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 cheerleading” 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 unenforceable.” 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 solicitation 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 service) 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) violation 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 confidences” “instruct [him] not to work on any matter that he previously worked on for the other side” “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 & Carrigan 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 client” 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 right” 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” settlement) 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