Powerpoint Chapter 6-2

1. Powerpoint Chapter 6-2 Duty to Third Parties, the Law, Lawyers and the Bar

2. Chapter 6-10 • After both parties had completed the presentation of evidence and arguments, the judge took under advisement a case tried without a jury. The case involved a difficult fact issue of causation and a difficult issue of law. After the case was under advisement for several weeks, the plaintiff's attorney heard rumors that the judge was having difficulty determining the issue of factual causation and was uncertain about the applicable law. Immediately after hearing these rumors, the attorney telephoned the judge, told her of the rumors he had heard, and asked the judge if she would like to reopen the case for additional evidence and briefing from both parties. Thereafter the judge reopened the case for further testimony and requested supplementary briefs from both parties. Was it proper for the attorney to communicate with the judge? • Yes, because both parties were given full opportunity to present their views on the issues in the case. • Yes, because the attorney did not make any suggestion as to how the judge should decide the matter. • No, because the attorney communicated with the judge on a pending matter without advising opposing counsel. • No, because the attorney caused the judge to reopen a case that had been taken under advisement.

3. Rule 3.5 Impartiality And Decorum Of The Tribunal • A lawyer shall not: • (a) seek to influence a judge, juror, prospective juror or other official by means prohibited by law; • (b) communicate ex parte with such a person during the proceeding unless authorized to do so by law or court order; • (c) communicate with a juror or prospective juror after discharge of the jury if: • (1) the communication is prohibited by law or court order; • (2) the juror has made known to the lawyer a desire not to communicate; or • (3) the communication involves misrepresentation, coercion, duress or harassment; or • (d) engage in conduct intended to disrupt a tribunal.

4. When are ex parte communications with judges permitted? • Restatement § 113 Comment (c) notes that such communications are permissible for routine scheduling matters. • In addition, Restatement • § 113 Comment (d) explains that such communications are often • permitted in “obtaining a temporary restraining order.” With regard • to the latter, Rule 3.3(d) imposes a duty upon lawyers to “inform the • tribunal of all material facts known to the lawyer that will enable the • tribunal to make an informed decision, whether or not the facts are • adverse.” Casebook p. 532.

5. Chapter 6-11 • An attorney represented a man in a case set for a jury trial. After the list of potential jurors was made available, the attorney hired a private investigator to interview the potential jurors and their family members concerning their relevant past experiences related to the subject matter of the action. The investigator did not inform the jurors or their family members that he was working on behalf of the attorney. The interviews were entirely voluntary and were not harassing. The attorney did not provide the report of the interviews to opposing counsel. He used the report to make decisions regarding jury selection. Is the attorney subject to discipline? • Yes, because the attorney did not provide the report of the interviews to opposing counsel. • Yes, because the investigator, at the attorney's direction, communicated with potential jurors prior to trial. • Yes, because the investigator did not inform the jurors or their family members that he was working on behalf of the attorney. • No, because the interviews were entirely voluntary and not harassing.

6. Rule 3.5 Impartiality And Decorum Of The Tribunal • A lawyer shall not: • (a) seek to influence a judge, juror, prospective juror or other official by means prohibited by law; • (b) communicate ex parte with such a person during the proceeding unless authorized to do so by law or court order; • (c) communicate with a juror or prospective juror after discharge of the jury if: • (1) the communication is prohibited by law or court order; • (2) the juror has made known to the lawyer a desire not to communicate; or • (3) the communication involves misrepresentation, coercion, duress or harassment; or • (d) engage in conduct intended to disrupt a tribunal.

7. Rule 8.4 Misconduct • It is professional misconduct for a lawyer to: • (a) violate or attempt to violate the Rules of Professional Conduct, knowingly assist or induce another to do so, or do so through the acts of another;

8. Chapter 6-12 • An attorney is a well-known tax lawyer and author. During congressional hearings on tax reform, the attorney testified to her personal belief and expert opinion on the pending reform package. She failed to disclose in her testimony that she was being compensated by a private client for her appearance. In her testimony, the attorney took the position favored by her client, but the position was also one that the attorney believed was in the public interest. Was it proper for the attorney to present this testimony without identifying her private client? • Yes, because the attorney believed that the position she advocated was in the public interest. • Yes, because Congress is interested in the content of the testimony and not who is paying the witness. • No, because a lawyer may not accept a fee for trying to influence legislative action. • No, because a lawyer who appears in a legislative hearing should identify the capacity in which the lawyer appears.

9. Rule 3.9 Advocate In Nonadjudicative Proceedings • A lawyer representing a client before a legislative body or administrative agency in a nonadjudicative proceeding shall disclose that the appearance is in a representative capacity and shall conform to the provisions of Rules 3.3(a) through (c), 3.4(a) through (c), and 3.5.

10. 6-13 • Attorney is a well-known, highly skilled litigator. Attorney's practice is in an area of law in which the trial proceedings are heard by the court without a jury. In an interview with a prospective client, Attorney said, "I make certain that I give the campaign committee of every candidate for elective judicial office more money than any other lawyer gives, whether it's $500 or $5,000. Judges know who helped them get elected." The prospective client did not retain Attorney. Is Attorney subject to discipline? • Yes, if Attorney's contributions are made without consideration of candidates' merits. • Yes, because Attorney implied that Attorney receives favored treatment by judges. • No, if Attorney's statements were true. • No, because the prospective client did not retain Attorney.

11. Rule 8.4 Misconduct • It is professional misconduct for a lawyer to: • (a) violate or attempt to violate the Rules of Professional Conduct, knowingly assist or induce another to do so, or do so through the acts of another; • (b) commit a criminal act that reflects adversely on the lawyer's honesty, trustworthiness or fitness as a lawyer in other respects; • (c) engage in conduct involving dishonesty, fraud, deceit or misrepresentation; • (d) engage in conduct that is prejudicial to the administration of justice; • (e) state or imply an ability to influence improperly a government agency or official or to achieve results by means that violate the Rules of Professional Conduct or other law; or • (f) knowingly assist a judge or judicial officer in conduct that is a violation of applicable rules of judicial conduct or other law. • AdvocateRule 3.5 Impartiality And Decorum Of The Tribunal • A lawyer shall not: • (a) seek to influence a judge, juror, prospective juror or other official by means prohibited by law;

12. Chapter 6-14 • Attorney represents Defendant, a prominent businessman, in a civil paternity suit brought by Plaintiff, who was formerly Defendant's employee. Blood tests did not exclude Defendant's paternity, and the case is being tried before a jury. The result turns on questions of fact. Defendant has steadfastly denied that he had sexual relations with Plaintiff, while Plaintiff has testified that they had sexual relations while on business trips and in her home. The trial has generated great public interest and is closely followed by the news media. When Plaintiff completed her testimony, Attorney was interviewed by a newspaper reporter. Which of the following statements, if believed by the attorney to be true, would be proper for attorney to make. I."As stated in our pleadings, we expect to prove that other men could be the father of Plaintiff's child." II."We have scientific medical tests proving that Defendant is sterile." III."We have been unable to locate several people whose testimony will be helpful to us, and I implore them to contact me immediately." • II only • III only • I and III, but not II • I, II, and III

13. Rule 3.6 • (a) A lawyer who is participating or has participated in the investigation or litigation of a matter shall not make an extrajudicial statement that the lawyer knows or reasonably should know will be disseminated by means of public communication and will have a substantial likelihood of materially prejudicing an adjudicative proceeding in the matter. • (b) Notwithstanding paragraph (a), a lawyer may state: • (1) the claim, offense or defense involved and, except when prohibited by law, the identity of the persons involved; • (2) information contained in a public record; • (3) that an investigation of a matter is in progress; • (4) the scheduling or result of any step in litigation; • (5) a request for assistance in obtaining evidence and information necessary thereto; • (6) a warning of danger concerning the behavior of a person involved, when there is reason to believe that there exists the likelihood of substantial harm to an individual or to the public interest; and • (7) in a criminal case, in addition to subparagraphs (1) through (6): • (i) the identity, residence, occupation and family status of the accused; • (ii) if the accused has not been apprehended, information necessary to aid in apprehension of that person; • (iii) the fact, time and place of arrest; and • (iv) the identity of investigating and arresting officers or agencies and the length of the investigation. • (c) Notwithstanding paragraph (a), a lawyer may make a statement that a reasonable lawyer would believe is required to protect a client from the substantial undue prejudicial effect of recent publicity not initiated by the lawyer or the lawyer's client. A statement made pursuant to this paragraph shall be limited to such information as is necessary to mitigate the recent adverse publicity.

14. Gentile v. State Bar of Nevada • Gentile holds press conference stating that “the evidence demonstrated his client’s innocence,” that the likely culprit was a police detective, and that “other victims were not credible.” • Nevada disciplines. • Violation under Rule 3.6 (a) and (b)? • Supreme Court upholds Nevada rule substantially similar to Rule 3.6 but limits it to “attorney[] speech that will have a “substantial likelihood of materially prejudicing an adjudicative proceeding.” Not demonstrated here and, as applied, Nevada rule void for vagueness. • Rule 3.6 (c)?

15. Chapter 6-15 • An attorney regularly appears before a trial court judge who is running for reelection in six months. Over the past year, the attorney had noticed that the judge has become increasingly ill tempered on the bench. Not only is the judge abrupt and critical of lawyers appearing before him, he is also rude and abusive to litigants. On more than one occasion, the judge has thrown his gavel across the courtroom in a fit of temper. The judge's conduct on the bench is often the subject of discussion whenever a group of lawyers meets. Some lawyers are automatically filing requests for judicial substitution whenever a case in which they are to appear is assigned to the judge. The attorney discussed the matter with her law partners, who rarely make court appearances. The attorney's law partners suggested that she, too, file a request for judicial substitution whenever one of her cases is assigned to the judge. In addition, the attorney and her law partners discussed the possibility of reporting to the judge to the appropriate disciplinary authority but are concerned that this would alienate the other judges to whom their cases are assigned. The attorney has reluctantly started filing for substitution of the judge in every one of her cases to which the judge is assigned but she has taken no further action. Is the attorney subject to discipline? • Yes, because the attorney failed to inform the appropriate authorities about the judge's conduct. • Yes, because, by filing automatic requests for substitution of the judge, the attorney undermined public confidence in the administration of justice. • No, because the attorney has a duty to represent her clients zealously. • No, because the judge is running for reelection and may not be reelected.

16. Rule 8.3(a) A lawyer who knows that another lawyer has committed a violation of the Rules of Professional Conduct that raises a substantial question as to that lawyer's honesty, trustworthiness or fitness as a lawyer in other respects, shall inform the appropriate professional authority. • (b) A lawyer who knows that a judge has committed a violation of applicable rules of judicial conduct that raises a substantial question as to the judge's fitness for office shall inform the appropriate authority. • (c) This Rule does not require disclosure of information otherwise protected by Rule 1.6 or information gained by a lawyer or judge while participating in an approved lawyers assistance program.

17. Professionalism?

18. 6-16 • An attorney practices law in the same community as a lawyer who is running for election as a state judge. The attorney has frequently observed the judicial candidate's courtroom demeanor in litigated cases. Based on those experiences, the attorney believes that the judicial candidate does not have a proper judicial temperament. A local news reporter asked the attorney how he would rate the candidate, and the attorney responded in good faith that he believed the candidate was unsuited for the bench and lacked the proper judicial temperament for a judge. A local newspaper with a wide circulation quoted the attorney's remarks. Were the attorney's remarks proper? • Yes, because the attorney was not seeking judicial office. • Yes, because the attorney believed the candidate was unsuited for the bench. • No, because the remarks serve to bring the judiciary into disrepute. • No, because a lawyer should not publicly comment on candidates for judicial office.

19. Rule 8.2(a) A lawyer shall not make a statement that the lawyer knows to be false or with reckless disregard as to its truth or falsity concerning the qualifications or integrity of a judge, adjudicatory officer or public legal officer, or of a candidate for election or appointment to judicial or legal office.

20. In re Holzman v. Standing Comm. v. Yagman • Holtzman: Court upholds discipline of DA for relying on ADA’s account in alleging that Judge asked sexual assault victim to demonstrate the assault in robing room. Holds that “criticism adversely affects the administration of justice and adversely reflects on the attorney’s judgment and, consequently her ability to practice law.” • Query: Rule 8.2 (a): (a) A lawyer shall not make a statement that the lawyer knows to be false or with reckless disregard as to its truth or falsity concerning the qualifications or integrity of a judge, adjudicatory officer or public legal officer, or of a candidate for election or appointment to judicial or legal office. • Yagman: Court rejects discipline for lawyer who described judge as “anti-semitic,” “dishonest,” and “drunk on the bench.” Court held that first two statements were protected as opinion and that “drunk on the bench” had not been disproven. Controversial decision.

21. Kunstler v. Galligan: Contempt • Bill Kunstler • Lawyer describes judge’s decision as “outrageous” and tells judge “[y]ou have exhibited what your partisanship is . . . . You are a disgrace to the bench.” • Court holds lawyer in contempt for “[d]isorderly, contemptuous, or insolent behavior . . . Directly tending to interrupt court proceedings, or to impair respect to its authority.” See also Rule 3.5 (d) (“engag[ing] in conduct intended to disrupt a tribunal”) • Kunstler later disciplined for “committing a ‘serious crime’ in violation of the disciplinary rules.” See Rule 8.4 (b)(“commit[ting] a criminal act that reflects adversely on the lawyer's honesty, trustworthiness or fitness as a lawyer in other respects”)

22. 6-17 • An attorney represented a respondent in proceedings instituted by a child protection services agency to establish the paternity of a child and to recover past-due child support. The mother of the child had refused to file a complaint, had refused to retain a lawyer, and in fact had asked that the agency not file any action whatsoever. However, state law permitted the agency to commence paternity and support proceedings in its own name in such circumstances. The attorney contacted the mother without the knowledge or consent of the agency or its lawyers. The attorney identified himself to the mother as "an officer of the court" and told the mother that he was investigating the matter. Based upon what she told him, the attorney prepared and the mother signed an affidavit truthfully stating that the respondent was not the father of the child. Is the attorney subject to discipline? • Yes, because the attorney acted without the knowledge or consent of the agency or its lawyers. • Yes, because the attorney implied that he was disinterested in the matter. • No, because all of the attorney's statements to the mother were true. • No, because the attorney did not give the mother legal advice.

23. Rule 4.3 • In dealing on behalf of a client with a person who is not represented by counsel, a lawyer shall not state or imply that the lawyer is disinterested. When the lawyer knows or reasonably should know that the unrepresented person misunderstands the lawyer’s role in the matter, the lawyer shall make reasonable efforts to correct the misunderstanding. The lawyer shall not give legal advice to an unrepresented person, other than the advice to secure counsel, if the lawyer knows or reasonably should know that the interests of such a person are or have a reasonable possibility of being in conflict with the interests of the client.

24. 6-18 • John Lawyer represents Larry Landlord in a nonpayment eviction suit against Thomas Tenant. At court, the case is called and Lawyer asks Tenant to step outside to talk. Tenant tells Lawyer he would like to pay his rent to Landlord but that for two months Landlord has refused to repair his broken refrigerator. Lawyer tells Tenant that he has a legal obligation to pay his rent and will be evicted if he doesn't do so. Lawyer does not advise Tenant that Tenant may have potential claims against Landlord under the warranty of habitability. Lawyer suggests that if Tenant signs a stipulation agreeing to pay the back rent, Landlord will look into the repair. Has John Lawyer committed a disciplinary violation? • Yes • No

25. Rule 4.3 • In dealing on behalf of a client with a person who is not represented by counsel, a lawyer shall not state or imply that the lawyer is disinterested. When the lawyer knows or reasonably should know that the unrepresented person misunderstands the lawyer’s role in the matter, the lawyer shall make reasonable efforts to correct the misunderstanding. The lawyer shall not give legal advice to an unrepresented person, other than the advice to secure counsel, if the lawyer knows or reasonably should know that the interests of such a person are or have a reasonable possibility of being in conflict with the interests of the client.

26. 6-19 • A seller was engaged in negotiations to sell his interest in a large tract of land to a buyer who was unrepresented in the transaction. Before the seller went out of town for a few days, he told the buyer to call his attorney if the buyer had any questions about the property. The buyer called the seller's attorney, responded that, based on his experience handling real estate transactions in the neighborhood, the buyer would be getting a lot of property for the price. At the time the attorney spoke to the buyer, the attorney knew that there was a defect in the title and that the buyer's attempt to purchase the seller's interest in the tract would not result in the buyer's acquisition of any interest in the property. Relying on the attorney's assurance, the buyer agreed to make the purchase. Shortly after the sale closed, the buyer discovered that his acquisition was worthless. Is the attorney subject to civil liability to the buyer? • Yes, because the attorney knowingly made false representations of fact to the buyer. • Yes, because the attorney implied that his opinion regarding the value of the property was a disinterested opinion. • No, because the attorney's statement that the buyer would be getting a lot of property for the money was a statement of opinion regarding the value of the property. • No, because the buyer was not a client of the attorney.

27. Rule 4.1 • In the course of representing a client a lawyer shall not knowingly: • (a) make a false statement of material fact or law to a third person; or • (b) fail to disclose a material fact to a third person when disclosure is necessary to avoid assisting a criminal or fraudulent act by a client, unless disclosure is prohibited by Rule 1.6.

28. 6-20 • An attorney represented a seller in negotiating the sale of his ice cream parlor. The seller told the attorney in confidence that, although the business had once been very profitable, recent profits had been stable but modest. As the negotiations proceeded, the buyer appeared to be losing interest in the deal. Hoping to restore the buyer's interest, the attorney stated, "The ice cream business is every American's dream: happy kids, steady profits, and a clear conscience." The buyer bought the ice cream parlor but was disappointed when his own profits proved to be modest. Is the attorney subject to discipline? • Yes, because the attorney made a false statement of fact to the buyer. • Yes, because the attorney exaggerated the profitability of the business. • No, because the attorney represented the seller, not the buyer. • No, because the attorney's statement constitutes acceptable puffing in negotiations.

29. Rule 4.1 • In the course of representing a client a lawyer shall not knowingly: • (a) make a false statement of material fact or law to a third person; or • (b) fail to disclose a material fact to a third person when disclosure is necessary to avoid assisting a criminal or fraudulent act by a client, unless disclosure is prohibited by Rule 1.6. • Comment [2]: Under generally accepted conventions in negotiation, certain types of statements ordinarily are not taken as statements of material fact. Estimates of price or value placed on the subject of a transaction and a party’s intentions as to an acceptable settlement of a claim are ordinarily in this category, and so is the existence of an undisclosed principal except where nondisclosure of the principal would constitute fraud.

30. 6-21 • An attorney represented a plaintiff in a civil lawsuit against a defendant who was represented by other counsel. In the course of developing the plaintiff's case, the attorney discovered evidence that she reasonably believed showed that the defendant had committed a crime. The attorney felt that the defendant's crime should be reported to local prosecutorial authorities. After full disclosure, the plaintiff consented to the attorney's doing so. Without advising the defendant's counsel, the attorney informed the local prosecutor of her findings, but she sought no advantage in the civil suit from her actions. The defendant was subsequently indicted, tried, and acquitted of the offense. Was the attorney's disclosure to prosecutorial authorities proper? • Yes, because the attorney reasonably believed the defendant was guilty of a crime. • Yes, because the attorney was required to report knowledge of criminal conduct when that knowledge was obtained through unprivileged sources • No, because the attorney did not advise the other counsel of her disclosure before making it. • No, because the plaintiff's civil suit against the defendant was still pending

31. The Model Code “expressly prohibit[ed] a lawyer from threatening to use, or using, the criminal process solely to enforce a private civil claim.” DR 7-105(A). • No equivalent Model Rule. • ABA Formal Op. 92-363 (1992): “a threat to bring criminal charges for the purpose of advancing a civil claim would violate the Model Rules if the criminal wrongdoing were unrelated to the client’s civil claim, if the lawyer did not believe both the civil claim and the potential criminal charges to be well-founded, or if the threat constituted an attempt to exert or suggest improper influence over the criminal process.”

32. Chapter 6-22 • An attorney is employed by a client who is a fugitive from justice under indictment for armed robbery. The attorney, after thorough legal research and investigation of the facts furnished by the client, reasonably believes the indictment is fatally defective and should be dismissed as a matter of law. The attorney advised the client of his opinion and urged the client to surrender. The client told the attorney that she would not surrender. The attorney informed the district attorney that he represented the client and that he had counseled her to surrender but that she refused to follow his advice. The attorney has not advised his client on how to avoid arrest and prosecution and does not know where she is hiding. Is the attorney subject to discipline if he continues to represent the client? • Yes, because the client is engaging in continuing illegal conduct. • Yes, because the client refused to accept the attorney's advice and surrender. • No, because the attorney is not counseling the client to avoid arrest and prosecution. • No, because the attorney believes the indictment is defective.

33. Rule 1.2(d) • A lawyer shall not counsel a client to engage, or assist a client, in conduct that the lawyer knows is criminal or fraudulent, but a lawyer may discuss the legal consequences of any proposed course of conduct with a client and may counsel or assist a client to make a good faith effort to determine the validity, scope, meaning or application of the law.

34. Enron

35. 6-23 • For many years, Attorney has served as outside counsel to Corp, a corporation. Shortly after a change in management, Attorney discovered what she reasonably believed to be a material misstatement in a document she had drafted that Attorney was about to file on Corp's behalf with a government agency. Attorney advised Corp's Board of Directors that filing the document was probably criminal. However, the Board disagreed that there was any material misstatement and directed Attorney to proceed with the filing. Attorney did so. It later becomes known that the document did indeed include a material misstatement. Attorney faces: • No liability • Discipline • Potential civil and criminal liability • Discipline, as well as potential civil and criminal liability

36. Rule 1.6 • (b) 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 or fraud that is reasonably certain to result in substantial injury to the financial interests or property of another and in furtherance of which the client has used or is using the lawyer's services; • (3) to prevent, mitigate or rectify substantial injury to the financial interests or property of another that is reasonably certain to result or has resulted from the client's commission of a crime or fraud in furtherance of which the client has used the lawyer's services;

37. Rule 1.2 (d) • A lawyer shall not counsel a client to engage, or assist a client, in conduct that the lawyer knows is criminal or fraudulent, but a lawyer may discuss the legal consequences of any proposed course of conduct with a client and may counsel or assist a client to make a good faith effort to determine the validity, scope, meaning or application of the law.

38. Rule 1.13 • (b) If a lawyer for an organization knows that an officer, employee or other person associated with the organization is engaged in action, intends to act or refuses to act in a matter related to the representation that is a violation of a legal obligation to the organization, or a violation of law that reasonably might be imputed to the organization, and that is likely to result in substantial injury to the organization, then the lawyer shall proceed as is reasonably necessary in the best interest of the organization. Unless the lawyer reasonably believes that it is not necessary in the best interest of the organization to do so, the lawyer shall refer the matter to higher authority in the organization, including, if warranted by the circumstances to the highest authority that can act on behalf of the organization as determined by applicable law. • (c) Except as provided in paragraph (d), if • (1) despite the lawyer's efforts in accordance with paragraph (b) the highest authority that can act on behalf of the organization insists upon or fails to address in a timely and appropriate manner an action, or a refusal to act, that is clearly a violation of law, and • (2) the lawyer reasonably believes that the violation is reasonably certain to result in substantial injury to the organization, • then the lawyer may reveal information relating to the representation whether or not Rule 1.6 permits such disclosure, but only if and to the extent the lawyer reasonably believes necessary to prevent substantial injury to the organization.

39. Rule 1.16 • Except as stated in paragraph (c), a lawyer shall not represent a client or, where representation has commenced, shall withdraw from the representation of a client if: • (1) the representation will result in violation of the rules of professional conduct or other law;

40. Hazard Test (1) The client is engaged in a course of conduct that violates the criminal law or is an intentional violation of a civil obligation, other than failure to perform a contract or failure to sustain a good faith claim to property;(2) The lawyer has knowledge of the facts sufficient to reasonably discern that the client's course of conduct is such a violation; and(3) The lawyer facilitates the client's course of conduct either by giving advice that encourages the client to pursue the conduct or indicates how to reduce the risks of detection, or by performing an act that substantially furthers the course of conduct. • .

41. 6-24 • L&C is representing S&L, a savings and loan, in defending against Government Regulator's investigation. Associate brings to Partner's attention that a board resolution previously filed with Government Regulator has been back-dated to give the appearance of contemporaneous board approval of a particular transaction. Associate urges disclosure. Based upon review of the relevant law and rules, which are not clear, Partner decides against disclosure and instructs Associate not to disclose. Partner and Associate make arguments to Government Regulator predicated on the veracity of the particular board resolution. It is later determined that both the law and rules required disclosure of the back-dating to the government. Which of the following is true: • Partner and Associate face discipline but not liability. • Partner and Associate face liability but not discipline. • Partner and Associate face both discipline and liability. • Partner faces discipline and liability; Associate faces liability only. • Partner faces liability only; Associate faces discipline and liability.

42. Rule 5.2 (subordinate lawyer) • (a) A lawyer is bound by the Rules of Professional Conduct notwithstanding that the lawyer acted at the direction of another person. • (b) A subordinate lawyer does not violate the Rules of Professional Conduct if that lawyer acts in accordance with a supervisory lawyer's reasonable resolution of an arguable question of professional duty.

43. 6-25 • Lincoln & Center ("L&C") wrote an opinion letter for a transaction between Ronen Corp & Serenity, a partnership. A key issue was whether Serenity was independent of Ronen, which required that at least 3% of its equity was independent of Ronen. L&C did not investigate the independent investors, but if it had it would have discovered that they were paper entities lacking in capital. The deal is later found to be unlawful. L&C potentially faces: • Sanctions under the Sarbanes-Oxley regulations • Sanctions under Sarbanes Oxley regulations and discipline under the Rules • Discipline under the Rules • None of the above

44. Sarbanes-Oxley • The Sarbanes-Oxley Regulations, 17 C.F.R. § 205.3, Casebook p. • 595, require lawyers “appearing and practicing before the • Commission” to report “evidence of a material violation . . . • EITHER to the issuer’s chief legal officer . . . or to both the issuer’s chief legal officer • and its chief executive officer.” • Unless the “attorney who has made • the report . . . reasonably believes that the chief legal officer or the • chief executive officer . . . has provided an appropriate response within • a reasonable time, the attorney shall report the evidence of a material • violation to: (i) [t]he audit committee of the issuer’s board of directors, • (ii) [a]nother committee” of independent directors “if the issuer’s board • of directors has no audit committee[;]” or “[t]he issuer’s board of • directors . . . if the board of directors” has no committee of • independent directors. 17 CFR § 205.3 (b). • OR If the client “has • established a qualified legal compliance committee[,]” the lawyer may • report “evidence of a material violation” directly to that committee and • need not follow-up as required if the lawyer reports to the chief legal • officer and/or chief executive officer. 17 CFR § 205.3 (c). • (Note that the attorney • has no obligation to report ‘[i]f the attorney was retained or directed . . • . to investigate such evidence of a material violation. . . [or] to assert . . • . a colorable defense on behalf of the issuer[.]”)

45. Rule 1.6 • (b) 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 or fraud that is reasonably certain to result in substantial injury to the financial interests or property of another and in furtherance of which the client has used or is using the lawyer's services; • (3) to prevent, mitigate or rectify substantial injury to the financial interests or property of another that is reasonably certain to result or has resulted from the client's commission of a crime or fraud in furtherance of which the client has used the lawyer's services;

46. Rule 1.2 (d) • A lawyer shall not counsel a client to engage, or assist a client, in conduct that the lawyer knows is criminal or fraudulent, but a lawyer may discuss the legal consequences of any proposed course of conduct with a client and may counsel or assist a client to make a good faith effort to determine the validity, scope, meaning or application of the law.

47. Rule 1.13 • (b) If a lawyer for an organization knows that an officer, employee or other person associated with the organization is engaged in action, intends to act or refuses to act in a matter related to the representation that is a violation of a legal obligation to the organization, or a violation of law that reasonably might be imputed to the organization, and that is likely to result in substantial injury to the organization, then the lawyer shall proceed as is reasonably necessary in the best interest of the organization. Unless the lawyer reasonably believes that it is not necessary in the best interest of the organization to do so, the lawyer shall refer the matter to higher authority in the organization, including, if warranted by the circumstances to the highest authority that can act on behalf of the organization as determined by applicable law. • (c) Except as provided in paragraph (d), if • (1) despite the lawyer's efforts in accordance with paragraph (b) the highest authority that can act on behalf of the organization insists upon or fails to address in a timely and appropriate manner an action, or a refusal to act, that is clearly a violation of law, and • (2) the lawyer reasonably believes that the violation is reasonably certain to result in substantial injury to the organization, • then the lawyer may reveal information relating to the representation whether or not Rule 1.6 permits such disclosure, but only if and to the extent the lawyer reasonably believes necessary to prevent substantial injury to the organization.

48. Rule 1.16 • Except as stated in paragraph (c), a lawyer shall not represent a client or, where representation has commenced, shall withdraw from the representation of a client if: • (1) the representation will result in violation of the rules of professional conduct or other law;

49. Rule 1.1 • A lawyer shall provide competent representation to a client. Competent representation requires the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation. • Comment [5]: Competent handling of a particular matter includes inquiry into and analysis of the factual and legal elements of the problem, and use of methods and procedures meeting the standards of competent practitioners. It also includes adequate preparation. The required attention and preparation are determined in part by what is at stake; major litigation and complex transactions ordinarily require more extensive treatment than matters of lesser complexity and consequence.