Information Memorandum
TO: New Associate
FROM: Barry Richards
RE: In re Wendy Braun
Date: April 26, 2013
(i) Is the Life Story Rights Acquisition Agreement between Ms. Braun and
Mr. Atkins enforceable under Rule 502(a) or 502(c)?
Under Rule 502(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:
(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; (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 (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.
Under Rule 502(c) prior to the conclusion of representation of a client, a lawyer shall not make
or negotiate an agreement giving the lawyer literary or media rights to a portrayal or account
based in substantial part on information relating to the representation.
Here, our client, Mr. Atkins was an engineer for Lydian Resource Exploration, Inc. or “LRE” for
short. LRE is in the business of natural gas exploration, and its business practice was to go to
towns and persuade the residents of the town to sell mineral exploration rights to LRE. After
landowners in a town would sell their mineral exploration rights to LRE, Mr. Atkins was one of
the engineers who would go to the towns and explore and mine for natural gas through hydraulic
fracturing.
After leaking information about LRE’s business ventures to the public, he was at the subject of
litigation by LRE. The Life Story Acquisition Agreement is not enforceable under Rule 502(c)
because Mr. Atkins’ life story is based in substantial part on information related to the
representation. With his limited finances, Mr. Atkins had a difficult time finding counsel that
was skilled enough to put on a strong defense to the charges and stand up to LRE. Based on the
amount of work this type of case would take, an offer was made to agree to a retainer agreement
by which Ms. Braun would represent him without an upfront payment, and when the
representation was over, he would have the option of paying the full bill or signing a life story
rights agreement with Ms. Braun. Although under Rule 502(a) Mr. Atkins gave his informed
consent, in a writing signed by Mr. Atkins, to the essential terms of the transaction and the
lawyer’s role in the transaction. Although Ms. Braun knowingly acquired an ownership of a
literary right that may be adverse to a client, Mr. Atkins gave informed consent. Mr. Atkins’
hesitancy in the arrangement was apparent, even after given the option to consult with
independent counsel. When it was all said and done, Mr. Atkins owed over $450,000 in legal
bills. He opted to instead sign a life story rights agreement Ms. Braun drew up for him, which
gave her the right to sell the literary and film rights to Ms. Braun’s representation of him, which
essentially waived his right to sue for defamation or invasion of privacy and allowed to use any
information about him and his case. Under Mattingly v. Powers, the court raised because the
informed consent was included in the agreement itself and not a separate document, Rule 502
was not met. Here, a court is likely to find that because the life story acquisition agreement was
woven into the terms of the representation as a payment option, Rule 502 is not enforceable.
Thus, Rule 502(c) is not enforceable against Ms. Braun.
(ii) Did Ms. Braun violate her duty of confidentiality to Mr. Atkins by
providing information to Galaxy Films?
Under Rule 503, a lawyer who has formerly represented a client in a matter or whose present or
former firm has formerly represented in a client matter shall not thereafter use information
relating to the representation to the disadvantage of the former client or reveal information
relating to the representation of the former client except where a client has provided informed
consent to do so.
Here, Ms. Braun did not violate her duty of confidentiality to Mr. Atkins by providing
information to Galaxy films because Mr. Atkins provided informed consent, confirmed in
writing, authorizing Ms. Braun to sell his life story rights. Ms. Braun reminded him of the
alternative fee arrangement option of signing a life story rights acquisition agreement. Mr.
Atkins asked again whether signing a life story rights acquisition agreement meant that he would
not have to pay anything, and Ms. Braun affirmed. Unlike the plaintiff in Freeman v. Stevenson,
Mr. Atkins had the option to either pay the legal fees in full or provide informed consent,
confirmed in writing to sell his literary rights. Because Mr. Atkins was given the opportunity to
seek independent counsel, but refused, the court is likely to find that there are instances, such as
described in Freeman v. Stevenson, when it is appropriate for an attorney to reveal
information about a client, namely when, “pursuant to Rule 503, the client has provided
informed consent to the attorney to do so.”
After Ms. Braun told Mr. Atkins she could give him a proposed agreement which he could take
to an independent attorney to review. He became very upset at this suggestion and replied that he
did not have money to go talk to another attorney. Under Rule 503, Mr. Atkins provided
informed consent, and after he signed it, Ms. Braun then negotiated his life story rights with
various producers and studios and reached an agreement with Galaxy Films where Ms. Braun
paid $200,000 for the story.
Thus, Ms. Braun did not violate her duty of confidentiality to Mr. Atkins.
(iii) If the Life Story Rights Acquisition Agreement is deemed
unenforceable, what recommendations do you have regarding how Ms. Braun should
proceed with the film production?
Under the Lincoln Rules of Professional Conduct, Rule 503 states that A lawyer who has
formerly represented a client in a matter or whose present or former firm has formerly
represented in a client matter shall not thereafter use information relating to the representation to
the disadvantage of the former client or reveal information relating to the representation of the
former client except where a client has provided informed consent to do so.
Here, if a court finds that the Life Story Rights Acquisition Agreement is deemed
unenforceable, it is recommended that Ms. Braun instead work with the film production to only
recount her representation with Mr. Atkins, as opposed to Mr. Atkins’ life story. If Ms. Braun
may be able to secure informed consent, confirmed in writing that she will sell the literary rights
of her own story that includes the representation of Mr. Atkins, there may be a level of overlap of
what was originally promised to the film production, at a reduced fee. As described in Freeman
v. Stevenson, the defendant attorney appealed a trial court injunction prohibiting the release of a
book that recounted her representation of her client. The court in the Freeman case found that it
is impermissible for an attorney to reveal any information relating to the representation of that
client, unless the client provides informed consent. If Mr. Atkins provides informed consent of
Ms. Braun’s recounting of the representation, Rule 503 may be enforceable.
Please let me know if you have any questions or concerns related to my analysis of Ms. Braun’s
case.
Sincerely,
Attorney
Richards & Sweeney, LLP
Attorneys at Law
716 S. Apple Street
Garden City, Lincoln 97842