Identifying Ethical Problems
Among the ethical challenges that arise in the practice of law, conflicts of interest and breaches of confidentiality happen with frequency. Compliance with the duty to maintain client confidences and secrets is extremely important, as exemplified by a disciplinary case involving a Baton Rouge attorney.
In Louisiana State Bar Association v. Pugh, the Louisiana Supreme Court publicly reprimanded an attorney for improperly disclosing a former client’s secrets in a deposition, in private conversations with a second client, and to a former co-counsel. The attorney was formerly an attorney for an insurance company and had defended, in a class action lawsuit, the company’s actions in the denial of medical and drug claims to insureds and their beneficiaries.
The attorney was later hired by several other insureds as an expert witness to testify on behalf of the plaintiff class about the insurance company’s customary practices regarding the payment of medical claims. The attorney subsequently revealed some of the plaintiff class’ confidential settlement positions to a co-counsel against whom the attorney was pursuing separate claims.
Interestingly, the behavioral rules governing attorneys’ conduct do not uniformly require that clients consent to such disclosures of secrets: Some of the rules require informed consent, some require consent (fairly unqualified) and some are silent (requiring only a reasonable belief of confidentiality). If nothing else, the ethical rules provide notice that attorneys are expected to recognize the risk of disclosing client secrets outside the representation , particularly when it relates to the subject of the representation.
The most frequently encountered ethical issues include conflicts of interest, breach of the duty of confidentiality, and improper handling of client funds. In addition to the above Pugh case (discussed in more detail below), there are numerous cases in which attorneys have publicly received disciplinary action for violating client confidence rules.
In a somewhat unusual case, an experienced attorney represented a worker’s compensation claimant with a claim of degenerative arthritis of the shoulder, which the attorney believed was aggravated by a work-related accident. The case settled for $28,500; however, the attorney sent the settlement proceeds to an accountant for deposit into an account for another client whom the attorney represented in her divorce proceedings. The accounts were commingled to the point that it was impossible for the accountant to separate the funds at a later date. The accountant then transferred money from the account to satisfy a personal obligation and the attorney failed to reimburse the employee for her settlement funds, notwithstanding repeated requests. The Louisiana Supreme Court found that the attorney knowingly used the settlement proceeds for the benefit of a different client, thus violating the obligation to preserve the identity and the existence of all property in which two or more clients have an interest. In this case, the settlement was not even the attorney’s property, nor did the attorney use the funds for anything other than an attorney expense, yet the court suspended the attorney for a year and barred her from practicing law for six months after the suspension period.
The Scope Of Professional Responsibility
As stewards of the justice system, lawyers have the monumental task of ensuring that the interests of their clients are served, while simultaneously upholding the integrity of the legal system as a whole. This dual obligation can be a balancing act, and is not always easy to achieve. The rules of professional responsibility help guide attorneys in maintaining ethical behavior across the span of their representation, providing a framework for serving their clients without sacrificing the greater good of the legal process.
In 1908, the American Bar Association adopted the first Model Rules of Professional Conduct, comprising 32 numbered "Canons" that articulated the primary obligations of lawyers in the representation of their clients. The Canons were not a code of mandatory conduct, however, but instead left to the discretion of individual state supreme courts those provisions that would be mandatory in nature. Over time, the various state bar organizations adopted their own variations of the Canons, resulting in the wide variety of ethical rules for which legal practice has become known.
In the wake of Watergate, however, the perception of the legal profession began to change. As a result, a broad-based movement began within the American legal community to revise the various codes of ethics from the state level up, resulting in the adoption of the American Bar Association’s Model Rules of Professional Conduct in 1983. While these rules have have been adapted and amended at the state level from jurisdiction to jurisdiction, the ABA Model Rules remain the premier guide for what constitutes ethical behavior on the part of attorneys, and state-level ethics committees frequently look to the ABA Model Rules when considering an attorney’s conduct.
Lawyers who don’t follow the rules run the very real risk of having their licenses to practice law suspended or revoked by the supreme court of their state, and often face civil suits as well in the event that clients allege that the inappropriate behavior damaged their case. And even if no harm actually occurred, the reputational damage to the attorney may be enough to damage his or her practice, and to further undermine the public’s faith in the legal profession as a whole.
Failing to adhere to the rules of professional conduct can have a damaging effect upon a law firm’s management and profitability, so it’s in every attorney’s best interest to familiarize themselves with the rules as they apply to their specific practice.
Conflict Of Interest Defined
A conflict of interest exists when a situation undermines, or at least appears to undermine, the professional impartiality of the lawyer. These situations may occur directly in the lawyer-client relationship or in the context of a court action, or through the lawyer’s other responsibilities. A broad range of circumstances might be seen as a conflict, because something of value may tempt a lawyer to act contrary to his or her client’s interests. Sometimes these conflicts are relatively minor, such as when a lawyer charges an excessive fee or doesn’t keep his or her fee records clear and accurate. More serious issues, however, arise when a lawyer represents multiple clients with competing or conflicting interests and where significant issues are at stake.
If you have accepted a case that puts you in a position of conflict, the best course of action is to notify your client at the earliest opportunity. From there you will have three options: you can withdraw, continue through informed consent, or continue without obtaining informed consent. If you have large caseload, it might be difficult for you to immediately spot the conflicts. It’s a good idea to make conflict searches a standard part of your onboarding process, so you can proactively avoid developing any potential conflicts. In the rare event when a situation develops where you do not have prior notice of the conflict, then you must take the steps necessary to eliminate the conflict. If, however, that action would require you to breach your duties to another current client or to a former client, then the situation becomes more complicated. As the lawyer, you must choose the avenue that is most protective of client interests. The rules tend to favor the protection of client interests so long as they do not cause substantial risk to a client. Yet, the rules also recognize that a lawyer’s prior commitment to an old client might doom the new client to an unqualified lawyer. So the rules put a premium on the necessity of avoiding a conflict, allowing you to choose how to resolve the conflict so long as you do so with the informed consent of all affected clients.
Client Confidentiality, And Its Limitations
Confidentiality is a bedrock ethical principle for lawyers. It is central to the attorney-client relationship, as it only when a client can have confidence that the lawyer will not disclose the client’s private affairs to the world that the client will be willing to divulge these private affairs to the lawyer. It protects the client’s privacy and enables the lawyer to learn all of the facts necessary to provide candid, effective legal advice.
The ethical rule is that a lawyer must keep confidential all communications from the client concerning the matter at hand. Although the rule applies to communications related to the representation, not all communications from the client are protected. For example, the representation may hinge on one or more facts, but the client is mistaken about one of them, believing that it is true. As such, the lawyer will provide advice based on the mistaken fact. A court has held that the mistaken fact is not protected, even though the advice being offered is admittedly protected. In re Wilkins, 577 F.3d 1165, 1170 (10th Cir. 2009).
So while the client’s communications are protected, not all of the client’s communications are protected. What about the communications of third parties that become known to the lawyer during the representation? Those generally are not protected, unless they substantially involve the lawyer’s representing the client.
Because of the supreme importance of the rule of confidentiality, breaking it by revealing confidential information may not only be a breach of ethics, but also may violate the law as well. To this end, the rule of confidentiality has many exceptions, and understanding in what situations the lawyer can disclose confidential information without ethical or legal consequences is necessary to practice law.
Since the rule of confidentiality falls short of protecting everything, we will briefly touch on some of its limits and exceptions. A lawyer can disclose confidential information when the disclosure is impliedly authorized to carry out the representation, or when the lawyer is impliedly authorized to respond to allegations in a legal proceeding concerning, for example, the lawyer’s conduct or competence, or the amount of a fee charged, or even when the lawyer is called to testify to those matters [Model Rule of Prof’l Conduct 1.6(b)(2) & (3)].
Unless the client gives the go-ahead, however, the lawyer cannot reveal confidential information to obtain legal advice about compliance with the rules, to defend himself or herself against allegations of misconduct, or to respond to an official inquiry about the lawyer’s conduct or competence. Fla. Bar v. Moriber, 775 So. 2d 948, 962-63 (Fla. 2000). Those situations require the lawyer to choose between possible breaches of the rule of confidentiality, and careful thought needs to be given to which disclosure to make, if any.
Although not exhaustive, the following are common circumstances when disclosure of potentially protectable information is legally authorized:
Finally, a lawyer may reveal information relating to the representation of a client if the lawyer reasonably believes that disclosure is necessary to prevent reasonably certain death or substantial bodily harm, 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, or 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 commission of a crime or fraud in furtherance of which the client has used the lawyer’s services. Rule of Prof’l Conduct 1.6(b)(1)-(3).
As noted, the rule of confidentiality is one of the most important principles governing the ethical conduct of lawyers. It is important, and therefore not surprisingly, there are exceptions to the rule. Knowing those exceptions, however, would appear to lead to more effective lawyering.
Client Issues Of An Ethical Nature
The concept of ethical boundaries in representing clients can be considered from multiple points of view. It is not enough to merely understand the ethical considerations as they affect the relationship between an attorney and his or her client. You must also understand the ethical duties owed to third parties in that relationship. The best way to develop a feel for the ethical rules for representing a client is to touch on a few examples.
First and foremost, is the duty of an attorney to always tell the truth in court. In Pennsylvania, attorneys are absolutely barred from "knowingly" making a false statement of material fact to a court or tribunal. See, RPC 3.3(a)(4). An attorney’s duty to speak the truth in court applies to an attorney’s arguments, statements and representations to the court as well as materials submitted to the court.
The duty tells the whole truth to the Court so that it can fully evaluate and fairly decide the case. Keeping out evidence even though it is favorable to an opponent will not violate the rule as long as that evidence is not kept out for an improper purpose. If evidence is falsely argued to be deficient or represents an unfair comparison , that argument will violate the rule.
A lawyer has some latitude to represent a client’s position. The lawyer can advocate legal and factual arguments in a way most favorable to the client. However, the rule on this point prevents lawyers from dishonestly overstating those legal and factual arguments. Small exaggerations, bad faith disputes over the truth and intentional misrepresentations of facts to a court are prohibited.
Sometimes an attorney must choose between the client’s position and the rules of ethics. In that case, a lawyer must not advocate for the client. This is an ethical duty owed to the legal system. For example, if there exists a controlling appellate case on point, it is a violation of the attorney’s duty to advocate for a change in the law.
Ethical Uses Of Client Funds
To properly handle client funds is one of the foremost obligations an attorney has and it is subject to rigorous and detailed guidelines, the violation of which can lead to censure, disbarment, or criminal charges. Florida Bar Rule 5-1.1 states that all trust funds are to be deposited into a pooled trust account unless the lawyer is holding the funds for a single client, in which case a separate account (with the lawyer’s name and "Trust Account") can be set up where those funds would be deposited. Any interest that the pool account earns is to be deposited into "a Florida Bar approved Legal Aid organization…for the purpose of funding law-related programs." The ethical rule that governs the conduct of attorneys who handle client funds is Rule 4-1.15. The rule requires attorneys to keep their personal funds separate from client funds. Attorneys must also keep complete records of client funds. Trust funds must be kept in "a bank or other financial institution authorized to do business in a state of the United States." If attorneys withdraw fund from the trust account, they must retain documents "sufficient to identify the transaction." Attorneys must also "disburse funds only upon receiving notice of the deposit of those funds and upon presentation of a demand by or on behalf of the client. If an associated risk exists at the time of deposit because of the nature of the transaction, an attorney may not disburse any part of a deposit until the check, draft, or other instrument has been honored." Without question, this rule is highly technical, however it is very important that lawyers understand their obligations vis-a-vis handling client funds. An attorney can be issued a public reprimand by the Florida Bar for violation of these Rules, and if the conduct is especially egregious, there even could be criminal charges. If you find there is a huge discrepancy between your records and an accounting of a trust account, don’t panic. The first step you should take is to reconcile your accounts to see if you mistakenly placed even a small amount of insert client funds into the wrong place. Nothing might be wrong; it might just be two numbers on a spreadsheet that are slightly different with no money missing. This happens all the time, and it is human error. After that, you should consult with a qualified attorney to determine how to address the issue. There are former Bar prosecutors who have found a more amicable way to "set things straight" depending on the capital flow, so improper accounting need not lead to an immediate Bar investigation if you take the necessary steps to fix the problem. It also greatly matters whether the funds were missing from your trust account, or whether you messed up your records so that you believed you had the funds but in fact didn’t. We cannot suggest what you need to do and how to do it, but it’s better to ask a knowledgeable attorney, who can then bring in additional professionals as necessary.
Technology And Legal Ethics
The rapid pace of technological advancement has invariably altered the landscape in which lawyers operate and, subsequently, the long-established rules of professional responsibility governing lawyers have had to adapt. When once the vast majority of communication between lawyers, courts, clients, and other third parties occurred through physical, hard-copy documents, today legal communication has become more reliant on digital forms. This has not only affected the methods in which communication occurs but also the speed at which legal transactions may be completed. The rapid-fire pace of emails, "texting" and instant messaging all create the expectation among the public and their clients that they too can demand, expect, and receive similarly rapid responses from their attorney. The result can be a situation where a lawyer who complies with the Model Rules runs the risk of jeopardizing their client’s business or legal opportunities because they are "out of touch" with the ever-unfolding developments and changes occurring in the matter.
Technological advancements have also resulted in changes in the economic model of the law firm and the practice of law itself. Formerly, the legal environment was replete with space-intensive overhead which resulted in a significant burden being placed on the attorneys to generate minimum billable hours. The move towards more digital documentation has allowed many firms to reduce or eliminate their paper-storage needs, reducing the physical footprint of their practices.
With the move has come greater opportunities for virtual law practice – a law practice where the attorney works 100% in a digital environment with fewer, or no, physical constraints at all. Technology has also brought to the forefront new types of entities, such as the LLLT, more expansive use of paralegals, advocacy of limited scope unbundled representation, and a move away from hourly billing in favor of value-based billing – all of which have directly resulted from advances in technology. Technology has also brought about a renewed focus on data protection and security, something that was less of a concern when law offices were free of online services. With more client information being in electronic format, new obligations on the lawyers regarding data protection and privacy may arise.
Many of these issues have been addressed through more recent revisions and amendments to the Model Rules of Professional Responsibility, however it is an ever-evolving environment. The reactions of our regulatory bodies and professional associations to changes in ethical concerns brought about by technological advancements will also evolve. This may include, though not be limited to, educational programs and opportunities. More recently the ABA has made it a goal to provide high quality resources to the public and lawyers alike on the changing landscape of legal ethics by creating the Center for Professional Responsibility. The Mission Statement of the center includes, among other things, the Center’s goals to "cultivate an understanding of ethics and professional responsibility for the benefit of lawyers and clients" as well as to "serve as the leader in fostering high professional standards throughout the legal profession." Lawyers will need to keep abreast of these developments, lest they fall on the wrong side of the ethical line, or worse, suffer adverse consequences in a litigation setting due to the inability to competently advise their client on the modern ethical landscape.
Dealing With Ethics Violations
Ethical violations are a serious concern for legal professionals and must be addressed properly. One of the first actions a lawyer should take is to determine whether the violation can be resolved internally. For example, when a concern is raised within a law firm it will often be addressed with an informal meeting with management. Procedures for dealing with ethical concerns should be a part of the firm’s internal policies and procedures manual. It is important to deal with issues internally because a failure to do so can bring negative public attention to the firm. Protection of the firm’s reputation should be a top priority.
When health issues are involved, lawyers must also confront the concerns in a timely manner. However, once a problem is identified, the action taken can depend on the severity of the treatment needed, who the lawyer confides this information to, and whether that lawyer has a responsibility under the law to report the issue to the appropriate agency. Confidentiality rules apply to some of these situations and compliance with all laws governing confidentiality must be maintained . However, while a lawyer may have to keep client secrets, they are not required to keep secrets about other lawyers.
Whether or not a concern can be dealt with internally, bar associations can still be notified about ethical lapses. TIP: When reporting a violation of the Texas Disciplinary Rules of Professional Conduct to the State Bar of Texas, determine whether the Board of Disciplinary Appeals needs to be contacted.
When the State Bar is notified, they will request any documentation for the violation that can be obtained to support the complaint. As with internal action, the State Bar will often try to resolve the situation informally. However, if a lawyer is found to have violated rules, they can face any number of consequences ranging from a private reprimand to disbarment. The response from the Texas Bar will depend on a number of factors – the severity of the violation, prior violations, and whether the lawyer cooperated with the investigation are some of the first tier concerns.
