lawyer must be inserted somewhere in the process prior to signing up a client. It need not be a face-to-face meeting, but the lawyer must have some communication with the client prior to the client signing the engagement agreement. The State Bar appears to be taking the position that a legal judgment is involved in the decision whether to provide representation to a client and that such decision cannot be delegated to a paralegal. Although the paralegal can oversee the signing of the engagement agreement, a lawyer should be available should the client have any legal questions. See www.nccertifiedparalegal.gov/guidelines.asp
Direct Mail Ads – Look Out for a Rule Change
October 28, 2010
Today, the NC Ethics Committee voted to publish a revision to Rule 7.3(c). The Rule currently requires that all direct mail solicitations contain the words, THIS IS AN ADVERTISEMENT FOR LEGAL SERVICES, on both the front of the envelope and at the beginning of the body of the letter. On the envelope, the font of the disclaimer must be larger than any other print on the envelope. For the letter, the existing Rule requires that the font be as large as or larger that the lawyer’s name or firm name appears in the letterhead. So what’s the proposed change? The font of the disclaimer on the letterhead would now need to be “as large as or larger than any other printing in the communication.” “Who cares?” you say. Lawyers who use targeted direct mail, that’s who. What if you include a brochure in your communication? The current wording would appear to require that the disclaimer on the letterhead be as large as or larger than any printing on the brochure as well. What if you have logos and pictures in your materials? It’s not clear. What if you have a watermark on your letterhead? Who knows? Keep watching. We should have answers soon.
Money Laundering Scams Targeting Lawyers
August 26, 2010
Have you ever received a call from a potential client who either 1) has just inherited lots of money, or 2) reached an agreement with their spouse in a domestic matter, or 3) settled a civil claim directly with opposing party, and they just need someone to help receive a large sum of money? Bells and whistles should be going off in your head. No legal services are needed, just someone to collect the money and deliver it to the person on the phone, and you’ll get a cut of the money for your time and efforts. Don’t walk, run in the other direction. While I have not had the time to look over this issue, my guess is that this is some attempt to draw the attorney into a money laundering scheme or somehow avoid the reporting requirements.
If anyone knows more about this topic, please let me know. I can be reached through my firm website: www.brockerlawfirm.com.
To Report or Not to Report
May 20, 2010
Most lawyers know that the Rules of Professional Conduct require lawyers to report certain conduct of other lawyers. Rule 8.3 provides that a lawyer who “knows that another lawyer has committed a violation of the Rules of Professional Conduct that raises a substantial question as to that lawyer’s honesty, trustworthiness or fitness as a lawyer in other respects, shall inform the North Carolina State Bar or the court having jurisdiction over the matter.” Are there exceptions to this Rule? Sure. First, not all rule violations trigger a report. The conduct must be serious enough to report; that is, it must raise a substantial questions as to the lawyers honesty and fitness to practice. Second, if the information to be reported is client confidential information and the client does not consent to reporting this information, then the Rule does not require disclosure. Third, a lawyer also has to have actual knowledge of a serious violation for the reporting requirement to kick in. Fourth, the duty to report does not apply to a lawyer retained to represent a lawyer whose professional conduct is in question. (Whew! That’s us). Fifth, confidential information gained by a lawyer from a lawyer seeking assistance in a lawyer’s assistance program (LAP) is excepted under the Rule.
Notwithstanding these exceptions, we understand that the State Bar has been issuing grievances on a growing basis for violations of Rule 8.3. In the past, this Rule was rarely invoked as a basis for discipline. Now if the State Bar sees any indication that a lawyer was aware of misconduct of another lawyer and failed to report it, the lawyer can expect to receive a grievance. The onus will be on the lawyer to demonstrate that an exception applies. If you know of lawyer misconduct and are trying to decide whether to report it, call the State Bar’s ethics hotline ( 919-828-4620 919-828-4620 ) for advice first and document any applicable exception to the Rule. You’ll need all the protection you can get.
Here Today, Gone Tomorrow
May 5, 2010
It is rare that a lawyer stays in one place for his or her entire career. Lawyers change law firms everyday. And yet, relatively few law firms have employment agreements with their lawyers. A lawyer’s departure from a firm can be contentious. One way to minimize the trauma is to have in place an employment agreement that addresses issues such as 1) proprietary information of the firm, 2) notice to clients of the departing lawyer, 3) handling of client files, and 4) fee splitting arrangements, among others. The N.C. State Bar recently tackled the last of these issues in an ethics opinion, 2008 FEO 8. If you haven’t reviewed your employment agreement in awhile, or if you are considering using one, take a look at this opinion first. The opinion states that any fee splitting structure between a departing lawyer and law firm that does not take into account the relative work performed by the departing lawyer after he leaves the firm may be suspect. I strongly recommend that law firms have an employment agreement with each new hire. It’s better to be prepared, because. . . the firms, they are a changin’.
Think Before You Link
May 3, 2010
Social Networking is the craze these days, but are all social networking sites right for lawyers? It depends on how you use them. For example, I believe LinkedIn is a great tool for networking for lawyers. The relationship links created between individuals are defined, such as “colleague” or “business associate.” LinkedIn’s business and networking purpose is quite clear. On Facebook, however, everyone is a “friend.” Think about what the consequences would be if a lawyer were to “friend” other lawyers, judges, and clients, or even persons the lawyer doesn’t know very well. The nature of the relationship actually may be different than that of “friend.” Could “friending” be misleading or could these e-defined relationships create unintended conflicts of interest? Just something to think about.
State Bar Tackles Cloud Computing
May 3, 2010
At the latest quarterly meeting, on April 15, 2010, the Ethics Committee of the NC State Bar voted to publish a new ethics opinion addressing the applicability of the Rules of Professional Conduct to cloud computing or software as a service (Saas). The proposed opinion, 2010 FEO 7, says that a lawyer may contract with a SaaS vendor provided that the risks that confidential client information may be disclosed or lost are effectively minimized. The opinion requires that lawyers take “reasonable precautions” to prevent information from being leaked or destroyed, and does not require that an attorney use “infallibly secure methods of communication.” Nonetheless, the opinion goes onto list nearly 23 questions that a lawyer “should be able to answer” to conclude whether the risk to confidentiality and security of the client’s information is minimal. One of the questions is “where does the SaaS vendor derive its funding?” Query whether this is information that any vendor would share.