Ch. 1 Regulation of Lawyers A. Institutions that regulate pp. 24-34

1. Ch. 1 Regulation of LawyersA. Institutions that regulate pp. 24-34 1. Highest state courts: exclusive & inherent authority over lawyers practicing in state, whether licensed or pro hac vice. (cf. negative inherent powers; no complaint if legal profession (LP), State Ct likes). a. State bar ass’ns (“comprehensive” or “mandatory” v. voluntary; impt differences). 37 states, including OK & Tex: Mandatory) b. County & city bars: voluntary; may have political clout.

2. A. Institutions that regulate pp. 32-34 • Lawyer Disciplinary Agencies: depends; where State Ct deems worthy of credit. • ABA: mixed trade & regulatory functions. • Model Rules: only examples; states free to adopt or reject. • Only binding authority: law school accreditation standards; “persuasive” assessment of federal judicial nominees.

3. Concept of self-regulation: ABA MRPC Preamble [1] A lawyer [L], as a member of the LP, is a representative of clients, an officer of the legal system and a public citizen having special responsibility for the quality of justice. [10] . . . LP is largely self-governing. Although other professions also have been granted powers of self-government, the LP is unique. . . because of the close relationship between the profession and the processes of government and law enforcement.. . . manifested in the fact that ultimate authority over the legal profession is vested largely in the courts.

4. Chart, Roles of Branches of Govt. pp. 28-29 Usual principle: legal rules made by democratically elected representatives. Inherent powers doctrine: exception, courts make rules, aspect of administrative authority to over courts. Nevertheless intrusions by legislative & executive branches; mixed results.

5. Misc. “other regulators” pp. 38-45 Federal & State administrative agencies, e.g., SEC, IRS, FTC, OTS (‘92 Kaye Scholer, asset freeze) Prosecutors **Malpractice carriers (education to prevent unwanted risk, loss prevention, power through rate-setting **Legal employers, “ethical infrastructure” **Institutional Clients (Cs), e.g. insurance co’s, corporate Cs, ACC as trade group speaking for them

6. Nutshell History of American Legal Ethics Regulation & Law of Lawyering See hand-out on overhead, material pp. 45-48 Hoffman (1936) Sharswood (1854-1884) *Alabama: 1st written Code, post-Civil War ABA 1908 Canons of Ethics, supp. Pp. 661-673 ’60s, Lewis Powell ABA President > Model Code of Prof’l Responsibility (CPR adopted by HOD1969>1982) Watergate, John Dean’s testimony + other probs. > KutakComm’n > 1st set of Model Rules (Restatement format) “Ethics 2000” Veasey, Del. CJ chaired, Nancy Moore Chief Reporter “Ethics 20/20” re globalization & technology

7. State Rules Most work off current Model from ABA, although deviations. *e2k: strong push for national uniformity so easier for interstate practice L’s to find variations. Largely successful, although still significant differences among states re certain Rules, e.g. on Advertising; Circuit split, SCOTUS ready to take on new case?

8. Traditional attributes of “profession” pp. 5-6 • Extensive technical training • High degree of skill & care • Technical, special language & procedure beyond understanding of laypersons • Licensure (monopoly over categories of conduct) • Altruism, commitment to serving others, including those who cannot afford to pay monopoly rates

9. Clicker: Given that definition, why did YOU decide to attend law school? a. Always been my dream inspired by live person or fictional character. b. practical, economy not ready to put my undergraduate skills to work for amount of pay I need to live. • Expectation of parents, other family that will need advanced degree. • Need to “park myself” while economy improved.

10. Clicker: Are you pleased with your decision to attend OU Law? • yes, good place to park, acquire knowledge, skills, continue friendships from undergraduate, make new ones. • Yes, intellectually challenging, opened eyes to new horizons, possible lines of work. • No, I’m bored or frustrated but don’t have other good options at present. • No, I don’t like the competition, incurring debt load concerns me.

11. Prob. 1-1 The New Country pp. 55-56 • Newly independent; some wealthy but per capita income < $1000K. No established legal system. • Q: should it create legal system where are lawyers? • If so, how should they be trained? • If so, any type of licensing system? Limit on number of licenses? Basis for determining who gets? Bar exam? Other criteria?

12. Admission to Practice Common standards p. 53 Passing score on MBE & MPRE(multiple choice) (states set minimum passing score) NCBE marketing essay packages & scoring services, practical skill components. Satisfy that are currently “have good moral character & fit to practice law”

13. Character & fitness inquiry, Q’s pp. 57-58 • Why do they want all this tedious information? Reasonably related to fitness to practice? • Every address last 10 years • Every past job • Every party to civil action (include copy of complaint, answer, disposition) • States vary, e.g. TX & NC want copy of EVERY law school where applied. OK: only law schools that you attended. Q: What will bar admission staff do with it?

14. Mental Health Preamble Conference “does not, by its questions, seek information that is fairly characterized as situational counseling.” E.g., stress, domestic, grief, eating or sleeping disorders . . . [not germane to whether qualified to practice] What ARE they looking for? What will they do with it?

15. Mental Health Questions pp. 68-71 • Preamble • Purpose: determine current fitness • Mere fact of treatment is ordinarily not basis to deny admission • Encourage applicants to realize when need help & get it, unafraid of consequences

16. Clicker Question: NCBE Character & Fitness Questions • W/in last 5 years, diagnosed or treated for bipolar disorder, schizophrenia, paranoia, or any other psychotic disorder. Clicker Q: Is this a proper question, with rational nexus to the practice of law? • Yes • No • Debatable

17. NCBE Character & Fitness Questions • A. Do you currently have any condition or impairment (including, but not limited to, substance abuse, alcohol abuse, or a mental, emotional or nervous disorder or condition) which in any way currently affects, or if untreated could affect, your ability to practice law in a competent and professional matter? • B. If yes . . . Are the limitations caused [thereby] reduced or ameliorated b/c receive ongoing treatment or participate in monitoring program?

18. Chapter 2 Lawyer LiabilityA. Professional Discipline pp. 79-100 • 1908 Canons: seldom used for (except v. p.i. lawyers, grievances filed by opposing counsel) • 1970 Clark Commission, p. 46: “disciplinary action practically nonexistent; practices & procedures antiquated, agencies powerless” [cronyism, fox/henhouse] Urged bold reforms. • 1998 McKay Report (Okla. had just revised disciplinary procedures, “do-over” not feasible. Now more “professionalized.”

24. B. 3. Reporting Misconduct by other LsSession # 5 pp. 100-18 RPC 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. “Land of Lincoln” In reHimmel, 533 N.E.2d 790 (Ill. 1988)(Stamos, J.) pp. 106-110 Facts?Himmel’sconduct at issue? IL (voluntary; excellent regulatory system. Proced’l history? Grogan charged seeking 1 yr. suspension (picture p. 106); panel rec’dn? Supreme Court?

25. In re Himmell (IL. 1998) • Not privileged (details communicated by L & by Client (C) to non-privileged communications • C cannot (c/n) order L to refrain from reporting • Great impact nationwide, although rare for discipline if fail to report. • N. 82: next 2 years, 25% of IL reports from other Ls. N.B. OK 2012, 41% of all grievances from Ls!

26. Important takeaway p. 109 • This is LAW, not gut issue. Treat as such. Research law of relevant jurisdiction(s). • “don’t risk making a wrong decision . . . And . . . Make sure you have adequate malpractice insurance before reporting another attorney against the wishes of a Client.”

27. Problem 2-2 Exculpatory Evidencepp. 110-11 • You & Bobby: close friends since law school • Both moved from same Prosecutor’s office to do prosecution to do criminal defense where each sole practitioner • Went out 5 years ago, Bobby confided that had fatal illness, few months left. Also confessed that he suppressed exculpatory Brady evidence when both constitutional cases & MRPC 3.8(d) required voluntary disclosure. Though you encouraged, he didn’t reveal information sufficient for you to identify & contact Δ’s L while still on death row. • Now, newspapers covered pending execution and realized this was the case. Q: what are your options& risks now? What would you so?

28. In reRiehlmann, 891 So.2d 1239 (La. 2005) ●You (Riehlmann) contacted ΔL, gave affidavit about old conversation with Bobby. You testified at hearing for new trial, Δ released after 18 years on death row, exoneratedbecause he was “factually innocent.” ● LA Disciplinary authorities in New Orleans opened file v. you, for failure to reveal ●Public reprimand; in mitigation phase of discipline recognized that you were distracted b/c difficult personal time.

29. Facts sound familiar? • π John Thompson brought § 1983 action for damages v. long-time elected NOLA prosecutor Harry Connick Sr.; federal habeas verdict awarded $14 M. • Connick v. Thompson, 131 S.Ct. 1350 (2011), Thomas, J. wrote majority opinion reversing verdict & holding that no liability attached absent strong proof that pattern & practice of poor training on Bradyduties; rationale assumed sufficient coverage in law school, clinic, CLE’s, thus no independent duty of prosecutor to train & retrain lawyers.

30. Ch. 2 B. 3. b. Lawyers responsibility for ethical misconduct of colleagues, superiorsProblem 2-3 The Little Hearingpp. 117-13 New L, 1st week on first job for sole practitioner in immigration law, tight job market. Boss assigned to represent C at high stakes immigration hearing (deport to Rwanda). Knew no relevant law or procedure; “we can talk about on train” but he napped instead. Supervisory style: “sink or swim.” Hearing disaster (no interpreter, new L felt totally inadequate) Secretary: 1500 open files, more than single person can handle. Do the best you can. Modest fees entitle to modest amount of work, preparation. (MRPC 1.1) Boss: Do the best you can. Modest fees entitle to modest amount of work, preparation (MRPC1.1). Assigned 2 hearings next day. What should she do?

31. Recent disciplinary case In re Phillips (Ariz., 2010) Founder & managing partner of Phillips & Associates suspended 6 months + 2 yrs probation for many violations of RPC 5.1(a), 5.3(a) and 7.1. High volume practice: criminal defense, bankruptcy, personal injury. Employed 38 lawyers, 228 nonlawyers. Junior lawyer testified that upon hiring, she became immediately responsible for 540 cases.

32. c. Legal protections for subordinate lawyers? Wrongful discharge action? Subordinate’s ethical duties RPC 5.2 (a) subordinate bound notwithstanding that acted at direction of another. . . (b) unless acted in accordance w/ supervisor’s reasonable resolution of arguable question of professional duty. RPC 8.3, 8.4 and all other rules

33. Wieder v. Scalapp. 120-21 609 N.E.2d 105 (NY Ct App. 1992) ­*Associate “at will” employee, m/n be fired in retaliation for complying with duty to report another lawyer’s dishonest conduct. * implied undertaking that associate and firm will practice in accordance with ethical standards; stated claim for breach of contract.

34. Contrast, Jacobson v. Knepper & Moga,106 N.E.2d 491 (Ill. 1998) pp. 121-22 Individual lawyer's responsibilities to comply with Rules of Professional Conduct, including Rules 3.3, 8.3 [Himmel], and 8.4( a) was sufficient protection of public interest. Unnecessary to recognize the tort of retaliatory discharge when associate terminated for raising internal concerns about the firm's persistent violation of venue requirements. 

35. Some improved protections for whistleblowing associates pp. 122-34 Kelly v. Hunton & Williams, 199 WL 408416 (E.D.N.Y., 1999) pp. 122-23 See FBI Wanted notice p. 124 3 associates observed & reported Wolas’ billing fraud; all 3 fired, 2 sued, only Peter K. recovered. What internal corrective efforts taken? What happened? Why fail? What would you have done if you were Peter Kelly?

36. Kelly v. Hunton & Williams, 199 WL 408416 (E.D.N.Y., 1999) pp. 122-23 • Tr. Ct. ruling? • Legal basis, analysis?

37. Peter Kelly: lessons learned • Do not rely on either firm managers OR on firm clients to do the right thing if it might affect the money they made. • Never compromise on an issue you see as a matter of right & wrong, because it will bite you in the backside every time.

38. Ch. 2 B. Civil Liability of Lawyers1. Legal Malpractice pp.135-140 • Reading: compact nutshell • N. 121, P. 135 Mallen & Smith (multi-volume treatise, great table of contents, index in back on cases & secondary authorities; annual updates) • Legal malpractice (LM): umbrella term • Usual tort elements p. 135 • Case w/in case, causation (Palsgraf) • Disagree w/ text, in OK, still hard to find π L, Expert Witness (EW)

39. Tort v. K? • OK still uncertain: Worsham v. Nix, circa 1990 (OK Ct. Civ. App.) • Privity: most states & OK allow t/p to recover if disappointed legatee under failed will (e.g. not testamentary formalities). Not TX. • Fact specific, e.g., where L failed to document properly partnership documents. • m/b signif. differences: especially punitive damages

40. B. Civil liability of Lawyers pp. 135-55 “Legal malpractice”: UMBRELLA term, subtle but important differences. Most cases: liability to client or successors in interest. Tort (negl., intentional tort) duty, breach, actual & proximate cause, damages Breach of K Breach of fiduciary duty

41. Possible Remedies • Compensatory damages • Maybe (m/b) punitive damages • Injunctive relief • Rescind contract • M/b fee forfeiture • If statutory violation, m/b treble damages, attorneys’ fees

42. Risky Business Practices (top 10 listp.137) • Conflicts of interest (COI)*** • Where present, ordinary tort easily “morphed” into breach of fiduciary duty. • Don’t advise or represent family members or friends! • Suefor unpaid fee: check 1st w/ your carrier! • Accept matters beyond what’s reasonable (esp. small/sole pract’rs, take all comers to pay bills) • Business transactions with clients • Vicarious liability for others in firm; poor internal monitoring

43. Risky practice areas p. 138 • P.i. (π, increasingly Δ) > 22% • Real estate transactions 20% • Domestic relations 10% • Estate, trust, probate 10% Q: what do these fields have in common?

44. Fiduciary • Position of trust & confidence • Safeguard property, information • Put other’s interests above own • Act in utmost honesty & good faith

45. Possible liability to limited categories of non-clients • Intended beneficiaries of will where lawyer’s negligence caused it to fail. OK: have standing. TX: no, privity still required. • Greycas, Inc. v. Proud, 926 F.2d 1560 (7th ‘87) p. 140, n. 139. Bank required “no lien” letter as condition of granting loan. Lawyer relied on docs. from Client, false. C defaulted, debt unsecured > recovered full amt from L b/c negligent misrepresentation.

46. 2. Malpractice Insurance (ins) pp. 140-42Recall: INS carriers effective regulators • Only Oregon requires coverage; recent study shows Ls happy with captive carrier. • Recent data: about 80% OK Ls have ins.! • ~ (about) ½ states require lawyers to disclose (somewhere, somehow) whether or not they have malpractice insurance. • Okla. & Tex.: “captive carriers” (underwrite only for lawyers licensed in state). Lawyers free to buy from private carrier. • Oklahoma Attorneys Mutual Insurance Co.(OAMIC) • Texas Lawyers Insurance Exchange (TLIE)

47. Policy exclusions p. 142 • Intentional torts • Restitution of fees, fines, penalties, punitive damages • Conduct outside “practice of law” • Claims where L is also owner of client company • Employment discrimination, law firm internal disputes. N.B. Starting w/ OAMIC, some carriers cover discipline defense. Why? Practical reasons?

48. C. Criminal liability of lawyers pp. 144-48 High flyers, hard falls. GREED prevailing theme. Harvey Meyerson (prosecuted while Peter Kelly at Hunton & Williams): 70 months prison (mail & wire fraud, overbilling) Bill Lerach, Milberg Weissp. 145 & fn. 157 (paid investors to serve as named class representatives, plead to $251Mkick-back scheme; disbarred, 19 months prison). Now: mostly sweet life. William J. Anton (multiple counts embezzlement, 10 years Okla. DOC)

49. New Era of Ls’ Criminal Liability? • Corporate general counsels (backdating stock options) • Robo-signing? • More “ordinary” crimes (embezzlement, drug use, possession, dealing, bribery, witness-tampering) Takeaway: Ls subject to same law as general public

50. D. Client protection funds pp. 148-54 • LIMITED compensation for $$$$ loss to Cs by dishonest Lswhere L dead, mentally incompetent or dead • Great variation among U.S. jurisdictions. • OK: Very hard to locate R’s, some shockingly unfair • Created by S.Ct., OBA C Trust Fund Committee (Cm’tee) • $100K/year (dues); maximum annual payout + interest on $1Mreserve. • Reality: only pay $100K/yr, distribute pro rata. NEVER MADE WHOLE!!