Ch. 9 Important Malpractice Traps
A. Client Relations Errors (14% 2000-03)
“Top Ten Traps” See, fn. 3, p. 290, Lawyer’s
Desk Guide 54 (2d ed. 1999), available at
http://www.abanet.org/legalservices/lpl/do
wnloads/ten.pdf
A. Client Relations Errors
1. Ineffective Screening:
Avoid “difficult clients” (trust gut instinct
backed up w/ standardized office-wide
screening procedures). U.S.: lawyers are not
public utility; no “cab rank rule.” Corollary:
discretionary right to w/d, but must comply
w/ standards (e.g., advance notice to cl.;
leave of ct req’d if in litigation) See generally
RPC 1.16.
A. Client Relations Errors
2. Client Communication & Failure to Keep
Clients Reasonably Informed (& Duty to
Follow Lawful Instructions w/in Scope of
Authority)
N.B. Both fiduciary and ethical duty. See Rstmt LGL
§§20-23, RPC 1.2, 1.4
Breakdown in communications/respect often basis
for C bringing LM claim (accord, med mal), file
grievance
B. Conflicts of Interest (COI)
Failure to recognize, analyze and deal properly with
a conflict is high risk malpractice trap.
ABA Standing Committee on Prof’l Liability: 6.28 %
(2000-2003); 66.6% increase since 1985
Texas Lawyers’ Insurance Exchange (TLIE), Jett
Hanna: 16.4% all claims filed; 22.5% all losses
(1996-2007)
Harris Poll: most significant error or omission in
largest claims v. firms w/ ≥35 Lawyers (1996)
COI give disgruntled C’s/former C’s
“wild card”
Played to: Avoid paying outstanding bill; seek
fee forfeiture; Move for disqualification; Bring
legal malpractice claim
Potential consequences: m/b basis for excluding
coverage; if carrier if pays for loss > premium
surcharges; discipline; ct-imposed sanctions;
loss of clients; firm splits; bad reputation
among L’s & C base
LM for COI
Evans v. Baker & McKenzie, Joel Held (Dallas Sr.
Counsel)(10/2010, Miss.)($103 Million verdict)
P claimed firm concurrently represented him & partner
in oil-rig drilling business; P unaware that partner
insolvent & used P’s assets to get millions in loans.
Further alleged firm secretly drafted docs creating
subsidiaries in P’s name, but controlled by partner.
When accounting showed partner’s insolvency, P tried to
dissolve busn., firm represented partner, devising “a
litigation strategy to bring [P] to his knees.”
2. Analyzing COI, where “consentable”
how to obtain “informed consent” (IC)
• Rstmt §§ 121-135 similar to RPC 1.7-1.13
• §121 a COI is present if “…a substantial risk
that L’s representation of the C would be
materially & adversely affected by the L’s own
interests or by the L’s duties to another
current C, a former C, or a third person”
2. Analyzing COI, evaluating whether
“consentable” conflict
Suni: “The key is whether the L’s exercise of
independent prof’l judgment is likely to be
unduly influenced by other interests….[A]sk
yourself…[b/c of that] interest, am I likely to do or
be tempted to do something different from what
a truly independent L [w/o such interest] …would
do in the same circumstances? (text at 297-98)
See also, RPC 1.7 Cmts 8, 14-15, 18; RPC 1.0(e)
defines informed consent.
3. Practical Issues Re Written
Disclosure & Informed Consent
RPC 1.7 COI: Current Clients
(a) concurrent COI if (1) representation of 2 C’s
“directly adverse” or (2) signif risk that repre’n
of 1 or more Cs will be “mat’ly ltd by L’s
responsibilities to another C, a former C” or T/P
or a psnl int. of L.
(b) If COI per (a), L/firm may represent if L rsnbly
believes it is consentable per (1-3) and (4) each
affected C gives informed consent, confirmed in
wrtg.
See text p. 303, Hazard & Hodes on disclosure
Who is the Client?
(for purpose of COI analysis) Suni,
text p. 298
Who is it I am representing?
Have I actually undertaken representation, or
am I dealing with a prospective C?
Is the C an individual, or the entity for which
that individual works?
Is it the insured or ins. co. paying the bill?
Am I representing one party to the transaction,
both parties, or the entity they are forming?
Prob. 9-1 Know Your Conflicts & Clients
C retained you to evaluate LM claim
1. Who was M&M’s Client (Chassen or Tyson)?
2. What possible LM claims?
3. Relevant questions to ask in evaluating
possible LM?
4. Relevant information to evaluate possible LM
claims?
5. Risk prevention steps firm might have taken?
COI: Estate Planning Problem
H&W marry in 1980s; 2d marriage for both; H has 3
children & substantial busn. assets. W has 2
children & minimal assests. 0 children born of this
marriage.
1999-2005: H executed various estate planning
devices, including trust & will. General theme:
Homestead to W (joint tenancy by entireties,
right of survivorship); $25K specific devise to ea.
Of H’s 6 grandchildren; trust income to W for life,
R to H’s 3 children per stirpes.
COI: Estate Planning Problem
2006: H&W go to L, estate planner, who created
docs fulfilling their agreement (mere
scrivener?) Simplified:
1. LLP: proceeds from sale of H’s busn.,
homestead. L as manager; each of 5 children
get 20% interest. W has LE in homestead, R
to LLP.
2. Trust (H Settlor & T’ee): all other H assets, on
H’s death distribution to H’s 3 children
COI: 2008 H dies, estate
administration
1. Distribution of trust corpus to H’s children (0
income for W)
2. Homestead: W only has life estate, not fee
simple interest.
Q: what’s wrong with this picture?
Does W have c/a for LM v. L?
(go back, see slides 7-9)
RPC 1.7(a)(2) current COI, significant risk L’s
representation of W mat’ly ltd by L’s
responsibilities to H.
Is this a consentable conflict? (slide 8, RPC 1.7(b)(1)
& Cmt. 15: only if L RSNBLY believes that L will be
able to provide competent & diligent repre’n to
each client)
Analysis?
1.7(b)(4) Did L obtain informed consent from H &
W, confirmed in writing?
COI: Estate Planning Problem
Rstmt Analysis §§121-22 accord:
§121 “substantial risk” L’s repre’n of W “would
be materially & adversely affected by L’s …
duties to another current C (H)
Cmts. c. (adverse effect on quality of repre’n;
likelihood of subst’l risk; evaluate using
objective std, on facts & circumstances L
knew/shd have known when undertook
repre’n)
COI: Estate Planning Problem
Rstmt §122(2) N/w/stdg IC of ea. affected C, L
m/n represent if [i.e., its nonconsentable],
(c) in the circumstances, it is not reasonably
likely that the L will be able to provide
adequate representation to one or more of
the clients. (similar to 1.7(b)(1))
Rstmt §130 (current COI, nonlitigated matter;
substantively similar to 122) cmt. c. illus. 2?
Bottom line, under both Rstmt & RPC
L didn’t see obvious conflict, didn’t attempt to
obtain H&W informed consent. Even if L had
done so, any consent would be ineffective
because it was nonconsentable.
Reason: no reasonably competent L could believe it
possible to represent both H & W in this estate
planning b/c their interests were so diverse. W
clueless that the estate plan deprived her of all
rights of survivorship to homestead & no life
estate in trust income, limited right to corpus. (as
is common).
W v. L
Breaches of fiduciary duty: impermissible COI
between W, H & L, adversely affected repre’n of
W, deprived of relevant info needed to protect
her interests.
Harm: left w/ almost nothing after 20+ marriage.
Proximate cause + but for
Damages: what would her rights have been if H
died intestate? Probable rights if she had been
competently represented by independent
counsel?
4. Advance Waivers
RPC 1.7 Cmt 22 might allow, under limited
circumstances.
Anthony Davis, on ABA F. Op. 05-436:
General, open-ended advance waiver usually
ineffective. But advance waiver w/o fresh IC, m/b
effective if: 1) rsnbly informed about potential
risks if future conflict arises; 2) C is sophisticated
consumer of legal services; 3) C actually
consulted independent counsel about advisability
of signing future waiver.
C. Litigation Errors
ABA 2003 Study: 44% all claims (most in π p.i.;
tho Δ p.i. close behind)
Reason: so many judgment calls, strategic &
tactical decisions, often made with little time
to deliberate, research, confer w/ C. (Hence,
Rstmt §§20(3),(4), 23; contrasted with 22.)
LM claims akin to “Monday morning
quarterbacking”; C dissatisfied w/ outcome
says L “shoulda, coulda” done differently
1. Missed Litigation Deadlines
# 1 of Top 10 Malpractice Traps (1999)
2003 ABA Study: now 16% of claims arise from
untimely commencement of action (prima facia
evidence of negligence)
Many other litigation deadlines w/ major impact on
outcome
Malpractice Carriers: annual application requires
description of calendar/docketing system,
including cross-check or dual control, ultimate
responsibility of L handling matter.
1. Missed Deadlines
3 types of errors:
Failure to calendar
Ignorance or misinterpretation of correct
deadline
Failure to file in accordance w/ correctly
calendared deadline
1. Missed Deadlines
Thar, “Ways not to Blow S. of L”
-Calculate immediately, while considering
whether to undertake matter
-THINK & CONFIRM you correctly determined
applicable s. of l. (foreign jurisdiction –
confirm w/ local counsel); RESEARCH
-VERIFY date of incident, PLAN AHEAD
-Multiple calendaring system w/ >1 person
tracking
1. Missed Deadlines
Thar, “Ways not to Blow S. of L”
-Avoid 11th hour clients (e.g., Geary; 10/25 cert.
w/drawn, improvidently granted; 11/4 mandate
issued)
-Calendar matters where you receive referral fee
(remember, joint responsibility)
-Periodic tickler dates to remind well in advance
-Don’t procrastinate!!! Plan ahead & do what’s
necessary before filing, including pro hac vice
application. “Virtual nullity doctrine”
-Law practice management includes routine letters
of nonengagement & withdrawal notices
2. Appellate Malpractice
• Evaluate scope of retainer.
• If retained for whole case, tend to details
preserving appeal: in trial, make record
objections, take exception; preserve record for
appeal; evaluate & discuss w/ C whether
viable appealable issues; file timely notice of
appeal/perfection; timely file record for
appeal; post supercedeas bond; timely file all
briefs
2. Appellate Malpractice
• Rstmt §§ 21-23 Authority Reserved to C (both
civil & criminal): whether to settle or appeal;
• Authority Reserved to L: refuse unlawful
assistance; compliance with applicable law,
orders of tribunal
• Joint decisions, after consultation: selecting
which non-frivolous issues to raise on appeal
Questions, p. 313
1. S/ retained only for trial. What should you
do after unsuccessful outcome to avoid risk
of appellate malpractice?
a. Confirm that written retainer states such limited
scope representation
b. Written confirmation again at end of trial; need
new L; remind of upcoming deadlines, possible
grounds for appeal.
Questions, p. 313
2. s/ trial L refers C to appellate L; risk
management steps?
Avoid negligent referral risks (3 names,
current objective information about each,
stress that C choice)
Questions, p. 313
3. S/ Retained for appeal; discover LM by trial L.
Legal & ethical duties to C?
- carefully evaluate
- disclose to C?
- refer to LM L?
Questions, p. 313
• 4. Normative question: should proximate
cause in appellate LM be Q of law for court, or
Q of fact that can be decided by jury?
3. The Exercise of Judgment in
Litigation
“judgmental immunity” (long history now eroding;
thought to protect v. L’s errors on strategic &
tactical decisions). Some juris. treat as
affirmative defense.
Fla. “predicate” for LM defense: L 1) exercised
informed judgment; 2) d/n ignore applicable
statutes, court procedures or established legal
principles; 3) must inform C of KNOWN PENDING
resolution of unsettled legal propositions.
Prob. 9-2, p. 314: Which of listed “failures” may be
protected by judgmental immunity?
4. Settlement Errors: Many possible
types (pp. 315-16)
• Not consider settling case then lost at trial
• Recommend C accept inadequate settlement
• Draft or approve release of rights that should have
been reserved
• Force C to settle (often cheap) to cover up L’s serious
litigation errors
• Falsely claim matter settled to hide L’s errors; L
pretends payment from D
• Not communicate settlement offer
• C fires L for cause, successor L recommends bad
settlement b/c of 1st L’s errors.
4. Settlement Errors
Muhammad v. Strassburger, 587 A.2d 1346 (Pa.
1991)(former C m/n bring LM v. former L where
underlying matter settled, unless L knowingly
committed LM and then fraudulently induced C
to settle)
N.B. Ziegelheim v. Apollo (N.J. 1992)(text at p. 322)
began change of tide (despite pro-settlement
policy, C entitled to competent legal advice about
whether to accept or reject settlement offer)
4. Settlement Errors
Thomas v. Bethea (Md. Ct. App. 1998) pp. 316-25
Facts: L sued 3 slum landlords for lead poisoning of
Minor (M); recommended C settle v. 2 for $2500.
Never served 3d landlord. Broad form release
executed by Mom relinquished claims v. all 3, tho
$0 from 3d landlord. M (now adult) sued L for LM
(negligently persuaded Mom to accept grossly
inadequate settlement)
Tr. Ct: special verdict, $125K; tr. ct. JNOV for D L.
Contrast Thomas (Md. ‘98) and
Muhammad (Pa. ‘91)
Policy considerations for & against allowing LM
where C settled underlying claim?
-encourage settlements; efficiency; finality (Q:
does non-mutual collateral estoppel bar?)
-fairness to C, right to competent representation
-incentives & disincentives for Lawyers
Q: on balance, as matter of policy, prefer
minority view (Muhammad) or new majority
view (Thomas)?
Measure of Damages for “Wrongful
Settlement”?
Difficulties in proving “case w/in case” for such
claims.
Possibilities:
1. Difference between actual settlement and what
a reasonable settlement would have been? Too
speculative? How prove? (Thomas jury found
settlement value v. unserved D was $25K, but
fixed dmges @ $125K)
2. Difference between actual settlement and
probable recovery at trial of underlying matter.
Problem 9-3 Inadequate Settlements
Wrongful death action filed against Upton County
w/in 2 year general statute of limitations, but
after expiration of shorter limitations period for
actions against governmental entities.
County moved for summary judgment on
limitations grounds. Estate administrator settled
for $10K (probable cost to county of litigating
summary judgment).
Should C/administrator have LM c/a vs. L?
D. Business Transactions with Clients
• Fraught with danger; if does not work well, to
client’s satisfaction, C often looks to L as
guarantor.
• Jurors see & condemn L’s who engage in selfdealing, prefer own interests over that of C.
• That said, why do so many lawyers engage in
business transactions with clients?
Rstmt §126 C/L Business Transactions
Generally prohibits business or financial transactions w/
C, NOT involving delivery of legal services UNLESS
(1) C has adequate info. about the terms of transaction &
risks presented by L’s involvement in it;
(2) Terms & circumstances of transaction are fair &
reasonable TO THE C;
(3) C gives informed consents to consentable conflict
involving L’s role in transaction after encouraged to
seek & given rsnble opportunity to seek independent
legal advice about transaction. (incorporates §122)
2. Fee arrangements
• When agreed at outset, before C/L relationship
begins, generally treated as arms-length
transaction. Scrutinize only under RPC 1.5(a)
(prohibiting unreasonable fees or expenses;
open-ended list of factors bearing on
reasonableness).
• If fee dispute between L & C, cts may use K
principles to construe ambiguous language v. L, as
drafter (contra proferentem); or shift BOP to L
that fee fair & reasonable to C.
2. Fee Arrangements
• Non-traditional fee arrangements, e.g. in
which L takes ownership or security interest in
C property, or stock: closely scrutinized as L/C
business transaction. E.g., L helped C obtain
financing for holographic baseball card, took
% interest in venture as “finder’s fee.” Ct set
aside.
2. Fee Arrangements
• Reminder: RPC 1.5
(c) Requires that contingent fee agreements be
in signed writing, state method by which fee is
determined including % accruing if resolved by
settlement, at trial or appeal, and whether
expenses for which C is responsible are
calculated before (fairer to C) or after
determining % fee. On conclusion, L must
provide written disbursal statement.
ABC Exam Question, ¶2
Does ABC’s fee agreement with Victim violate
RPC 1.5?
Does ABC’s fee agreement with Norman Bank
violate RPC 1.5? Violate any fiduciary duty to
Bank?
2. b. Modifying Fee Agreements
Rstmt LGL §18
(a) any K or modification “made beyond a
reasonable time after the L has begun to
represent the C in matter, the C may avoid it
unless the L shows that the K and the
circumstances of its formation were fair and
reasonable to the C; and
(b) if K after Ls services complete, C may avoid if not
informed of facts needed to evaluate
appropriateness of L’s compensation or other
benefits that K confers on the L.
2. b. Modifying Fee Agreements,
Richmond Excerpt
S/1: Complex tax matter, seeking large refund
from state. Firm regularly billed & was paid >
$120K using standard hourly rate & customary
expenses. Superb outcome: $7 M refund.
Q: may firm retroactively charge 10% premium
where fee agreement contained language “to
render a fair and reasonable bill”?
S/1 Beatty v. NP Corp., 581 N.E. 2d
1311 (Mass. App. Ct. 1991)
H: ambiguous language construed against
drafter (contra proferentem); firm’s
“subjective & unexpressed expectations”
could not refute objective agreement to
charge by hour.
Q: To avoid this outcome, how should
engagement letter read? (see pp. 336-37)
2. b. Modifying Fee Agreements,
Richmond Excerpt
S/2 Undertake defense of civil case for $50K flat
fee based on predictions of likely amount of
work, fee profitable. Ably-represented P
conducts extensive discovery which precludes
successful defense summary judgment
motion, joins additional defendants.
Can firm escape flat fee, charge for actual time
& expenses?
S/2 Heller, Horowitz & Feit, P.C. v.
Stage II Apparel Corp., 704 N.Y. App.
Div. 2000)
H: denied rescission; fact that litigation required
more work than expected at time of K does
not constitute relievable mutual mistake.
Repeated invoices and payments based on flat
fee ratified original agreement.
Q: To avoid this outcome, how should firm have
drafted the engagement letter? (p. 337)
2. b. Modifying Fee Agreements,
Richmond Excerpt
S/3 Firm undertakes defense in large, complex litigation,
billing standard hourly rate & customary expenses. 0
advance retainer. Initially C pays in full monthly bills,
later payments slow & low or not at all.
When L discusses arrearages, C apologizes & promises
to bring current when cash flow improves. C claims
firm’s threat to w/draw will cause irreparable harm; L
doubts judge would allow. Resolved by taking security
interest in C’s property.
Q: What should firm have done 1) when retained? 2) as
arrearages mount? 3) when idea of security interest
arose?
2. b. Modifying Fee Agreements, S/3
Q: What should firm have done
1) when retained?
Engagement letter: require substantial fee advance (put
in trust account, apply last bill to advance, refund
excess); monthly statements pd promptly; if unpaid, L
has right to suspend work and terminate engagement.
See RPC 1.5(b), 1.15(b)(5)(may w/d if C “fails
substantially to fulfill oblig’n to L re L’s services” &
“given rsnble warning that L will w/d unless” fulfilled.
2) as arrearages mount?
3) when idea of security interest arose? RPC 1.8(a), (i)(1)
S/3Welsh v. Case, 43 P.3d 445 (Or. Ct.
App. 2002)(unique OR. Rules & facts)
H: Firm allowed to foreclose mtge given as
security interest for unpd fees; was not “busn.
transaction” w/ C subject to applicable state
rule (predecessor to RPC 1.8(a)); C very
sophisticated, experienced in mtge
transactions, & m/b “Wiley Coyote”
Takeaway lessons: caution urged throughout all
C/L relationship; study local variant of RPC
1.8(a) & 1.16(b)(3) & interpretations
2. b. Modifying Fee Agreements,
Richmond Excerpt
Other “takeaway” points (pp. 339-41):
Remember: courts & Rstmt generally treat L as more
sophisticated party, must satisfy informational burden in all
dealings w/ C.
Engagement ltr should specify conditions that would permit
fee modification (exceptional result, basis for calculating
bonus; across board increase in hourly rates; unexpected
work volume in representation)
p. 339, last ¶: P abuse of flat fee, scorched earth defense
*avoid any implication of duress
*firm infrastructure: committee approval of fee modifications
*1.8(a), get everything in writing, C’s signed & informed
consent
Rstmt §126 Business Transaction
Between L & C
Generally prohibits business or financial transactions w/
C, NOT involving delivery of legal services UNLESS
(1) C has adequate info. about the terms of transaction &
risks presented by L’s involvement in it;
(2) Terms & circumstances of transaction are fair &
reasonable TO THE C;
(3) C gives informed consents to consentable conflict
involving L’s role in transaction after encouraged to
seek & given rsnble opportunity to seek independent
legal advice about transaction. (incorporates §122)
“How to” safely enter business
transaction w/ C???
Dzienkowski & Peroni: pp. 328-332 many risks in taking
equity investment in C entity
Liability to C w/ business interest: ct may grant
rescission, impose constructive trust (shift BOP,
constructive fraud), despite no proof of L’s fraudulent
intent or harm to C.
Claims: negligence, breach of fiduciary duty
Firms who take equity interest risk loss of limited liability
shield from LLP or LLC.
Potential liability to OTHER C’s (preferential treatment to
C w/whom L doing business)
Hodges, et al.: Bleed’em & Plead’em
Permissible equity interest in Client?
Text pp. 352, et seq.
Without consulting Clients (Chris or Callie), Bob
decides to give Callie 60% interest in the entity,
20% to Chris and the remaining 20% to
partnership. This decision was based in part by
his own love of all you can eat pizza as well as
desire to protect Callie in case the marriage
failed. In addition, the only payment C.C.’s has
been able to make was a $10,000 retainer, and so
Bob figures that the corporate share can be a
future legal services payment.
ANALYSIS? See 1.8(a) & related comments, Hubert
3. Entrepreneurial Activities With
Clients pp. 341-46
L’s involvement in a busn. venture w/ C
morphes traditional role of L (as
advocate, advisor or confidant) to
POTENTIAL D, CO-CONSPIRATOR, AIDER,
ABETTOR & TORTFEASOR. Lawsuit more
likely, difficult to defend b/c COI
“may be unethical, are generally illadvised, and are always risky. Text at 341.
3. Entrepreneurial Activities With
Clients pp. 341-46
Hence, legal malpractice policies typically
contain broad coverage exclusions any time L
has business interest w/ C, even if d/n involve
rendering of legal services.
3. Entrepreneurial Activities With
Clients
OMAIC EXCLUSIONS
g) To any claim arising out of the insured’s acts
or omissions as an officer, director, partner,
trustee or employee of a business enterprise
or charitable organization or of a pension,
welfare, profit sharing, mutual or investment
fund or trust.
3. Entrepreneurial Activities With
Clients
OAMIC EXCLUSIONS
i) To any claim arising out of legal services or advice
rendered by any insured in connection w/ any
busn. Enterprise owned in whole or in part,
controlled directly or indirectly, or managed by
any Insured, which service or advice is either
claimed or is, in fact, in conflict w/ the interest of
a C or former C . . . or in conflict w/ the interest of
any person claiming an interest in the same or a
related business enterprise.
Risky Business Transactions w/ C’s,
Hubert pp. 342-46
S/1 good long-term C homebuilder needs loan to
buy land for development. No commercial lender
willing to take risk. If L has $250K available,
willing to loan, what must L do to minimize risk
of adverse consequences?
RPC 1.8 (a) A lawyer shall not enter into a business
transaction with a client or knowingly acquire an
ownership, possessory, security or other
pecuniary interest adverse to a client unless:
Risky Business Transactions w/ C’s
RPC 1.8(a) UNLESS:
(1) the transaction and terms on which the lawyer acquires the
interest are fair and reasonable to the client and are fully disclosed
and transmitted in writing in a manner that can be reasonably
understood by the client;
WHAT MUST BE DISCLOSED?
(2) the client is advised in writing of the desirability of seeking and is
given a reasonable opportunity to seek the advice of independent
legal counsel on the transaction; and
WHAT IF C REFUSES TO CONSULT W/ INDEPENDENT COUNSEL?
(3) the client gives informed consent, in a writing signed by the client,
to the essential terms of the transaction and the lawyer's role in the
transaction, including whether the lawyer is representing the client
in the transaction.
WHAT EFFECT IF ANY DEFECTS IN COMPLIANCE?
Hypo variations
s/1 0% interest loan, repayment through 20% of
resulting profits?
s/2 Low interest loan, does not start to accrue until
closings begin, and also 10% of resulting profit?
s/3 C declines to seek independent legal advice.
Then what?
s/4 Just settled high $ case, C has proceeds to
invest, L needs to borrow $. ANALYSIS, HOW TO
PROCEED?
E. Breach of Confidentiality
RPC 1.6(a) and Rstmt LGL §§59-60 compared, text
pp. 346-48.
RPC ethical duty safeguards all information relating
to the representation of a C (may not reveal
unless falls w/in exception)
Rstmt: (fiduciary) duty to protect information
relating to the representation of a C where use or
disclosure will adversely affect a material interest
of C or if C instructed L not to use or disclose.
Exception: where info. is generally known, or
otherwise allowed by §§61-67
Problem 9-4, pp. 348-49
You are judge presiding over C’s LM v. Firm.
Pending D motions for summary judgment.
Evaluate and rule, as to liability of Firm and its
partners. Is C’s consent binding?
Risk Management Lessons re
Confidentiality pp. 347-48
***New technologies present special problems
Linked databases, shared computer systems,
“cloud computing”
Internet, websites, blogs, listservs
i-phones?
Hackers, industrial espionage
E-discovery
F. Representing Entities
1. Although relative number of claims is small
(6.37%), many of those claims result in very
large payouts.
- Between 1996-2003, Claims exceeding $2M
in losses increased by 60%
-Vinson & Elkins settled Enron-related claims
for $30M (critics: this was sweetheart deal)
-Jenkens & Gilchrist (‘07): settled for $75 M
to investors of bad tax shelter; firm dissolved.
F. Representing Entities
Formation: WHO IS THE CLIENT? (individuals?
The future entity?)
WHO IS THE CLIENT after formation of entity?
(lessons, better safe than sorry)
Risky business: advising constituent whose
conduct might be attributed to the entity.
***Read RPC 1.13 & Cmts.