ABA v. NSA: An Unhelpful Exchange

Posted on March 26, 2014 03:31 by Brandi Blair


The Edward Snowden scandal brought to light evidence that the National Security Agency obtained information from foreign intelligence services, which included privileged attorney-client communications between U.S. law firms and their foreign clients.  

Concerned about this discovery, the American Bar Association (ABA) sought clarification from the NSA. In correspondence to the NSA, ABA president James Silkenat underscored the importance of the attorney-client privilege as the “bedrock legal principle of our free society.” In essence, privileged attorney-client communications facilitate the “full and frank discussion between lawyer and client that is essential for effective legal representation.”  As our interests continue to globalize, this full and frank discussion increasingly involves electronic and voice communication with foreign clients. Although many of us would welcome an excuse to increase our global travel, it is simply not feasible for US law firms to limit their communications with foreign clients to in-person interviews. 

Given the disturbing evidence that the NSA retained information obtained from privileged communications, Mr. Silkenat requested that the NSA fully explain its policies pertaining to the collection and use of such information. A full understanding of the NSA’s policies and procedures, regarding the collection, retention, and use of privileged communications, is necessary for law firms to meet their ethical obligations to safe guard the confidentiality of client communications.     

NSA Director, General Keith Alexander, responded that he appreciated “the opportunity to clarify [the NSA’s] current policies and practices.” Unfortunately, in the response that followed, the NSA fell short of the open dialogue contemplated by the ABA’s request. Instead, General Alexander’s response attempts to reassure the bar that the agency is “firmly committed to the bedrock legal principle of attorney-client privilege.” According to General Alexander, potentially privileged communications are examined on a “case-by-case basis to determine whether the information is in fact privileged and, if so, the appropriate steps to be taken.” This response does not offer guidance, or the specificity necessary for attorneys to take adequate precautions to safeguard their client confidences, or to rest assured that the information is being appropriately safeguarded by the intelligence agencies.

Until the time that the NSA provides a more substantive response, and in the wake of this exchange of correspondence, it remains unclear what reasonable steps attorneys can take to adequately safeguard their foreign client communications. It appears the options are to trust foreign and domestic intelligence agencies, or start banking more flight miles abroad.  Either option is potentially costly to law firms, and their foreign clients. 

Brandi Blair is an attorney at Jones, Skelton & Hochuli in Phoenix, Arizona. She concentrates her practice on § 1983 defense, professional liability, and wrongful death and personal injury defense. She is currently the Publications Chair for DRI's Lawyers' Professionalism and Ethics Committee.  The views expressed herein are her own.

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The growing industry of litigation funding will be expanding further very soon.  Reuters reported last week that well known former federal prosecutor Andrew Stolper of Santa Ana, California, will open a litigation financing firm.  The new company will be based in Irvine, California and will specialize in funding plaintiffs in commercial litigation cases.  Firms like Stolper’s loan money to plaintiffs in exchange for a percentage of any recovery.  The loans typically do not have to be repaid if the plaintiff does not recover.  

Litigation financing is a very controversial practice.  In 2011 the New York City Bar Association issued a formal opinion stating that it is not unethical per se for a lawyer to represent a plaintiff with a non-recourse financing agreement.  However, the same opinion pointed out that there may be a loss of confidentiality due to sharing privileged information with the litigation finance company. The opinion states “a lawyer representing a client who is party, or considering becoming party, to a non-recourse funding arrangement should be aware of the potential ethical issues and should be prepared to address them as they arise.”

In addition to the various ethical concerns, one of the practical ramifications of litigation financing is that it can often complicate the resolution of a case by settlement since the funding company will typically have a lien against the proceeds, minimizing the plaintiff’s net recovery via settlement.  Many mediations fail because of such liens.

Stolper enters his new business with a history of having been strongly criticized by a federal judge in 2009 for engaging in a “shameful” effort to intimidate witnesses.  Further, his partner in the new venture, Peter Norrell, is a former FBI agent who pled guilty in 2010 to illegally accessing FBI records and threatening criminal prosecution to assist a friend in a debt collection matter.  He received two years of probation and three months of home confinement for that incident.  Apparently, Norrell and Stolper have worked together in the past and they bring their experience to the questionable litigation financing industry.   

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It is a deposition question that too often surprises lawyers and corporate-witness deponents.  Upon return from a water or lunch recess, the deposing lawyer asks the witness: “So, tell me what you and your company’s lawyer discussed during the break?”  Can the deposing lawyer ask that?  Does the defending lawyer have an attorney-client privilege objection?

In-House and outside counsel focus their deposition preparation on reviewing the notice-of-deposition topics, selecting the most appropriate corporate employee for the deposition task, and preparing that witness with the boilerplate deposition ”dos and don’ts.”  And while many lawyers defending depositions see every break as an opportunity to consult with the witness, they neglect to consider whether these in-deposition consultations are privileged and, importantly, to prepare the witness how to answer an out-of-the break question about those consultations.

Unfortunately, there is no uniform rule on whether lawyers may have privileged conversations with witnesses during deposition breaks.  Some jurisdictions prohibit all during-the-break consultations except when necessary to assert an evidentiary privilege.  Other jurisdictions reject this draconian rule for the more practical approach of permitting break-time discussions except when a question is pending.  In my recent article, Protecting Attorney-Corporate Witness Consultations During Deposition Breaks, published by Inside Counsel, I explore the various rules on this issue and provide practical tips for preparing lawyers and witnesses for this inevitable happening.

You may access the article at this link.  How does your jurisdiction–state or federal–handle this situation?  Place your comments in this post–perhaps we can gather the local rules, judicial rulings, and local practices so that others may find answers in a single forum.

As originally published at presnellonprivileges.com 
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Terry Baynes of Thomson Reuters has an interesting article on efforts by a few plaintiffs’ attorneys to “crowd source” consumer arbitration claims.  The effort arises out of the Supreme Court’s decision in AT&T Mobility v. Concepcion, 131 S.Ct. 1740 (2011), upholding class action waivers in mandatory arbitration clauses.  The article discusses how two plaintiffs’ attorneys have created a website to generate consumer interest in filing multiple arbitration claims against a company with the stated goal of overwhelming the company “with hundreds or thousands of claims.”   The article quotes one of the founding lawyers as saying, “If it happens enough, companies will want class actions again.”  Andrew Pincus, who represented AT&T Mobility before the Supreme Court, is quoted as calling the site “marketing front for plaintiffs’ law firms.”  Mr. Pincus discussed Concepcion at DRI’s 2011 Class Action Seminar in Washington, DC.  DRI will hold the next edition of the Class Action Seminar on July 25 and 26, 2013.  That program is expected to include discussions of the Supreme Court’s current term’s class action and collective action cases.  More details on that will follow soon.

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Bank of America’s new plan to seek reductions in its legal fees from certain outside law firms have some experts questioning the ethics of this unusual practice.  The bank is seeking a credit on its annual legal fees based on the amount of customer business it sends to the law firms.  According to the report, Bank of American has threatened to stop using law firms that refuse to sign onto the one year deal. 

The Bank of America agreement is believed to state that the credit sought is calculated based on the total amount of legal fees passed on to third-party customers.  Bank of America generally does not comment on specific arrangements with its legal providers; however, a source familiar with the agreement said that, the credit being sought is relationship based rather than percentage based. 

Cornelius Hurley, Director of the Boston University, Center for Finance, Policy, and Law opines that if the agreement is based on the amount of fees paid by customers, such an arrangement would be unethical and a “form of pay to play for the law firms.”  University of California’s Hastings Law School professor, Geoffrey Hazard explains that the agreement seems to violate the American Bar Association’s rules of Professional Conduct in a least two ways: (1) the bank is getting a reduction in legal fees; (2) and there is a referral in return for money.  

Not everyone sees this as an ethical issue.  Thomas Spahn, a commercial litigation partner at McGuireWoods in Virginia, said his law firm accepted the agreement and does not an issue.  He does not share the concern that this arrangement violates the rule that “a lawyer cannot give anything of value” to someone who sends him business.  Spahn’s reasoning is that “most law firms will give benefits to a company that sends them a lot of work such as free legal seminars or cocktail parties.”  He justified this position by stating that the agreement is sound as long as the credit is not tied to a particular fee. 

Bank of America does offer some notice to its customers that it is receiving a benefit.  Hurley feels the notice is “too vague and not a full-fledged disclosure...” and Hazard comments that “its getting the reduction that matters, not who knows about it.” 

The bank defended the agreement in a statement issued to Corporate Counsel.  “We do not require clients to retain particular law firms and we are committed to transparency in disclosing fee arrangements, as well as, potential benefits to our company.  We are confident that our agreements with external legal services providers are appropriate.”  Eric Cooperstein, a legal ethics practitioner in Minneapolis sees this agreement as raising serious ethical concerns as the rules do not have an exception for client consent.  “Quite simply, a legal client’s business cannot be bought and sold.”  

 

 

 

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An astounding four out of ten Americans have been invited to participate in a class action suit. Fifteen percent, the equivalent of 36 million people, actually participated in one, and most do not appear to be doing it for the money. Of the 70 percent receiving a financial award, 73 percent termed it insignificant. Their motivation might lie in the fact that 65 percent thought class action suits made corporations more responsible. These are some of the surprising results from the DRI National Poll on the Civil Justice System.

The poll also showed that large numbers of Americans doubt the fairness of civil courts and a majority— sometimes substantial majorities— admit that personal biases could affect their decisions as jurors.

In terms of confidence in the civil courts, only nine percent of respondents indicated that they were very confident that the results in civil courts are “just and fair” while 16 percent expressed no confidence that the results were fair. Eighty-three percent say that the side with the most money for lawyers usually wins. This holds true for all demographic groups: Democrats, Republicans, Independents, liberals, and conservatives. On the other hand, the 58 percent who expressed confidence in court decisions places the civil courts far ahead of Congress, the presidency, and even the church in other recent confidence polls.

Perhaps more troubling is the fact that majorities of respondents freely admitted that, in certain instances, their personal biases could affect their decisions as jurors. For instance, 57–59 percent say they would be inclined as jurors to favor individuals in cases against an insurance, oil, or financial company. Fifty-two percent said that if they had a bad consumer experience with a litigant, it could influence their decision as a juror.

In an interesting and perhaps counterintuitive response, the poll found that 64 percent prefer jury trials to bench trials even though 48 percent feel juries make decisions based upon personal opinion rather than facts and the law. Alternatively, 69 percent feel that judges base their decisions on facts and the law rather than personal opinion.

In an encouraging response, 75 percent of Americans see jury service as a civic duty rather than a burden and of those who had served, 81 percent say the experience was a positive one.

The above findings come from an independent, nonpartisan, national telephone survey conducted in August 2012 among a random scientific sample of adults. It employed rigorous methodology and balanced question wording to assess public attitudes on issues in civil law. It was conducted by Langer Research Associates, New York. Gary Langer is the former head of polling for ABC News and subscribes to the Code of Professional Ethics and Practices of the American Association for Public Opinion Research and the Principles of Disclosure of the National Council on Public Polls.

For the full report of the national survey as well as downloadable graphs and charts, please click here to go to the website for DRI’s Center for Law and Public Policy. For purposes of transparency and accessibility, a full data set of the survey and methodology will be available to journalists and researchers through the Roper Center for Public Opinion Research at the University of Connecticut.

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Ethics 20/20: The Impact of Technology

Posted on August 30, 2012 03:19 by J. Logan Murphy

Every day, we see the impact of technology on the practice of law. Blogs, social networking, electronically stored information, and other legal resources create enormous economies and unprecedented depth in our field. But with these advantages come unrecognized perils. The transparency and mobility of electronic information creates significant risks to clients, unless properly controlled. As part of the project to rein in technology in the practice of law, the American Bar Association launched an ambitious multi-year project called Ethics 20/20. One of the major goals of Ethics 20/20 was to modernize the rules of ethics and bring them into congruence with the state of technology.


At its most recent meeting, the ABA passed multiple resolutions amending the Model Rules of Professional Responsibility to reflect the evolution of technology in the practice of law. This article provides a brief overview of those amendments. Those who are more interested in the details of the amendments can click here to read the reports online.


Confidentiality When Using Computers
Resolution 105A makes changes to help lawyers understand how to protect client confidences when using new technology, including cloud computing, tablets, and smartphones. Though small, one of the most significant changes is included in Comment 6 to Rule 1.1 (Competence). The Rule now includes a requirement that “a lawyer should keep abreast of changes in the law and its practice, including the benefits and risks associated with relevant technology.” No longer can attorneys simply ignore developments in favor of staid methods of practice. To be competent, an attorney must work effectively with technology and keep alert to technological improvements and changes.

The amendment to Rule 1.6 (Confidentiality of Information) is probably the largest and most impactful rule change related to confidentiality. Now, Rule 1.6(c) requires attorneys to “make reasonable efforts to prevent the inadvertent or unauthorized disclosure of, or unauthorized access to, information relating the representation of a client.” The comments make it clear that attorneys are required to utilize reasonable safeguards to protect confidential information. These changes are geared toward the protection of electronic data, especially given the innumerable bits of sensitive information flying around every day.


Using Technology for Marketing
Resolution 105B was designed to help lawyers understand how the principles of attorney advertising already incorporated into the Rules are affected by the growth of Internet-based marketing and social networking. This particular resolution accomplishes three main goals. First, changes to Rule 1.18 offer guidance on how to market online without inadvertently forming an attorney-client relationship. Recent cases have demonstrated confusion on behalf of the general public regarding whether an attorney-client relationship is formed when the potential client emails the attorney or fills out a communication form on the attorney’s website. The amendments to Comment 2 of Rule 1.18 address the concern by stating that a person becomes a prospective client by “consulting” with a lawyer. While the existence of a consultation depends on the circumstances, the Comment eliminates potential passive liability to prospective clients. A consultation “does not occur if a person provides information to a lawyer in response to advertising that merely describes the lawyer’s education, experience, areas of practice, and contact information, or provides legal information of general interest.” But, if the lawyer actively invites information about a possible representation, the lawyer is probably stuck with a prospective client.

Second, the Rules contain a prohibition against paying others for a “recommendation,” and this Resolution modifies that prohibition to account for online lead generation services through chances to Comment 5 of Rule 7.2. Lawyers may now pay others for generating client leads, as long as the Internet-based lead generator does not “recommend” the lawyer. The lawyer is also responsible for the representations of the lead generator, with Comment 5 placing the onus on attorneys to ensure that the lead generator is not making statements that are inconsistent with the rules.

Finally, amendments to Rule 7.3 assist attorneys in determining when communications on the Internet, particularly through social networking sites, may constitute a “solicitation.” Only a “target communication initiated by the lawyer” directed to a “specific person” that “offers to provide” legal services is a solicitation. Communications to the general public, including Internet banners, are not solicitations, so feel free to jump on that Facebook advertising spot.


Outsourcing
Lawyers have been slow to adopt the economies of scale that outsourcing can provide, in part because of the perceived ethical dilemmas presented in outsourcing. Outsourcing can endanger confidential client information and presents a quandary over legal work being performed by attorneys not licensed in the United States. Resolution 105C encourages attorneys to ensure the efficiency, competence, and ethics of any outsourcing process. An entirely new comment is added to Rule 1.1, requiring the informed consent of the client to contract with any lawyer outside of the lawyer’s own firm. And, lest we forget, lawyers are always charged with supervising non-lawyers; that requirement does not abate simply because work is being outsourced to a foreign country. Comments 1 and 3 to Rule 5.3 incorporate this concept and apply the general rule to all non-lawyers outside of the lawyer’s own firm. The basic gist of the changes in Rule 105C is to encourage lawyers to keep a sharp eye on professionals hired from outside their own firm, and to work closely with clients in determining the proper scope of outside contracting and supervision. No surprise there—constant communication with the client is a harbinger of a durable and responsible attorney-client relationship.


Mobile Lawyers
A prevalent by-product of an informationally small, but geographically large, practice is the tendency of lawyers to move their practice. The world does indeed get smaller every year. No longer do lawyers move down the street; more and more, attorneys are moving their practice to different jurisdictions, and virtual law offices are sprouting in all states. The remaining resolutions that passed enable attorneys to establish a practice in another jurisdiction—subject to stringent information protection requirements—while pursuing admission in that jurisdiction. Resolutions 105D and 105E address the ABA Model Rule of Practice Pending Admission and the ABA Model Rule on Admission by Motion, respectively. With a few states signaling their intent to adopt a uniform bar exam, these model rules and their amendments continue the progress toward a more uniform practice of law. In case you have never encountered these model rules, or their state versions, their purpose is to allow experienced lawyers who have moved into a different jurisdiction to continue to practice while awaiting an expedited admission to the Bar. 

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As reported by InsideCounsel, the American Bar Association House of Delegates (“ABAHD”) recently approved an amended model rule stating that it is ethical for lawyers to disclose client information when trying to move from one firm to another.

Specifically, the rule states that it is ethical for an attorney in negotiations for a different job, as well as attorneys in merging firms, to disclose the identities of clients and the amount of business they generate because the information can help point out any conflicts of interest that might exist.  However, the model rule states that lawyers still should not reveal clients' financial information.

Although the model rule has been approved by the ABAHD, the rule is simply an advisory rule.  In addition, the rule provides little guidance for attorneys faced with the question of how much client information can be ethically revealed in states whose bar associations do not have rules covering this topic.  Thus, prior to revealing any information, lawyers should carefully consider and weigh this model rule against Model Rules of Professional Conduct 1.6 and 1.9.

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It is simply too easy for lawyers to quickly lose credibility within the bar and before the judiciary. It seems we've already lost this battle with much of the public, but within the profession I like to think we begin our careers with an undeserved presumption that most of us (at least those without the last name "Madoff") are straight shooters. This presumption should be nurtured and guarded for the gift it truly is.


A lawyer's individual reputation for honesty is as important, if not more important, than his or her intelligence or skill set.  Why? Most of us quickly learn that if we're out of our comfort zone skill-wise, we have choices.  We can involve another, more experienced practitioner.  Or we can double up on our research until we completely understand an issue or area.  Skills can be improved.  The same is not true for reputation.  Once our reputation for honesty is placed at risk, it is nearly impossible to fix.

The easiest way to lose credibility is almost too obvious to mention: to be untruthful, even about the most trivial detail. It's not necessary to falsify documents or manufacture evidence; a lawyer's reputation for honesty can be ruined simply by stretching the truth when "memorializing" a telephone conversation. We hang up, I read your letter, realize you've mischaracterized our discussion and from that point forward I don't trust a word you say. Worse, when my law partner mentions ten years from now that he's got a case against you, the first thought that comes to mind, which I surely share, is that you're not to be trusted. And just like that, you're no longer trusted.

Being untruthful with the court is even more dangerous.  Setting aside the risks of sanctions, contempt, complaints to the state bar, etc., judges have institutional memory which can follow you your entire career. Just as I'll tell my law partner that you can't be trusted, judges do talk, and have lunch together and, I am informed, discuss their cases and the lawyers appearing before them.  Let just one judge conclude that you are a lawyer capable of lying to the bench and that alone could devalue any statement you ever make in the same courthouse or even jurisdiction.

Many lawyers believe we only have our time and intelligence to sell on the open market.  I would add that neither time nor intelligence have any value at all without a reputation for honesty. Once we lose the trust of our colleagues and judges, everything about the practice of law becomes more difficult, especially winning cases and getting referrals.  Don't risk it.

as originally published at www.atcounseltable.com
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In the upcoming Annual Meeting of the ABA, the Commission of Ethics 20/20 will consider amending Model Rule 5.5, which addresses unauthorized practice of law issues.  Of particular concern is the issue of whether the Rule needs to be amended to address whether the proliferation of lawyers' use of technology allows them to maintain a "virtual practice" in a jurisdiction in which they are otherwise not licensed to practice.  The key issue centers around the question of how much "virtual practice" is sufficiently "systematic and continuous" to require an attorney to become licensed in a particular jurisdiction.

If you have seen the draft proposal to amend Model Rule 5.5, which was circulated in September 2011, but sent back to the drawing board because of feedback suggesting that it did more to cloud the issues than to clarify the issues, you probably felt the same way. 

In my humble opinion, at least for the time being, it may be much ado about nothing.  The rule as it stands appears to address most issues, and there probably needs to be considerably more in-depth analysis and study before any tweeking to the Rule occurs.  We've all dealt with pro hac vice issue, serving as and locating "local" counsel when necessary, and electronic filing hasn't really changed the process of being admitted, even if just temporarily, to a particular jurisdiction. Nonetheless, we have all seen how the practice of law has changed over the past ten to fifteen years, particularly as our dependence on electronic communication has multiplied exponentially, and this opinion could change as that dependence grows more and more.

 

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