Be Careful Helping your Friends – Sharing with Friends – Treating Staff and Litigants

When is a Lawyer just a Friend — in trouble?

Jameson Conrad was with a friend on New Year’s Eve, in Charleston WV. Conrad’s friend got into a dispute with another man, and used his gun to make his point. The shooting was caught on tape. Conrad then used his lawyerly skills to advise friend to “run,” he then kept friend’s cell phone and refused to identify friend when police asked.

When you are a fact witness, it is hard to claim a lawyer-client privilege, because the police think you are an “accessory to malicious wounding.” It might work, we will know in several months.

But, upon these facts, WV Bar Counsel alto thinks you are enough of a menace to make a prompt Complaint to the Investigation Commission, seeking suspension from the practice, and to report it when asked by the local paper.

H/T Gary Welsh.

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Who do YOU Trust with your Client’s Secrets?

It is only a little secret. Something you learned while working with the world’s most famous writer. Surely your wife’s best friend can be trusted not to tell what you should not have told her.  But she told, and now you pay, in a couple of ways.

JK Rowling has been known to write some pretty good books, sold millions of books, and movie tickets from the Harry Potter series.  She ought to be able to trust her secrets to her solicitors.  But Robert Galbraith’s identity was not safe with Christopher Gossage, one of her lawyers.  Robert Galbraith is the pseudonym Rowling used on a new book she wrote, trying to see if she could enjoy writing without the hype and expectations of her name.  She was displeased, even though the book sales jumped after the word was leaked by the trusted friend of Gossage’s wife.

The law firm fell on the sword, quickly admitting that Gossage had shared the information with Judith Callegari during a private conversation. “The disclosure was made in confidence to someone he trusted implicitly.”  Not a great judge of character there.

Who do you trust implicitly enough to turn your license over for their discretion? The Solicitors Regulation Authority in England fined Gossage £ 1,000. for the breach of confidentiality.  Rowlings charged even more.

There was a winner in this matter. “The Soldiers Charity” was the recipient of all the book proceeds, plus the settlement damages Gossage and his firm, as well as his trusted friend paid to Ms. Rowling. Nice touch.  Hard for a billionaire to get much in the way of sympathy for herself.

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Judge Suspended for Treatment of Staff, Lawyers and Litigants.

The Judge Kimberly Brown story is a big story in Indiana legal circles. She has been through a protracted hearing before the Master Panel to determine a recommended punishment, based on a multi-count complaint of judicial misconduct. She was reported to have mistreated staff, lawyers and litigants in unusual and contemptible ways.

The Master Panel has recommended her removal in spite of some clever legal maneuvering by her new lawyer-team, after firing her earlier team of lawyers.  Now the Supreme Court has temporarily suspended Judge Brown and will take further action in due course.  Her suspension, as recommended is with pay.

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Ted Waggoner will be offering the annual kickoff session to the IVY Tech Agricultural Seminar Series on Jan. 22, at the Cole campus in Logansport. The topic – Family Farm Ownership: What is the Right Solution for You and Your Family. For more information, contact Julie Byrd at IVY Tech, 765-459-0651 x 288.

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How Stupid is that Other Party?; Should I Push that Client?; Extra Punishment for Public Officials; Ogden Update

Legal writing experts tell lawyers to be careful with tone and expressions of disdain or dismissive attitudes towards opponents in motions and briefs.  And lawyers understand (usually) that what might work in traffic court should not be tried in Federal Circuit Courts of Appeals.  And lawyers who represent big clients, like State Farm Auto ought to expect extra scrutiny from courts and judges (mostly due to the respect courts often are suspected of giving to the biglaw lawyer types who represent the big companies.

Imagine what the discussion with General Counsel for State Farm was for the lawyers in Bennett v. State Farm earlier this week.  The Sixth Circuit Court of Appeals (one level below the US Supreme Court in the judicial hierarchy) mocked the insurance company’s lawyers for their brief opposing the efforts of the Bennetts to get what they had coming from Mrs. Bennett being struck while walking her dog.

The opening sentence of the opinion states:

There are good reasons not to call an opponent’s

argument “ridiculous,” which is what State Farm calls Barbara Bennett’s principal argument here. The reasons include civility; the near-certainty that overstatement will only push the reader away (especially when, as here, the hyperbole begins on page one of the brief); and that, even where the record supports an extreme modifier, “the better practice is usually to lay out the facts and let the court reach its own conclusions.”[citations omitted]  But here the biggest reason is more simple: the argument that State Farm derides as ridiculous is instead correct. (emphasis is added).

Oops.  That qualifies as a slapdown.  Now we don’t know which lawyer of the team of Richard M. Garner or Gregory H. Collins, both Ohio lawyers, gets credit for the brief, but the other probably had an opportunity to say “maybe we ought to read our client’s insurance policy before we ask the court to ignore the definition plaintiff is asking for.”

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Clients in dissolution cases can be difficult. they are going through a stressful time in their lives. They often have to deal with their lawyer, the spouse, the spouse’s lawyer, and maybe the kids.  you expect them to lose their cool on occasion.

Lawyers are to be the professionals, even when our client is not dealing well with matters.as well as we want.  Kokomo lawyer Dan May, a long time practitioner, forgot for a moment.

The details are sketchy, but include him shoving the client over the courtroom railing, a battery charge, a diversion agreement, and now a 60 days suspension with automatic reinstatement.

As Sgt. Esterhaus used to say:

http://www.youtube.com/watch?v=Jmg86CRBBtw

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We appreciate our public officials in strange ways.  We pay them less than they could make as practicing lawyers (at least that is the myth – see the SSF Conference Salary Survey report here from 2007).  Then when a public official has a bad moment, we hold her to a higher standard.

Lori Hittle is a part-time deputy prosecutor in Howard County.  She pleaded guilty to OVWI.  Took her punishment in court, got a month suspension from her job without pay, and now gets a public reprimand. That is a bit more than the normal lawyer gets for such an offense, often getting a private reprimand with JLAP provisions.

But we hold public officials to a stricter standard.

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Finally, Paul Ogden update.

I have commented on the Ogden disciplinary case several times, like here, and here. Paul writes about it on his blog with more regularity than most would. Tuesday Ogden said that the Disciplinary Commission is seeking a one year suspension in his post here. He follows up with more commentary in Thursday’s post here.

I will let Paul Ogden speak for himself.  The issues are complex, and important. As a lawyer, you need to think about them.  If you are not a lawyer, you ought to consider where your rights to speak freely are if the lawyers lose their rights.

Legal Websites with Comments – Strike Back at Critical Client? What are these Sites? Fake a Review?

Social Media is a Tool, You are a Lawyer, Don’t be the Fool

So a lawyer in the Chicago area Betty Tsamis, is active with AVVO, a lawyer rating site.  Her AVVO page is here. She has a 6.2 rating, pretty good.  Tsamis handled a case for a client, Rinehart and appealed his denial of Unemployment Benefits case against American Airlines, and the case did not go well, which happens.  Whose fault?  It depends on who you believe.  Client wrote an unfavorable review and said that he paid her fee, which she took “knowing full well” he would lose the case.

The trouble for the lawyer came about when Tsamis replied with facts and information that she got during the confidential client communications. The details are here. She stated in the reply to his review that he had beaten up a woman co-worker, and not advised her of that before she filed the appeal. (If you beat up co-workers, you usually do not get UE coverage).  The IL disciplinary office has filed charges for breaching Rule 1.6 of the RPC.  Tsamis still posts replies to critical comments, but they are now toned down.

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The Ratings Game – Martindale Hubbell to AVVO to Super Lawyer to Yelp, and beyond.

Lawyer ratings were once the sacred province of now absorbed publisher Martindale-Hubbell. Today there are several lawyer and law firm ratings sites,  Avvo (above) offers ratings on lawyers and other professionals. [full disclosure, my AVVO rating linked here]  AVVO seems the most aggressive of the new generation.  MH did the same kind of ratings, but in the old days, the rating was bound in a series of books taking up 5-6 feet of library shelf space and costing hundreds of dollars and updated yearly, but MH is now is found online at http://www.martindale.com {my martindale.com rating is here].  AVVO allows client comments, as does Martindale. Both sites focus on lawyers and other professionals.

Another new entrant in the legal and medical fields does it differently. SuperLawyers.com names what it calls the “super lawyers” in most of the states. It works with magazine publishers and sends out ad-filled supplements annually on lawyers nominated and selected as the best.  [full disclosure – I am told I have been nominated, but I have not been selected as a super lawyer (or as a colleague calls them “the superest duperest lawyers”) in Indiana]. There are several ethics opinions on the propriety of advertising the designation. Most states seem to have lost interest in prosecuting this issue, even though there are regulations on lawyer advertising.

Yelp offers webpages for most businesses in the country, in an online “yellow page” style that gives the business name, address, phone number, and then lets customers comment on every business in town, from spas to restaurants and lawyers. The business owner can claim the page and edit the information about the business.

Breach of Yelp’s Policy

San Francisco lawyer Julian McMillan stands accused of taking the review matter just a step further, by allegedly having his staff create and post favorable reviews.  Favorable reviews are hard to come by, and may have a positive economic benefit to the lawyer praised. As Ms. Tsamis can attest, unfavorable reviews may have more impact.

So Yelp claims that it monitors and prosecutes businesses and now lawyers who abuse the comments policy. It should be noted that McMillan responds that he had sued Yelp and won in the trial court on an advertising contract dispute.  He suggests this is payback by Yelp.

We will see how this comes out over the next few months.

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Ernie the Attorney’s take on these matters!

The leading blogger in the legal field, Ernie the Attorney and I were discussing the “dangerous tool” of social media last week.  I do not agree with ethics guru Stephen Gillers, that all lawyers should avoid social media, and who Ernie takes apart in this post (else I would not be posting here).

Any tool can be dangerous.  Lawyers get trained  to look out for danger in every area of life. I advocate removing dangerous tools from idiots and infants, who are found in lots of places.

I hope there are few idiots and no infants among the lawyers who are posting on any of the social media sites. But still be careful out there, and learn how to run spell checker on the site.

Neglecting Clients Here and There: Indiana; & New Jersey

Neglecting clients is a bad thing to do. Let’s learn the lesson at someone else’s experience, and not do it ourselves:

Indiana:

In 1997 Biomet, Inc. a worldwide ortho manufacturer from Warsaw IN hired Kent Frandsen, of Parr Richey law firm, to file a legal malpractice claim against Barnes & Thornburg for the way it handled a patent infringement case.  The firm filed the suit followed by, as you can imagine, lots of intrigue, including an interlocutory appeal decided in 2003.  After the Court of Appeals opinion approved the case moving forward, nothing happened on the case.

In 2006 B&T sought a Rule 41(E) dismissal that was heard, with an honest discussion of the delay at the hearing:

THE COURT: What has happened ? Why has nothing

happened since transfer wasn’t granted, sir?

COUNSEL: That’s a fair question, Your Honor. First of

all, I was stunned personally when the Court of Appeals

issued the decision it made. I was extremely busy in my

practice. This case takes a lot of time to put together. It has been one (1) of those cases where I couldn’t bring myself to dig into it enough to be ready to do what needs to be done. This is not an automobile accident case, Your Honor.This involves difficult issues that were involving patent litigation that frankly has been very uncomfortable for me and I don’t know that I’ve ever felt competent to deal with the underlying merits of the judgment that is at issue in this case. *** When that did not come, … I simply could not get to where I could take or have anyone else take the time to get into the merits of the case. I take full responsibility for it and we were in communication with Biomet. We indicated to our client that we would do things but we simply didn’t do them. We would get going on the case. Biomet seriously wants this case pursued and resolved on its merits. We’ve not been able to get that done. ***

THE COURT: … The question is if we talk about the

judicial system, why should I penalize this Defendant ?

Why should I penalize this Defendant because of what you have described as your inaction, sir ? I guess I want to try to understand that.

The court did not understand that, and the client did not either, later filing a malpractice case after the case vs. B&T was dismissed.  Biomet got a partial summary judgment v. the law firm and lawyer, and then Parr Richey appealed. The question was whether there was a duty and a breach, and it was decided (in a NFP opinion*) there was.  Other issues remained for trial.

*While NFP opinions have no precedential value in a court of law, they are great teaching tools in the hands of a blogger! 

Be careful taking on more than you and your firm are capable of handling.  Stay on the case even when things get busy or you get distracted.  The client is still counting on you.

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New Jersey

“They are pestering me!” “Their calls got nastier and nastier, and quite frankly I did not need that.” “I fired them [the client], told them to get a new lawyer!”  NJ’s Disciplinary Review Board did not take kindly to Victor Azar’s attitude about people who had hired him, paid him money and then got neglected.  The board objected to his defensive responses to the clients’ seemingly legitimate complaints.  He also withheld their files.

The report was complimentary about his skills in getting clients and their retainers, but suggested that the follow through lacked a lawyerly precision, and he “neglected, if not grossly neglected” the client’s interest and “engaged in a pattern of failing to communicate” with his clients.

Azar is facing a reprimand at DRC’s recommendation.

h/t Vic Indiano

Telling the Client’s Story; Drinking, Twice?; Calculated Fraud?

Must be Tempting

To know a juicy story, with sex, politics, and prominent people, and be forbidden to tell, is tough.  It is such a temptation that the authorities wrote a rule especially for lawyers, to threaten us not to reveal confidential information.  But Karl Rove is also a tempting target.  And there is money in writing books, so they say.

It is tough to deal with one temptation, but two, or three all at the same time?  Joseph Stork Smith, of Carmel, IN, did not handle the pressure well, apparently.  He decided to write the book, name the names, and tell the sordid stories that he got from his legal client. Some have speculated on who the client is, but the Indiana Supreme Court in its Order did not name her.  I respect that. And having read the opinion, it is pretty juicy writing for a per curiam decision.

Smith got a disbarment. End of the line for him.  Started practice in 1976, so early he is in his early 60s most likely.  Succumbed to temptations.

Maybe if he had not subtitled the book “Machiavelli’s Sexy Twin Sister”….

Once ought to be enough.

Allen County, IN Public Defender Mitchell Hicks, has seen the twice drunken arrestee too many times in the practice, he has to know better, but….“I screwed up,” he said.

A fight with a former client outside a bar… an unregistered gun… trouble. Arrested for a second alcohol offense, he took it like an adult (unlike so many defendants). Sentencing was as follows:

[Judge Fran] Gull ordered Hicks to serve 60 days at the Allen County Jail on the drunken driving charge but suspended 50 days of that sentence. She ordered him to serve 365 days on the charge of carrying a handgun without a license but suspended 275 days.

She then said he could serve his time in the county community corrections program and that his [driver’s] license will be suspended for 180 days.

100 days of home detention. No Disciplinary Action by the Indiana Supreme Court, yet.

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Biglaw lawyers ought to know!

Some firm names just ring out as BIGLAW, and among the biggest is Baker & McKinzie.  Biglaw firms have lots of people around, and they suggest that lots of people provide good protection for their clients. When you get billed for 10 lawyers work on your business matter, you should have especially good protection from the harms that some solo or other errant lawyer might commit.

Not in the case of Martin Weisberg!  He was sentenced to two years for committing “a calculate fraud and lies” to steal $1.3M from his securities clients.

The scheme was to put $30M of client’s money into a “trust account,” but he did not tell the clients that it was earning interest.  Lawyers use interest free or IOLTA trust accounts for handling small amounts of money for clients, if the interest that would be earned is not worth the time to set up the account.  The Rules co permit the earned interest be used for public purposes, instead of simply going to the bank. But when the amounts involved make it worth the time to open an interest earning trust account, the lawyer must do that.  Weinberg put $1.3M earned interest in his pocket.  That violates lots of laws, and lawyer rules.  He got caught. The Sentencing Order included:

 [T]wo years in prison,… three years of supervised release, 1,000 hours of community service, a $297,500 restitution order and a $250,000 forfeiture.

I always wonder why if the finding is $1.3M in losses, the restitution and forfeiture together do not equal at least $1.3M – plus interest.

Short Post – Working with Staff to Protect the Lawyer (and Staff jobs)

Not too much time this week, with the Indiana Solo and Small Firm Conference in French Lick. Proud to be a part of the planning for this event, and this year we have record attendance with lawyers.

Also this year for the first time we are bringing law office staff to the Conference, and a Staff Track day of education for the staff members, be they secretaries, legal assistants, paralegals or office managers. Those registered as ISBA Paralegals will be able to receive their 6 hour CLE requirement at the conference.

John Conlon and I are leading one staff session on “Ethics for Staff and the Lawyers Who Employ Them.”  And just in time, the Indiana Supreme Court issues its Order in Godshalk.

Godshalk either allowed his assistant to accept clients and  file appearances in his name, or did not adequately supervise an assistant who did that very act, causing a conflict of interest between two clients.

Good language in the Order about the need to have protections in place that will show a conflict between a criminal client and the witnesses who may testify against the client.

Other Cases on the agenda:

John and I will discuss Guideline 9 and Rule 5.3 of the RPC, and other supervision cases that ended up biting the lawyer:

In the Matter of George Paras (2001);

In the Matter of John Thrasher (1996);

In the Matter of Anonymous (2010)

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Godshalk got a public reprimand, no harm was suffered by either person involved.

The 2014 Solo and Small Firm Conference is already filing up with great speakers and break out leaders.  Put it on the calendar today for June 5-7, 2014 in French Lick.  Plan to bring your staff and your family.  A great time will be had.

Pretend you are a Supreme on DI cases; Duty when depressed; Sign Here Please; Filing Taxes is Timely

As a trial, I will be sharing the facts of a few DI cases, and poll the readers how they think the Court ruled, as punishment for the violations. Later in the blog entry I disclose the Court’s actual decision. Are you tougher than a Supreme?

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William Dittrich neglected several cases over a four-year period. The neglect included failing to do the work, refusing to respond to clients’ requests for information, not placing unearned fees in trust and failing to refund unearned fees.

He knew he had health and depression issues, but did not seek adequate treatment, and placed his interests ahead of his clients’ interests.

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Unsigned document to file with the court, client forgot to sign her name. What do you do? There are several wrong answers: file it unsigned, ask the staff to sign for the client, or worst of all – sign the client’s name to the document. Ray Robison chose the worst of the options.

Sisters were co-personal representatives, one signed all but one document in the stack of papers. Robison signed her name to the unsigned document, then sent them to the sister for her signatures. Sister noticed that the signature was not right.

Robison cooperated, withdrew without a fight, and the court acknowledged that his purpose was to avoid inconveniencing a client. But it was a violation of Rule 8.4 on fraud, dishonesty, deceit or misrepresentation.

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SC lawyer David Flowers failed to file tax returns for 2007-2010. An anonymous complainant reported these facts to the South Carolina Disciplinary Commission, and it got ugly. SC found he violated Rule 8.4 of the RPC, together with two other codes of lawyer conduct.

He admits he wants to give up the practice of law, and suffers from the stress of the practice. He has not yet paid the taxes due.

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Dittrich, got 90 day suspension with automatic reinstatement. Is working with JLAP according to the Opinion.

Robison got an agreement for a public reprimand accepted by the Court.

Flowers got 90 day “definite suspension” meaning that he must file for reinstatement, and he may not file until after he pays the taxes. There must have been some interest in figuring out who the “anonymous source” was, as it made the opinion.

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Tell me if you liked the polls in the body of the blog.

Sex causes trouble for lawyers and (sr.) judge; Theft and Tax Evasion are problems too.

New York lawyers

In NYC a law firm partner got sued for sexually harassing a junior lawyer in the firm. That happens and is hardly news anymore. What got the NY Times to react was – he not only denied it, but he filed a counterclaim. She says he had his way, against her will, several times and places. Her claim, she quits her job due to his actions, and sues him and the firm.

He comes firing back and gets headlines. He says he turned her down and called a cab to take her home after she suggested that “if he wanted, she would not say no!” He says she was spurned, and “Hell hath no fury…” This will be interesting to watch. Embedded in the Times article is the so-called “lurid complaint” and the counterclaim.

Indiana Sr. Judge and practicing lawyer

Lisa Traylor-Wolff is from near my office, and was the judge of the then two-county  (Fulton-Pulaski) County Court before we asked the legislature to separate the courts in the 1990s.  Several years ago the Pulaski County voters chose another to serve as judge, and she has been practicing since that election – probably 8-10 years ago.  She has served as Senior Judge under the Administrative Rules, #5(B), since her return to private practice.

She was appointed the public defender of S.W. a prisoner at the Miami Correctional Center, and according to the Supreme Court’s Published Order “engaged in an improper romantic relationship” with the client S.W.  That was a violation of Rule 1.7 (a)(2) of the Rules of Professional Conduct, and as she is qualified as a Sr. Judge, the actions also violated Rules 1.2 and 3.1(C) of the Indiana Code of Judicial Conduct.

For this Traylor-Wolff gets a lifetime suspension from serving in any judicial capacity, and a one year suspension from the practice of law, with all but 45 days withheld, and two years of probation. Among the probation terms are working with JLAP; stay away from S.W. (is he the victim?); no violations of RPC; and pay costs.

Marion County Prosecutor goes after admitted and alleged bad lawyers

Terry Curry is going after bad guys, and as prosecutor that is his (and his office’s) job.  Two recent targets are Indy lawyers David Rees and Steven Geller. 

Rees is alleged to have stolen estate funds, after eight years of administration of the estate of his client there was about $400,000 unaccounted for. He also was charged with Obstruction of Justice for filing a false “final accounting” that claimed the missing money was still in the account.

According to the Prosecutor’s press release, Rees has admitted the theft of $270,549 of estate funds, agreed to plead guilty and could face up to eight years for the Class C and D felonies.

Geller was charged with the failure to file multiple Indiana tax returns, earning an Evasion of Tax charge as a Class D Felony. Expect the federal charges to follow.

Neglect gets 3 years; Lawyer arrested for fraud?; Report your Sex Offender Client? NY says no!

There must have been neglect, statement of proof in the opinion would be nice.

Louis Denney eventually had four DI cases filed, one for each year of 2008, 2009, 2010, and finally one in 2011 that did him in. Unfortunately the Order reads more like a CCS entry, so it is hard to tell what all Denney did. We are told that the Hearing Officer, Judge Jeff Todd issued a 56 page report, Denney appealed and was heard by the Supreme Court, and the court adopted that Report, but we just get a snippet of info on Counts 2,5,7 and 9. The court found violations of Rules 1.2(a), 1.3, 1.4(a) & (b), 1.5(a), 1.15(d), 1.16(a)(3) & (d), 3.1, 3.2, 3.4(c), 4.4(a), 5.4(a), 8.1(b) and 8.4(b).  Denney was a busy guy, and apparently  neglected many of his cases. He did fight the allegations and the Hearing Officer report, but the final order does not offer many details.

There is no link to the 56 page report, so what we know is that Denney: charged unreasonable fees, neglected client cases, failed to do the work for which he was hired, failed to communicate, refused to return unearned fees, disobeyed court orders for accountings, and made scandalous and irrelevant accusations against a judge when the judge refused a continuance, in an attempt to remove the judge from the case.

As a result he is suspended from the practice for three years without automatic reinstatement, and we know  that Justice Rucker would have approved a one year suspension, and Justice David would have disbarred Denney.

What we don’t know that would be educational for lawyers who review disciplinary matters is: How many total counts were found against the respondent; were any counts found for the respondent; what time frame was Denney committing violations, and did he continue to violate the duty to clients after the 2008 complaint (which resulted from his failure to respond to grievance), and was the 2008 issue (or the ’09 or ’10 issues) wrapped into the 2011 matters? Were any clients made whole during this matter or will the ISBA’s Client’s Financial Assistance Fund be involved, if the clients are aware of this benefit?

I imagine writing disciplinary opinions is difficult, but we could learn more if more information and judicial reasoning was put on display in the opinions that are issued. Especially after a well fought hearing.

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Lawyer Arrested for Benefits Fraud…

Shawn Donahue pleaded not guilty to fraud in Harrison County recently.  The Louisville Courier Journal’s story called it welfare fraud, but it appears to be unemployment compensation benefits at issue.

The allegations are that Donahue received UE benefits while still working for a couple local entities that were paying him for legal work. It is alleged that he failed to disclose the earnings. Donahue’s lawyer, Bart Betteau predicted that his client would be cleared of the charges.

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NY Opinion, Lawyer not required to Report Inaccurate reports by Sex Offender

Legal services lawyer is contacted by potential client PC, who is a registered sex offender.  Lawyer is asked to review an administrative filing, made under penalty of perjury, to a state agency. She does, and in confirming the information submitted determines that the allegation of being a felon is inadequate, because pc did not disclose the sex offender status of Level Three Rapist, and pc did not register as required by law, under his properly spelled name.  PC  did not appear for appointment, so Agency decided not to represent him further, but did not report the evidence it found to the agency.

Should lawyer have reported the findings to the state agency? NY Ethics Committee says No! (see Opinion 963) Rules of Professional Conduct # 1.6 deals with confidentiality of client communications, and if PC had not become a client, Rule 1.18 carries duties to prospective clients. The rub is that Rule 3.3 “Conduct before a Tribunal” puts duties to disclose confidential information on lawyers, if the situation meets the standards. Here it is a close call, but since the lawyer did not appear before the tribunal, but only reviewed information submitted to it, and the submission was not by the lawyer, the committee finds that “It would not make sense to require a lawyer to take reasonable remedial measures regarding proceedings before a tribunal in which the lawyer has never appeared on behalf of the client.”

But does the lawyer have to report the failure to register properly with the police?  Rule 1.6(b)(2) in NY and in Indiana, is a permissive rule.  “A lawyer may reveal information relating to the representation of a client to the extent the lawyer reasonably believes necessary: (2) to prevent the client from committing a crime… and in furtherance of which the client has used or is using the lawyer’s services” (Ind. Rule).  NY’s Rule 1.6 does not have the “and in furtherance” language.  Indiana’s does which makes it even less likely that a disclosure would be appropriate even with the permissive disclosure language.

In NY the committee previously opined that past crimes cannot be revealed under this provision, only future crimes. Either way there is no mandatory disclosure, but a permissive disclosure in NY looks to be less risky than in Indiana, where there was no use of the lawyer’s services in furtherance of the misreporting.

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Jeffersonville INNS of Court meeting

Thursday March 21, Ted Waggoner will attend the Jeffersonville IN Inns of Court meeting at the invitation of Judge Terry Cody to speak on the Indiana Attorney Surrogate Rule, and its application to lawyers and law firms.  Ted chairs the Attorney Surrogate Rule Special Committee of the ISBA. 

Contact me for more information about this important rule.

IOLTA UPDATE if you accept Credit Cards: Circular 230 Disclosure: CBS Radio v. Emmis = DQ:

Credit Cards and IOLTA – New Problem

If you have been innovative over the past few years and started to accept credit card payments, and then posted them when required, directly to your IOLTA trust account (thanks Dan Reed and LawPay – a great ISBA member benefit) you better check your merchant account now.

Congress added Section 6050W to the code effective Jan 1, 2013.  As reported in LawBizzCoo, a legal business blog, there is a new requirement that if the credit card processor’s information is not exactly as contained in the IRS’s file (i.e. name change of firm, new address) the processor must withhold 28% of each deposit processed by the credit card company, including funds deposited in IOLTA.

The Disciplinary Commission may start getting notices of bounced checks from banks (required under the rules allowing banks to hold IOLTA funds) and lawyers may start getting certified letters from the Commission.  Those funds are not being mis-deposited, so you cannot just move them, they are held for potential taxes. You have to come up with the funds, and answer the grievance, in short order. Take a moment now and check your EIN letter and your Merchant Account Agreement. Fix it ASAP.

The same will happen to your general account, but that will not automatically involve the DC. It may later, but your landlord will not appreciate the rent check bouncing.

I discussed this with my office manager and she has been on top of it for a while, thanks to AffiniPay (a/k/a LawPay and Dan Reed). Whether you are with LawPay or some other provider, it is your skin in the game. Make sure everything lines up as it should.

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Tax abuse schemes are serious! Up to $190M serious for one lawyer.

The IRS issued one of its worst ideas a few years ago, called the Circular 230 Disclosure. Good in theory, to require lawyers to warn clients and potential clients not to construe information in a letter or email as being tax advice from the author to engage in a tax scheme, unless that is the purpose of the letter. Now a majority of lawyers’ posts of recipes or sports commentary carries a long disclaimer at the end that no client lacking an MBA could understand, and that most posters do not understand, or they would not prize their every utterance so highly!

But, sometimes folks should avoid doing what lawyers like Donna Guerin did, and review the tax code before writing tax schemes.

Ms. Guerin wrote a scheme so good she and her co-author claimed that her law firm’s clients could save millions of dollars in taxes. And she was no fly-by-night lawyer. A partner in the once prestigious BIG law firm Jenkins & Gilchrist, she recently pleaded guilt to criminal tax fraud, will go to prison for 8 years and has agreed to a penalty and restitution of $190 Million. Her partner entered his plea early and only has to pay $1.6 Million.

For my lawyer friends, be careful with the indiscriminate use of the Circular 230 language, and for the lawyers who do tax work, go back and read Circular 230 in-depth. Then be careful.

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Great fight, but Ice goes down.

Speaking last week on the Ethics of Developing and Representing Businesses, I was asked to discuss those lawyers who get disqualified from cases for overlooking and violating a Conflict of Interest. Rules 1.7 & 1.9 of the Indiana Rules of Professional Conduct are pretty clear when lawyers must not violate the pledge of loyalty we take to our clients (see Comment 1 to RPC 1.7). But lawyers continue to lose focus of their duty, often when one engagement is completed and a chance to earn a new fee surfaces in a “new” case.

I have had the call on the Ethics Hotline (facts changed to protect the calling lawyers) where a previous client went to a new lawyer, with a similar problem, and the same or similar issues. The old lawyer gets in the case, deciding that things have changed since the first time these folks met. Then that old lawyer just hates getting the call or letter saying “I think you have a conflict and need to get out of the case.”  Take that call seriously!

One of Indy’s premiere big firms, Ice Miller was hired by Walter Berger, an employee of Emmis Broadcasting Co., to help him in a senior management employment contract in 2002. Emmis had suggested Ice Miller to Berger. In 2005 Berger renewed that contract with Emmis, then several months later left Emmis to go to work for CBS Radio, Inc. Emmis did not like that, hired their lawyers, Another of Indy’s top big firms, Barnes & Thornburg to sue CBS for hiring Berger, (USDC, So. IN, Case No. 1:06-cv-0920) then it discharged B&T and hired Ice Miller to represent it in the case.

Ice shows up in the suit, and CBS and Berger demand it get out of the case due to an alleged conflict of interest. Ice, showing an incredible amount of chutzpah, lashed back with several defenses and a couple of accusations (which to an outsider read like they were based on client confidences), including that there is no conflict because “it is clear” that Berger breached the Emmis contract. The facts and issues were well briefed by both sides (materials in the ICLEF book) and Federal Judge Larry J. McKinney wrote a great explanation of the tests and the considerations involved in a DQ motion, in his 14 page Order. It is available on Pacer, or through Westlaw($$$).

Bottom line, loyalty is paramount, the issues are looked at from the client’s POV, and while case dicta and commentary makes it sound tough for the clients to prevail, in reality it is hard for a lawyer to win on this issue. There are a few outlier cases, but from my study, the issue, once raised, should be seen in the practical light of “how much is it worth to fight this issue, plus the possible ethics complaint, if you win? Is there enough in the case to pay all that?”  After looking at that, you should consider the option to prepare that Motion to Withdraw and have a talk with your now ex-client.