2017 Ethics update UT-Battelle Labor & Employment Training

1. 2017 Ethics updateUT-BattelleLabor & Employment Training UT College of Law Professor Alex Long

2. Introduction Program Format & Question Lineup

3. Today’s Program • Questions (sometimes loosely) based on recent cases and items in the news. • Tennessee Professional Conduct Rules will be our governing authority. • Answer with Your Clicker. • Discussion. Prizes. Fun!

4. Question Lineup • Stopping Truckers Fuel Stop Fraud • Intermission • Engaging in UPL from the Comfort of Your Office • Women Can Be Especially Good at Lying • No Win for Walwyn • Better Not Call Saul

5. Stopping Truckers Fuel Stop Fraud

6. Truckers Fuel Stop Fraud • You are in-house counsel for Trucker’s Fuel Stop, Inc., the nation’s second largest truck stop chain. • You have worked closely with the company’s CEO, Big Bob Hanson • Family-run business. • 70% owned by Hanson family members who are also board members • 30% TFS employees • You are negotiating a rebate contract with a customer when you notice the numbers don’t add up • You speak to an employee in the billing department who, to your surprise, explains how the fraud works.

7. Truckers Fuel Stop Fraud • The employee explains why customers are unlikely to discover the fraud. • “We’ve saved $12.5 million so far in the last two years! • Employee was ordered to cook the books by Jim Upjohn, the head of the billing department

8. A preliminary question: who is the client?

9. Who is your client? • Truckers Fuel Stop • Big Bob Hanson • Truckers Fuel Stop and Big Bob Hanson • The minority shareholders Bonus: Why does this question matter?

10. You investigate … • Before proceeding further, you decide to speak to Jim Upjohn. • Jim: “It’s good that I’m talking to a lawyer. This is all confidential, right?” • You: “You should just tell me everything you’ve done. You aren’t likely to face any legal charges.”

11. Have you violated any rules of professional conduct? • Yes, the rule about ________ • Probably, but I’m not sure why. • No, this seems fine.

12. Tennessee RPC 4.3 • 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. 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.

13. Upjohn Warning • 1) lawyer represents the organization and not the individual; • 2) privilege belongs only to the organization; • 3) organization may waive privilege; • 4) individual should keep the conversation confidential; and • 5) individual may wish to consult his or her own attorney.

14. What now? • After investigating, you are convinced that TFS employees have been defrauding customers on the orders of Jim Upjohn. • You decide you can no longer ethically negotiate the rebate contract with the customer. • What are your ethical obligations?

15. What are your ethical obligations? • Refer the matter to a higher authority in TFS, including, if necessary, Big Bob Hanson. • Notify the customers who have been defrauded. • Both A & B. • Nothing.

16. Tennessee RPC 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 … related to the representation that is … 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.

17. What now? • Pursuant to Rule 1.13, you go all the way up the corporate ladder to Big Bob Hanson who tells you to “mind your own business and let this matter drop.” • He tells you that the company will negotiate the rebate contract without your help. • What are your ethical obligations?

18. What are your ethical obligations? • You must notify the customers who have been defrauded. • You may notify the customers who have been defrauded. • You may notify the customer TFS is still negotiating with. • Nothing.

19. The lawsuits begin … • Word of TFS’ fraud soon leaks. Lawsuits are filed. • A lawyer for one of he defrauded customers poses as a newspaper reporter and speaks to current and former TFS employees in an attempt to gather information prior to the start of discovery. • Talks to Jim Upjohn

20. Is the lawyer subject to discipline? • Yes because ______. • Probably, but I’m not sure why. • No.

21. Possible Rule Violations • 4.1(a): In the course of representing a client, a lawyer shall not knowingly make a false statement of material fact or law to a third person. • 4.2: In representing a client, a lawyer shall not communicate about the subject of the representation with a person the lawyer knows to be represented by another lawyer in the matter, unless the lawyer has the consent of the other lawyer or is authorized to do so by law or a court order. • Rule 4.2, Comment 7: • Current employees: in the case of a represented organization, the rule applies to a member of the governing board, an officer or managerial agent or employee, or an agent or employee who supervises or directs the organization's lawyer concerning the matter, has authority to contractually obligate the organization with respect to the matter, or otherwise participates substantially in the determination of the organization's position in the matter.

22. Possible Rule Violations • 4.1(a): In the course of representing a client, a lawyer shall not knowingly make a false statement of material fact or law to a third person. • 4.2: In representing a client, a lawyer shall not communicate about the subject of the representation with a person the lawyer knows to be represented by another lawyer in the matter, unless the lawyer has the consent of the other lawyer or is authorized to do so by law or a court order. • Rule 4.2, Comment 7: • Former employees: • Consent of the organization's lawyer is not required for communication with a former agent or employee. • In communicating with a current or former agent or employee of an organization, a lawyer shall not solicit or assist in the breach of any duty of confidentiality owed by the agent to the organization.

23. Intermission

24. Which of the following was not grounds for discipline in a real attorney disciplinary case from the past year? • Arizona attorney offered client a line of cocaine after a settlement conference. • Tennessee attorney forged the signature of a judge in a divorce matter. • Virginia attorney was charged with vandalism and cutting down neighbor’s 100-year-old tree. • Tennessee attorney violated protective order by cyberstalking former girlfriend/escort.

25. Engaging in the Unauthorized Practice of Law From the Comfort of Your Own Office

26. You Love Your Mother-In-Law • You are licensed in and live in Tennessee • Your mother-in-law lives in Minnesota where she runs a small business • She receives a demand letter from the lawyer of a former employee. • Employee took a company laptop when fired and won’t return it.

27. Helping Your Mother-in-Law • She’s still shopping for a lawyer, but asks for your help re: the laptop • Communications with plaintiff’s lawyer • All by email • All from your office in Tennessee • “By the way, are you licensed in Minnesota?” • “I’m not licensed in Minnesota, but I will associate with local counsel if I need to file suit.”

28. Are you engaged in the practice of law? • Yes, this is the practice of law. • No, this is not the practice of law because ______.

29. Are you engaged in the practice of law in Minnesota? • Yes, even though I was not physically located there. • No, I was engaged in the practice of law in Tennessee.

30. Minnesota RPC 5.5 • (a) A lawyer shall not practice law in a jurisdiction in violation of the regulation of the legal profession in that jurisdiction, or assist another in doing so, except that a lawyer admitted to practice in Minnesota does not violate this rule by conduct in another jurisdiction that is permitted in Minnesota under Rule 5.5 (c) and (d) for lawyers not admitted to practice in Minnesota. • (b) A lawyer who is not admitted to practice in this jurisdiction shall not: • (1) except as authorized by these rules or other law, establish an office or other systematic and continuous presence in this jurisdiction for the practice of law; or • (2) hold out to the public or otherwise represent that the lawyer is admitted to practice law in this jurisdiction.

31. Were you engaged in permitted temporary practice in Minnesota? • Yes, because this is related to my practice in Tennessee. • Yes, because I planned to associate with local counsel and seek pro hac vice admission if necessary. • No, my conduct is not permitted temporary practice.

32. Minnesota RPC 5.5(c) • A lawyer admitted in another United States jurisdiction, and not disbarred or suspended from practice in any jurisdiction, may provide legal services on a temporary basis in this jurisdiction which: • (1) are undertaken in association with a lawyer who is admitted to practice in this jurisdiction and who actively participates in the matter; • (2) are in or reasonably related to a pending or potential proceeding before a tribunal in this or another jurisdiction, if the lawyer, or a person the lawyer is assisting, is authorized by law or order to appear in the proceeding or reasonably expects to be so authorized;

33. Minnesota RPC 5.5(c) • A lawyer admitted in another United States jurisdiction, and not disbarred or suspended from practice in any jurisdiction, may provide legal services on a temporary basis in this jurisdiction which: • (3) are in or reasonably related to a pending or potential arbitration, mediation, or other alternative dispute resolution proceeding in this or another jurisdiction, if the services arise out of or are reasonably related to the lawyer’s practice in a jurisdiction in which the lawyer is admitted to practice and are not services for which the forum requires pro hac vice admission; or • (4) are not within paragraphs (c)(2) or (c)(3) and arise out of or are reasonably related to the lawyer’s practice in a jurisdiction in which the lawyer is admitted to practice.

34. The Actual Case • In re Charges of Unprofessional Conduct in Panel File No. 39302, 884 N.W.2d 661(Minn. Aug. 31, 2016). • Why does it matter? Possible implications: • Reciprocal Discipline • Impact on Pro Hac Vice Admission

35. Women Can Be Especially Good at Lying Based on attorney conduct in the Memphis case State v. Mark Giannini

36. The Weaker Sex and Lying • During closing argument in a rape trial, defense lawyer Steve Farese stated: “People can be very good at lying. Women can be especially good at it because they’re the weaker sex and we, that’s what the books say, and we want to protect them and not have anybody take advantage of them. At least I do.”

37. Making this statement at trial is a violation of Tennessee RPCs • Yes, it violates RPC ___. • No, this conduct is not a rule violation.

38. Tennessee RPC 8.4(d) It is professional misconduct for a lawyer to engage in conduct that is prejudicial to the administration of justice. [3] A lawyer who, in the course of representing a client, knowingly manifests, by words or conduct, bias or prejudice based on race, sex, religion, national origin, disability, age, sexual orientation, or socio-economic status violates paragraph (d) when such actions are prejudicial to the administration of justice. Legitimate advocacy respecting the forgoing factors does not violate paragraph (d).

39. ABA Model Rule 8.4(g) It is professional misconduct for a lawyer to engage in conduct that the lawyer knows or reasonably should know is harassment or discrimination on the basis of race, sex, religion, national origin, ethnicity, disability, age, sexual orientation, gender identity, marital status or socioeconomic status in conduct related to the practice of law. This paragraph does not limit the ability of a lawyer to accept, decline or withdraw from a representation in accordance with Rule 1.16. This paragraph does not preclude legitimate advice or advocacy consistent with these Rules.

40. No Win for Walwyn Determining the appropriate disciplinary sanction for professional misconduct

41. In re Walwyn: The Client’s Complaint • Client sentenced to sentenced to life in prison and four consecutive four-year sentences. • Lawyer negligently missed the original deadline for filing the notice of appeal • Waited over three years later to file the notice of appeal even after he discovered his mistake.

42. In re Walwyn: The Client’s Complaint • Client’s letter to BPR: • “I never received any of my court records[,] and, eventually[,] Mr. Walwyn stopped accepting my calls[,] and he has been unable to be reached by my family.” • “I have tried repeatedly in every way I know how to find out about the status of my appeal. I still have no idea what the decision is, or if the court has even made a decision yet.”

43. What rules did the lawyer violate?

44. What rules did the lawyer violate?

45. In re Walwyn: Discipline Imposed • Hearing Panel imposes one punishment. • Tennessee Supreme Court questions punishment. • Lawyer requests oral argument. • Supreme Court imposes punishment

46. What is the appropriate punishment? • In Re: Paul Julius Walwyn, BPR #18263 • Court relies upon ABA’s Standards for Imposing Lawyer Sanctions • Four factors to consider: • “the duty violated,” • “the lawyer’s mental state,” • “the potential or actual injury caused by the lawyer’s misconduct,” and • “the existence of aggravating or mitigating factors.”

47. What is the appropriate punishment? • ABA Standard 4.42 (failure to act with diligence): Suspension is generally appropriate when: • (a) a lawyer knowingly fails to perform services for a client and causes injury or potential injury to a client, or • (b) a lawyer engages in a pattern of neglect [which] causes injury or potential injury to a client.

48. What is the appropriate punishment? • ABA Standard 8.2 (when lawyer has been disciplined previously): “Suspension is generally appropriate when a lawyer has been reprimanded for the same or similar misconduct and engages in further similar acts of misconduct that cause injury or potential injury to a client, the public, the legal system, or the profession.”

49. What do YOU Think the Appropriate Discipline Should Have Been? • Reprimand. • Suspension Less than One Year. • Suspension for One Year. • Suspension Longer than One Year. • Disbarment

50. Better Not Call Saul Assisting the Client in Committing Fraud