2013 Ethics Update

Charles Herring, Jr.
Herring & Irwin, L.L.P.
Austin, Texas
Barratry fall-out
 2011 passage – SB 1716
 Remedies:
 1. Client suits to void contracts obtained by
barratrous conduct, plus attorney’s fees
 2. Nonclients solicited by barratrous conduct-$10,000 plus atty’s fees.
 “Barratry bonus” suits
 May a corporation sue? R 7.03 distinction –
particular event v. general business
What is barratry?
 Criminal prohibitions – principally
Penal Code § 38.12
 Civil case law – “exciting and
stirring up … suits”; “adjudicative
 Ancient origins
Barratry -- § 38.12
 Case runners
 Suing without authorization
 “solicit[ing]employment, either in person or
by telephone, for himself or for another”
inconsistently with Disciplinary Rules;
 knowingly solicits employment from
someone represented by other counsel
Barratry -- § 38.12
 Communicates using “coercion, duress, fraud,
overreaching, harassment, intimidation, or
undue influence” or
 A communication that “contains a false,
fraudulent, misleading, deceptive, or unfair
statement or claim.”
Pelton v. McClaren Rubber, Co.,
120 S.W.2d 516 (Tex. Civ. App. – Waco 1938,
no pet.)
“Pelton secured his contract of employment to
collect the claim in question by personal
solicitation in violation of this law. His
purported contract was therefore void and
Defensive Uses
 Motion to disqualify Plaintiffs’ counsel
 Motion to require P’s attys to instruct clients
concerning rights – Willis; PJC 104.2; Disciplinary
Rule 1.03
 Invalidating contracts based on barratrous
 Attacking attorney’s fees when barratry occurs
Attorneys’ Fees
 DLA Piper v. Adam Victor
 Suit for $675,000 unpaid fees
 DLA internal docs:
 “Now Vince has random people working full time
on random research projects in standard ‘churn
that bill, baby!’ mode”
 Prof. William G. Ross: “churning . . . is an insidious
problem in the legal profession”
Attorneys’ Fees
Frailick v. Plumbers & Pipefitters
Natl. Pension Fund, 2011 WL 487754
(N.D. Tex. 2011)
 Disallowing fees in ERISA case for various
billing practices, including:
 “lack of billing judgment” (noting the lack
of documentation of hours written off as
unproductive, excessive, or redundant)
Attorneys’ Fees
Frailick (cont.):
 “block billing” (reporting all tasks performed on a
given day as a single entry, rather than specifying
the time spent per task)
 vagueness (e.g., entries reading “telephone
conference,” “phone conference with co-counsel,”
“legal research”);
 billing for “clerical work” by lawyers (e.g.,
organizing files, serving and filing proofs of
Attorneys’ Fees
 Burrow v. Arce – fee forfeiture for breach of
fiduciary duty
 PJC 104.2
 Transaction “fair and reasonable”
 Acting in “utmost good faith”
 “Scrupulous honesty”
 Putting client’s interests above own
Motions To Disqualify
 Former client conflicts
 Proliferation
 R 1.09:
 Adverse to former client
 Same or substantially related matter
 Reasonable probability of R 1.05 (confidentiality)
 Challenging work product
 Tactical considerations
Motions To Disqualify
 Is an in-house counsel who is also corporate
officer judged by lawyer or non-lawyer standard?
 In re SAExploration, Inc., 2012 WL 6017717 (Tex.
App. –Houston [14th Dist.] 2012, no pet.)
 Held: Non-lawyer standard applied
 Screening permissible – not done, so counsel
disqualified and screened
Motions To Disqualify
 In re SAExploration, Inc. (cont.)
 What should the company have done?
“caution [him] not to disclose any
“instruct [him] not to work on any matter
that he previously worked on for the other
“take reasonable steps to ensure that the
employee will not work in connection with
such matters”
Anti-fracturing doctrine
 “Legal malpractice” v. other claims
 Professional negligence v. breach of fiduciary
duty, fraud, DTPA, breach of contract
 Significance:
 Statute of limitations
 Remedies
 Attorney’s fees
Attorney-client Relationship?
 Express agreement
 Agreement implied by conduct
 Attorney by estoppel
 Duty to warn cases – Perez v. Kirk &
 Mirandizing corporate “constituents”
Attorney Immunity Defense
 Suits by opposing parties
 Easton v. Phelan, 2012 WL 1650024 (Tex. App.–
Houston [1st Dist.] 2012, no pet.)
 Alleged that defendant lawyers
conspired to deprive the plaintiffs of
annuity funds by “generating, filing,
and prosecuting a ‘pretend’ lawsuit,
committing fraud, and tampering with
governmental records
Attorney Immunity Defense
 Easton v. Phelan, (cont.)
 “[t]he filing of pleadings and motions – even
if they are unmeritorious or frivolous – and
the rendition of legal advice cannot form
the factual basis of a fraud claim against an
attorney when the acts are performed
within the context of discharging duties to a
Attorney Immunity Defense
 Easton v. Phelan, (cont.)
 however, immunity “to non-clients is not
absolute …. [A]n attorney may be held liable
for conspiracy to defraud by knowingly
assisting a client in evading a judgment
through a fraudulent transfer, or . . .
knowingly assisting a client in extorting a
payment to which the client had no legal
Professional Ethics Committee
 Appointed by Tx S Ct
 Created by statute:
 Tex. Gov’t Code §§ 81.091-.95
 Effect of opinions?
 § 81.092(c): opinions not binding on Tx S Ct
 Stonewall Fin. Servs. Corp. v. Corona, 2012 WL
4087642 (Tex. App.—Texarkana 2012, no pet.)
 Opinions “advisory”
 Practicalities: disciplinary enforcement
PEC Op. 614 (2012)
 Under Rule 3.04(b): A lawyer must not condition a
suit settlement on the other party providing
testimony acceptable in form and substance
 But may require an affidavit to address truthfully
a “specified subject or incident,” without
specifying content
PEC Op. 617 (2012)
 Addressing Rule 7.01 trade-name-restriction &
Rule 8.05 choice-of-law issues
 Lawyer licensed in both Texas and North
Carolina, but who practiced law in North
Carolina, proposed to use a trade name in his
North Carolina law firm
 (Compare Johnnie Cochran “mirror page”
PEC Op. 621 (2012)
 Addressing Rule 3.04(b) witness-payment issues
 A lawyer handling a divorce case proposed to
allow client to pay the client’s former lawyer to
serve as both fact witness and expert witness
 Held: permissible if fees reasonable and not
contingent on outcome
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