NC Legal Ethics

Bar applicants are under a lot of stress on the day of the bar examination.  That may be the understatement of the year.  In addition to trying to retain the enormous amount of information necessary to pass the bar exam, there are the additional worries of simply getting to the exam: Will there be traffic? Do I have the right directions?  Where will I park?  Do I have my admissions ticket with me?  Adding to that stress is the four-page Examination Regulations and Code of Conduct that must be initialed and signed before taking the bar exam.  This document contains a list of everything you can and cannot bring into the exam room, how you must conduct yourself during the exam, and where you can and cannot be at any given time.  The document asks the applicants to affirm that they have read and understand it, but no doubt, many do not read it carefully or simply forget the requirements and prohibitions. They have enough to worry about.

That four-page document can be critical, however, and knowing the rules may be the difference between obtaining your license and not.  Each time the bar exam is given, someone inevitably, albeit unintentionally, violates the rules listed in the document and must explain their conduct to the Board of Law Examiners before their bar examination results are released to them.  Keep in mind that in the vast majority of cases, these are not people trying to cheat.  They may have accidentally brought something into the exam room with them that they didn’t think twice about, such as a wallet, a watch, or eyeglasses case, or maybe they put on a jacket during the break that had pockets and simply forgot it was prohibited.  Applicants need to understand that the requirements listed in the Examination Regulations and Code of Conduct are strictly enforced.  It does not matter if a violation is unintentional.  If an applicant brings anything into the exam room that is forbidden, they risk having their exam results withheld for a period of time or, if there is not a good explanation for their conduct, permanently.  No doubt, it’s a bit harsh.  So if you know someone planning to take the Bar Exam, offer your condolences, and then remind them to carefully review the Examination Regulations and Code of Conduct, because you can bet the individuals proctoring the exam will, and they mean business!

I am a natural born fretter. I tend to envision all the ways things could go wrong, and I tell myself it’s so I’ll be prepared when they (inevitably) do.  My sister-in-law often tells me to quit planning the wreckage of my future.  I know I need to find my zen zone, and try to deal with the stress that I inflict upon myself.  But if you’re like me, you know it is easier said than done.

The need to manage stress or the failure to do so seems to be the hallmark of the legal profession.  Apparently, the legal professional is number one — number one, that is, for the incidents of depression, out of 105 different professions. (1)   A fair number of the lawyers that I counsel suffer from depression, anxiety, and/or substance abuse.  I have wondered whether there is something about the legal profession that causes mental health issues, or is the type of person who is drawn to the law likely to be someone with characteristics that put them at risk?

According to Psychologist Martin Seligman, those traits which epitomize a good lawyer, may also translate into an unhappy person.  “[T]he legal profession is unique in that it is the only profession where pessimists–those who see problems as the norm and not the exception–out-perform optimists….[T]he legal profession calls for caution, skepticism, and anticipation that things will go wrong.”  (2) Combine that with the fact that lawyers as a group are particularly adverse to seeking help for mental health issues, and you have a recipe for disaster.

Given my personality, I have chosen the perfect profession for myself, so I should count that in the win column.  At the same time, if I allow the stress and worry to take too large a role in my life, I am at risk.  I attended a recent Lawyers Mutual presentation that tackled issues of stress and anxiety and how to cope with these factors in your life.  One takeaway from the program is that you need to schedule time to decompress.  Really.  Plan time away from your work, just like you would an appointment.  It doesn’t have to be as significant as a vacation.  Just think about how you can escape for a bit and find your happy place.  It could be getting outside, exercising, reading a good book, meditation, going to a concert, a change of scenery, spending time with family (or away from family), or anything else that makes you smile.

Schedule that time for yourself each and every day.  When you take better care of your mental health, you are in a better frame of mind – to make decisions, to get work done efficiently and to interact effectively.  In short, you’ll be a better lawyer.

For a while there, it looked as if the State Bar was going to require all law firms using any kind of personal mobile technology to adopt a BYOD (Bring Your Own Device) policy. Ethics Committee members and others, however, expressed concern that a Formal Ethics Opinion would serve to micromanage lawyers.  Furthermore, because technology was changing so rapidly, any ethics opinion, trying to direct how attorneys should protect mobile devices containing client confidential information, could become obsolete in a short time frame. Besides, lawyers already have a duty to stay abreast of changes in technology as part of Rule 1.1 (Competence). So, at its January 2016 meeting, the Ethics Committee instead voted to publish an article, in lieu of an ethics opinion, providing guidance to attorneys on how protect client confidential information on mobile devices by adopting such a policy.

One thing I learned from sitting in on the Ethics Committee meetings, was that the “apps” or applications that you download (think Facebook, LinkedIn, etc.) can access your contacts if you let them.  There are some applications that specifically ask if you will allow them to access your contacts, but there are others that may not.  That’s a bit scary.  If you are like me, you may have your client contact information on your smartphone.  I had not previously given much thought to my applications, although my M.O. is to say no to everything: can we access your location? – NO; can we access your contacts? – NO; can we access your pictures? – HECK NO.

Stay tuned for this ethics article in your State Bar Journal that will provide lots of insight and advice on protecting your mobile device and your client’s information. In the meantime, when in doubt, just say NO.

Regardless of how conscientious you strive to be, eventually everyone makes mistakes. Fortunately, inadvertent or unintentional mistakes generally are not matters for which professionals are disciplined or held liable in most circumstances, absent some intent, malice or a pattern of errors.  Nonetheless, when mistakes do inevitably happen, it’s important to take a few simple steps to handle them correctly and professionally.  First, fess up and admit your mistake, preferably without qualification, hedging or excuse.  Second, take the initiative to do whatever you can to fix the problem or at least minimize any adverse effects.  Don’t wait for somebody to ask you to remedy it.  If you’re dealing with reasonable people, taking these simple steps often diffuses the situation and minimizes any potential negative effects to you and others.  In contrast, failing to take these commonsense steps, or acting to the contrary and unprofessionally, likely will exacerbate a potentially bad situation.

Because mistakes inevitably occur, we all eventually will be on the receiving end of such situations involving the mistakes of others.  It is equally essential to handle those situations professionally, even if it’s not the most expedient option or typically your first instinct.  For example, it is almost always a bad idea to respond through electronic communications to perceived misconduct by another person or professional.  The many shortcomings of digital exchanges rarely can adequately handle the sensitive nature and the nuances involved in such situations.  Rather, e-mails and texts regularly inflame and exacerbate such situations and cause people to make incorrect assumptions and jump to conclusions.

Ideally, confronting such situations should be done in person, or at least by phone.  These more traditional options allow for a much more interactive, interpersonal exchange and permit both sides to perceive essential nonverbal communications.  In short, when faced with such a situation, ask for a meeting or pick up the phone to discuss it, rather than sending a nasty email message without time to reflect.   It is equally important not to make assumptions or jump to conclusions without providing the other side the opportunity to explain and also to give the other side the benefit of the doubt, especially if you have developed a good working professional relationship.  Finally, don’t try to take strategic advantage of another’s mistake for short term potential gain.  Professionalism typically takes more work, but it is almost always worth it in the long run.  Next time the mistake may be yours.

I was reminded recently of these important principles.  Fortunately, both sides followed these basic but important steps and acted very professionally.  As a result, a potentially bad situation was quickly resolved, which then resulted in corrective action to quickly fix the mistake and the professionals were able to continue their good working relationship and focus on advancing their client’s interests.  The situation reminded me of the words of wisdom from a seasoned professional:  “Clients don’t hire us to pick a fight but to solve their problems.”  I just hope that the next time I am reminded of these important professionalism principles, it is as a result of someone else’s mistake.

So you may recall that in a previous blog, we addressed the issue of whether you must disclose a mistake or error in judgment to a client, and if so, what must you say.  In this blog, the question is whether, having made an error, must you withdraw from representation, assuming the client wants you to continue?  The answer is, it depends.  If the continued representation would result in a conflict of interest, you must withdraw.  There are many instances where your interest in rectifying the mistake (and avoiding personal liability) is consistent with the client’s interest in having the problem fixed.  If you believe that you can mitigate the damage to the client, you may be in the best position to do so, and therefore, may try to do so if you can.  In those instances where your interests are aligned with those of your client, you would not be required to withdraw from the representation.  If, however, your desire to avoid liability could be in conflict with client’s best interests, or if there is nothing that can be done by you to rectify the error, you must withdraw from the representation.

The ethics opinion, 2015 FEO 4, gives examples of the kinds of mistakes that can and perhaps should be rectified by the lawyer making the mistake.  “[A]n error made in a title search may be readily repaired or a motion in limine may prevent the use of privileged communications that were improperly produced in discovery. It is often in the best interest of both the lawyer and the client for the lawyer to attempt such repair.”  The opinion goes on to say, “when an error is such that the client’s objective can no longer be achieved, as when a claim can no longer be filed because the statute of limitations has passed, the lawyer must disclose the error to the client and terminate the representation.”

No matter what the circumstances surrounding the error, we always recommend that you consult your liability carrier before deciding whether to proceed with or to terminate the representation.

Starting a law firm partnership is a good way to share responsibilities and expenses, but you also share liability for your partners’ conduct and potential malpractice.  Office sharing with other lawyers can be a good alternative, allowing for the shared expense of rent, equipment, and in some cases, support staff, but without the liability of a partnership if set up correctly. However, before you rent that space, consider some of the potential ethical problems related to the office sharing arrangement:

Advertising and Other Communications

A lawyer sharing office space with other lawyers must take steps so that their clients and the public are not misled as to the relationship between the lawyers.

• To help reduce the risk any misunderstandings with clients, your engagement letter can clarify that no partnership exists between the lawyers in the shared space and that only the lawyer who signs the engagement letter will be responsible for the client’s matter.
• Rule 7.5 of the NC Rules of Professional Conduct prohibits lawyers from utilizing a false or misleading name. Thus, lawyers may not imply they are practicing under a partnership, when that is not accurate, in any communication including building signage, advertising and marketing.
• Lawyers in an office sharing situation generally may share a receptionist under certain conditions, but the receptionist cannot imply a partnership where there is none. S/he must answer the phone generically. CPR 265 provides, “While it might be less confusing to have separate telephone lines for each attorney, to have the telephone answered by the words ‘Law Offices’ does not connect the names of [a]ttorneys…in such a way as to suggest the existence of a partnership which does not in fact exist.”  In that context, where three lawyers, A, B, and C share an office but do not have a partnership agreement, the receptionist could not answer the phone, “Law Offices of A, B, and C”.

Conflicts of Interest

CPR 274 provides, “It is conceivable that two or more attorneys may maintain an office sharing arrangement and represent conflicting interests if the confidentiality of each attorney’s practice is maintained both in appearance and fact.  This confidentiality assumes that each attorney maintains a separate, independent practice.  Generally speaking, the sharing of a common library or copying equipment by attorneys representing conflicting interests is acceptable, but the sharing of a common telephone number or personnel by attorneys representing conflicting interests is not acceptable.” Further, it may be difficult to convince adverse parties there is no conflict where the two attorneys share space. Given that, lawyers in an office share likely want to consider conducting conflict checks between the two firms and avoid engaging in adverse representation altogether.

Shared Fees

Any fees shared between lawyers sharing office space must comply with Rule 1.5(e) of the Rules of Professional Conduct. Rule 1.5(e) provides that the division of a fee between lawyers who are not in the same firm may only be made if the total fee is reasonable, the division is in proportion to the services performed by each lawyer or each lawyer assumes joint responsibility for the representation, and the client agrees in writing to the arrangement. The Comment to the Rule provides, “Joint responsibility for the representation entails financial and ethical responsibility for the representation as if the lawyers were associated in a partnership.”

Client Confidentiality

While lawyers in a firm must also protect client confidentiality and secure client files, an office sharing arrangement presents a unique situation.

• Client files and other confidential information must not be accessible by other attorneys and their staff sharing the space. Files should be locked where the other lawyer and his/her staff would not have access to it. Your electronic files and data, whether stored onsite or in the cloud, will also need to be separate and secure from other lawyers sharing the space.
• Lawyers may share common spaces, such as conference rooms, but the design must protect client confidentiality so that conversations cannot be overheard.
• One of the great things about sharing space with another attorney, as opposed to a solo office, is having someone to share ideas with. Just make sure you use hypotheticals and leave out identifying information to protect the confidentiality of your clients.

We all know that first impressions matter.  This is true not only with in-person meetings but also with initial telephone calls.  There are several important factors that you should keep in mind when speaking to a potential client for the first time.  First, people want you to listen.  Even if you do not decide to take a client’s case, giving them the courtesy of allowing them to explain their issue and frustrations is incredibly important.  This does not mean you have to spend hours on the telephone with a potential client on an initial call.  It does mean you need to ensure not to make the person feel like you are rushed and do not have time to hear their concerns.  Before you return a call to a potential client, make sure you allow adequate time to listen, ask questions, and actively engage in the conversation.  Your time is valuable but so is the time of the people that call you for help.  “One of the greatest gifts you can give to anyone is the gift of attention.” – Jim Rohn

Second, do your best to ensure that you are understood.  For example, if you are quoting someone a fee for an initial consultation, make sure they understand exactly what they will be paying for – i.e. an hour of your time?  Two hours?  Review of documentation?  You do not want the client to be surprised.  Even if you put the agreement in writing before the consultation, if the client misunderstood the quote on the initial call, they will likely not be pleased to see a higher or different amount in writing.

Third, follow up on your promises.  If you tell a potential client that you are unable to help, but you will contact them with the names of a few people who may be able to assist, make sure you do get back to them.  If you are unable to provide the information you thought you could provide, you need to relay that information as well.

Fourth, make every effort possible to never come across as superior to the person who has contacted you.  Of course you likely know more about the topic the potential client is contacting you about or they would not be calling you.  However, this is not always the case.  Even if a potential client contradicts you, and you know you are correct, try to explain that in your experience, the situation resulted in a different outcome.  “People don’t care how much you know until they know how much you care.” – Theodore Roosevelt.

Following these simple steps should become second nature in any profession.  The first contact with a potential client matters!  We expect this level of professionalism and courtesy from others; therefore, it should also be what we provide.

Last week, I had the pleasure of sitting down and chatting with Tom Lenfestey, Managing Member of The Law Practice Exchange, LLC.  What I found out from Tom is that he and his staff offer a much needed service to lawyers, law firms, and other professionals throughout the state of North Carolina.

Ever wondered about retirement? Could you sustain the value in your firm and provide ethical representation of clients if you simply wanted to work a bit less and play a bit more?  Could you make money from selling your firm or a portion of it? Could you transition to a truly virtual practice? Is there some way to structure a transition so you continue in a mentoring or counseling role, with your practice generating income into your retirement years?  As I began talking to Tom, who is an attorney and a CPA, I came to realize that there were more ways to structure a transition, and more kinds of transitions for that matter, than I had ever known or even thought about before.

Tom’s legal practice has traditionally focused on creating, advising and implementing strategic business and estate plans for his clients. Tom came to recognize the lack of knowledge, attention and options that were provided in the legal profession to attorneys for their own practices, specifically in the realm of succession planning and other transition or exit opportunities.

Tom’s driving principles are as follows:

As a result and a belief in the need to increase understanding and promoting options for lawyers looking for exit or growth options through the transition market, Tom formed The Law Practice Exchange. The Law Practice Exchange aims to curb this lack of knowledge in the profession by educating and advising attorneys on the number of different options available in the legal marketplace and also serving as a confidential advisor to seek and provide connections for those right opportunities between an exiting attorney and a growth-focused attorney or firm.

 The Law Practice Exchange provides value-focused options to:

• Preserve client goodwill
• Provide value-based exit strategies
• Promote mentorship between senior and junior attorneys
• Provide alternative growth options for law practices
• Ensure continuous service to legal clients
• Prepare practices for change and transition
• Consult and advise on additional practice strategies for attorneys

Tom offers much more than just brokerage services or legal match-making services.  He also helps lawyers find and enhance the value in their firms as they journey through transition.  Some of the strategies he employs would be beneficial in any practice, even if you are not looking to transition immediately. His services are confidential and he’s an accredited business intermediary.

So, what’s your next step?

For more information:

The Law Practice Exchange, LLC
(919) 789-1931
tom@thelawpracticeexchange.com
www.TheLawPracticeExchange.com

*No remuneration was received for writing this blog or recommending Tom’s services.

Every so often, I get the question, can an attorney hold himself or herself out as an “expert” in an area of practice or as having “expertise” in a particular area? Most attorneys know that they can’t hold themselves out as “specialists” or as “specializing” in a practice area unless they are certified as a specialist by the North Carolina State Bar or another organization accredited by the State Bar or the ABA.  See Rule 7.4 of the Rules of Professional Conduct.  While there is no rule specifically prohibiting use of the word “expert” in advertising, the statement cannot be misleading under Rule 7.1.  Several factors determine whether using the term “expert” could be misleading.

State Bar ethics staff counsel has opined that whether the term “expert” is misleading under Rule 7.1 will depend upon whether it can be factually substantiated as a claim by a lawyer.  While years of experience are relevant, simply practicing in an area of the law for a number of years is not sufficient to substantiate a claim of expertise.  According to State Bar staff counsel, the lawyer must be able to demonstrate that he/she is knowledgeable and proficient in the most difficult of cases in the practice area.

Frankly, I am not entirely certain of exactly how you would make a sufficient showing of your knowledge and proficiency in your field of practice, but here are some suggestions:

• In addition to your many years of practice, you may be a person who has taught CLE courses or written articles for publications on the subject.
• You may also have colleagues who could attest to your proficiency in the field of practice and to the difficulty of cases you’ve handled.
• You may have actually served as an expert witness in a particular related field.
• Perhaps you have taught courses at your local law school.
• You may have served as a mentor to younger lawyers in the field.
• Perhaps you hold a position as an advisory member on a Board or leadership positions in related Bar organizations.

Bottom line: before you use the term “expert” in your legal advertisements, be sure you have an idea of how you could prove your expertise.  You may be called upon to do so someday.

We get this question a lot.  Do I have a duty to self report this conduct to the Bar?  Unless we’re talking about the trust account, which we’ve discussed in other blogs, there is generally no self-reporting duty in the Rules of Professional Conduct.  If you goof, make a bone-headed decision, briefly lose your mind, or aliens have taken over your body, and you have done something that violates the Rules of Professional Conduct, you need not report it to the State Bar.  That is, it is not a violation of the Rules of Professional Conduct NOT to report it.  Whether you should report it, notwithstanding that there’s not duty to do so, is a topic for another day.

Trust accounts are a different animal.  If you inadvertently misapply funds, over-disburse, or disburse in error, and you (1) discover the error promptly, (2) rectify it, and (3) document it in your files, then there is no duty to self report to the State Bar.  The failure to promptly discover the error or rectify it within a calendar quarter from when the error was made, could trigger the new reporting requirement in Rule 1.15-2. (See earlier blog).  But for errors that are discovered and correctly quickly, the State Bar has enough to do without fielding calls or reviewing correspondence about every mistake made in attorney trust accounts. If you do make a mistake in the trust account, let it be a wake up call to double down and make sure you have in place measures to help ensure that such mistakes do not happen in the future.