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.  

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?

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.

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.”  

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.

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.

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.

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.

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.

In addition to their work for their own clients in their own areas of expertise, some professionals also serve as expert witnesses in litigation.  They employ their knowledge and experience in their chosen field to analyze issues and render opinions for one or more parties to a lawsuit.  Like in any other aspect of their work, a professional serving as an expert can act negligently and make mistakes.  Sometimes these mistakes cause litigation problems for the party the professional has been retained to assist.  What happens when the professional is sued for his or her work as an expert?  What are the public policy implications of holding an expert witness liable for mistakes made in the litigation or conversely rendering the witness immune from suit?

A professional generally owes his or her client a duty of care to use the same amount of care, skill and proficiency commonly used by ordinarily skillful, careful and prudent professionals in the professional's community. See, e.g., Michaels v. CH2M Hill, Inc., 257 P.3d 532, 542 (Wash. 2011); Murphy v. A.A. Mathews, a Division of CRS Group Engineers, Inc., 841 S.W.2d 671, 674 (Mo. 1992).  Clearly, a professional retained to perform work as an expert witness in litigation owes his or her client a duty of care – a duty that can certainly be breached.

Some jurisdictions, however, have held that an expert witness's actions and testimony performed during the course of litigation are privileged.  In those jurisdictions, that privilege derives from the doctrine of witness immunity.

The Doctrine of Witness Immunity

As the Missouri Supreme Court has noted: "An immunity is a freedom from suit or liability.  The underlying premise of all immunities is that 'though the defendant might be a wrongdoer, social values of great importance require[d] that the defendant escape liability.'" Id. (quoting Prosser and Keeton on Torts 1032 (5^th ed. 1984)).  The immunity for witnesses in judicial proceedings from liability for damages related to their testimony originated in English common law.See Briscoe v. LaHue, 460 U.S. 325, 332 (U.S. 1983)(citation omitted).  The basis for the immunity was the concern that, if subject to subsequent liability, a witness may self-censor his or her testimony – either by altering their testimony for fear or liability or failing to appear to testify at all. Id.  This is not to say courts have not considered the potential for harm resulting from false testimony.  Rather, courts have noted that the reliability of a witness's testimony "is ensured by his oath, the hazard of cross-examination and the threat of prosecution for perjury." Bruce v. Byrne-Stevens & Associates Engineers, Inc., 776 P.2d 666, 667 (Wash. 1989) (citing Briscoe, 460 U.S. at 332).

The immunity first arose in the context of defamation actions based on statements made by witnesses or other parties in the context of a court proceedings. Murphy, 841 S.W.2d at 675.  Different jurisdictions, however, extended the immunity in varying degrees based on the circumstances of the defamatory statement. Id. at 675-76.

Does the Doctrine Apply to Expert Witnesses?

The Seventh Circuit Court of Appeals has noted that witness immunity is particularly designed to protect and encourage disinterested lay witnesses. MacGregor v. Rutberg, 478 F.3d 790, 792 (7^th Cir. 2007).   The court noted that because "they have no stake in the case and cannot be paid more than a nominal fee for testifying, [lay witnesses] would be highly reluctant to testify if the threat of a defamation suit hung over their heads." Id.  But what about an expert witness hired specifically to provide opinion testimony in a judicial proceeding?  Are they entitled to the same protection?

The Majority View Is No Immunity

The majority of courts to consider the issue in that context have held that so-called "friendly experts" are not entitled to blanket immunity for their work in preparing and communicating their opinions in litigation.  See, e.g., Marrogi v. Howard, 805 So. 2d 1118, 1128-29 (La. 2002).  InMarrogi, the Supreme Court of Louisiana analyzed whether the policy arguments used to justify the witness immunity doctrine apply in the context of a claim against an expert hired by the plaintiff in the underlying matter. It noted that the objective of encouraging forthright testimony in court "is not advanced by immunizing the incompetence of a party's retained expert witness simply because he or she provides expert services, including testimony, in relation to a judicial proceeding." Id. at 1131.

Some of the courts that have held that hired experts are not immune from suit by their client have based their reasoning on the distinction between the expert's testimony and the work leading up to that testimony.  In Pollock v. Panjabi, 781 A.2d 518 (Conn. Super. 2000), the court held that an expert witness was not entitled to such immunity, noting that the plaintiffs were not complaining about what the expert said; rather, the plaintiffs asserted that their hired expert failed to "perform work as agreed upon, according to scientific principles as to which there are no competing schools of thought." Id. at 525-26; see also Murphy, 841 S.W.2d at 680-81("These experts do not usually act solely as witnesses, but perform substantial pretrial work.").  The court held that there must be a nexus between the claimed immunity, the fact-finding function of the court and the interest in having the expert speak freely. Id. at 526.

California also recognizes the exception of friendly experts from the protection of witness immunity.  In Mattco Forge, Inc. v. Arthur Young & Co., 5 Cal. App. 4^th 392 (1992), the court held in favor of the plaintiff company which had sued experts it hired to perform litigation support accounting work. The plaintiff's underlying suit was dismissed allegedly based on negligent work performed by the experts. Id. at 395-96.  In its opinion, the court raised the issue of access to the courts as a policy reason in favor of the exception. Id.at 403-04.  Citing the facts of the case before it, the court reasoned that if an expert's negligence caused dismissal of the client's suit before trial, granting immunity to that expert would not expand access to the courts. Id. at 404.

The Minority Viewpoint: Immunity For Friendly Experts

While the majority of jurisdictions to consider the issue have found that expert witnesses should not be immune from suit by their client for negligence, some courts have reasoned that the immunity should attach in such situations.  The most prevalently cited opinion on this side of the issue is Bruce v. Byrne-Stevens & Associates Engineers, Inc., 776 P.2d 666 (Wash. 1989).  In that case, the Supreme Court of Washington held in favor an engineer sued by a client for negligently rendering opinions on damages issues in prior litigation.  In addressing many of the same policy issues discussed in the cases listed above, the Bruce court found that immunity of experts would encourage them to be more careful in their work and result in more reliable testimony. Id. at 670.  It stated:

Civil liability is too blunt an instrument to achieve much of a gain in reliability in the arcane and complex calculations and judgments which expert witnesses are called upon to make.  The threat of liability seems more likely to result in experts offering opinions motivated by litigants' interests rather than professional standards and in driving all but

the full-time expert out of the courtroom.

Id.  The court also discussed the alleged distinction between the expert's testimony and the work leading up to the testimony. It held that to grant immunity solely to the expert's testimony but not to the basis for that testimony would undermine the policies underlying the immunity in the first place. Id. at 672; see also Panitz v. Behrend, 632 A.2d 562, 565 (Pa. Super Ct. 1993).

Some courts have held in favor of an expert witness who has failed to provide helpful testimony to his or her client at trial, though not based on the doctrine of witness immunity.See Griffith v. Harris, 116 N.W.2d 133, 135 (Wis. 1962)(noting that "a contract [between a party and a witness] creating an obligation not only to appear but also to testify in a certain manner on behalf of a party to a lawsuit, is against public policy");Shaffer v. Donegan, 585 N.E.2d 854, 860 (Ohio Ct. App. 1990)(same); Curtis v. Wolfe, 513 N.E.2d 1139, 1141-42 (Ill. App. 1987)(same).

What About Immunity From Disciplinary Actions?

Even in jurisdictions that afford professionals witness immunity, the risk of a disciplinary action – as opposed to civil liability – may still exist.  In Kentucky State Bd. of Licensure for Professional Engineers and Land Surveyors v. Curd, -- S.W.3d --, 2012 WL 512403 (Ky. App. Feb. 17, 2012), the Court addressed the argument made by an engineer who had appealed a suspension handed down by his state's licensure board for giving dishonest testimony as an expert witness in a quiet title action.  Id. at *9-*10.  The engineer argued that subjecting experts to disciplinary action based on their testimony would affect experts' opinion and have a consequent chilling effect on the administration of justice. Id. at *9.  The Court rejected this argument, distinguishing between an expert being sued civilly and one being subjected to professional discipline pursuant to a state statute in administrative proceeding. Id.at *10.

Conclusion

While the majority of jurisdictions who have considered the argument have found no immunity for friendly experts, there is a valid position – outlined in the Bruce opinion – that immunity should apply if this issue arises in a jurisdiction that has been silent on the issue.  Because many courts have never expressed an opinion on the matter, the arguments raised in Bruce should be available to many attorneys defending professionals in this context.