Powerpoint Chapter 6-2
Duty to Third Parties, the Law,
Lawyers and the Bar
Chapter 6-10
•
After both parties had completed the presentation of evidence and
arguments, the judge took under advisement a case tried without a jury. The
case involved a difficult fact issue of causation and a difficult issue of law. After
the case was under advisement for several weeks, the plaintiff's attorney
heard rumors that the judge was having difficulty determining the issue of
factual causation and was uncertain about the applicable law. Immediately
after hearing these rumors, the attorney telephoned the judge, told her of the
rumors he had heard, and asked the judge if she would like to reopen the case
for additional evidence and briefing from both parties. Thereafter the judge
reopened the case for further testimony and requested supplementary briefs
from both parties. Was it proper for the attorney to communicate with the
judge?
– Yes, because both parties were given full opportunity to present their views on the
issues in the case.
– Yes, because the attorney did not make any suggestion as to how the judge should
decide the matter.
– No, because the attorney communicated with the judge on a pending matter
without advising opposing counsel.
– No, because the attorney caused the judge to reopen a case that had been taken
under advisement.
• Rule 3.5 Impartiality And Decorum Of The Tribunal
• A lawyer shall not:
• (a) seek to influence a judge, juror, prospective juror or other
official by means prohibited by law;
• (b) communicate ex parte with such a person during the proceeding
unless authorized to do so by law or court order;
• (c) communicate with a juror or prospective juror after discharge of
the jury if:
• (1) the communication is prohibited by law or court order;
• (2) the juror has made known to the lawyer a desire not to
communicate; or
• (3) the communication involves misrepresentation, coercion, duress
or harassment; or
• (d) engage in conduct intended to disrupt a tribunal.
When are ex parte communications with judges
permitted?
• Restatement § 113 Comment (c) notes that such communications
are permissible for routine scheduling matters.
• In addition, Restatement
• § 113 Comment (d) explains that such communications are often
• permitted in “obtaining a temporary restraining order.” With regard
• to the latter, Rule 3.3(d) imposes a duty upon lawyers to “inform
the
• tribunal of all material facts known to the lawyer that will enable
the
• tribunal to make an informed decision, whether or not the facts are
• adverse.” Casebook p. 532.
Chapter 6-11
• An attorney represented a man in a case set for a jury trial. After the list of
potential jurors was made available, the attorney hired a private
investigator to interview the potential jurors and their family members
concerning their relevant past experiences related to the subject matter of
the action. The investigator did not inform the jurors or their family
members that he was working on behalf of the attorney. The interviews
were entirely voluntary and were not harassing. The attorney did not
provide the report of the interviews to opposing counsel. He used the
report to make decisions regarding jury selection. Is the attorney subject
to discipline?
– Yes, because the attorney did not provide the report of the interviews to
opposing counsel.
– Yes, because the investigator, at the attorney's direction, communicated with
potential jurors prior to trial.
– Yes, because the investigator did not inform the jurors or their family
members that he was working on behalf of the attorney.
– No, because the interviews were entirely voluntary and not harassing.
Rule 3.5 Impartiality And Decorum Of
The Tribunal
• A lawyer shall not:
• (a) seek to influence a judge, juror, prospective juror or other
official by means prohibited by law;
• (b) communicate ex parte with such a person during the proceeding
unless authorized to do so by law or court order;
• (c) communicate with a juror or prospective juror after discharge of
the jury if:
• (1) the communication is prohibited by law or court order;
• (2) the juror has made known to the lawyer a desire not to
communicate; or
• (3) the communication involves misrepresentation, coercion, duress
or harassment; or
• (d) engage in conduct intended to disrupt a tribunal.
Rule 8.4 Misconduct
• It is professional misconduct for a lawyer to:
• (a) violate or attempt to violate the Rules of
Professional Conduct, knowingly assist or
induce another to do so, or do so through the
acts of another;
Chapter 6-12
• An attorney is a well-known tax lawyer and author. During congressional
hearings on tax reform, the attorney testified to her personal belief and
expert opinion on the pending reform package. She failed to disclose in
her testimony that she was being compensated by a private client for her
appearance. In her testimony, the attorney took the position favored by
her client, but the position was also one that the attorney believed was in
the public interest. Was it proper for the attorney to present this
testimony without identifying her private client?
– Yes, because the attorney believed that the position she advocated was in the
public interest.
– Yes, because Congress is interested in the content of the testimony and not
who is paying the witness.
– No, because a lawyer may not accept a fee for trying to influence legislative
action.
– No, because a lawyer who appears in a legislative hearing should identify the
capacity in which the lawyer appears.
Rule 3.9 Advocate In Nonadjudicative
Proceedings
• A lawyer representing a client before a
legislative body or administrative agency in a
nonadjudicative proceeding shall disclose that
the appearance is in a representative capacity
and shall conform to the provisions of Rules
3.3(a) through (c), 3.4(a) through (c), and 3.5.
6-13
• Attorney is a well-known, highly skilled litigator. Attorney's practice is in an
area of law in which the trial proceedings are heard by the court without a
jury. In an interview with a prospective client, Attorney said, "I make
certain that I give the campaign committee of every candidate for elective
judicial office more money than any other lawyer gives, whether it's $500
or $5,000. Judges know who helped them get elected." The prospective
client did not retain Attorney. Is Attorney subject to discipline?
– Yes, if Attorney's contributions are made without consideration of candidates'
merits.
– Yes, because Attorney implied that Attorney receives favored treatment by
judges.
– No, if Attorney's statements were true.
– No, because the prospective client did not retain Attorney.
Rule 8.4 Misconduct
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It is professional misconduct for a lawyer to:
(a) violate or attempt to violate the Rules of Professional Conduct, knowingly assist
or induce another to do so, or do so through the acts of another;
(b) commit a criminal act that reflects adversely on the lawyer's honesty,
trustworthiness or fitness as a lawyer in other respects;
(c) engage in conduct involving dishonesty, fraud, deceit or misrepresentation;
(d) engage in conduct that is prejudicial to the administration of justice;
(e) state or imply an ability to influence improperly a government agency or official
or to achieve results by means that violate the Rules of Professional Conduct or
other law; or
(f) knowingly assist a judge or judicial officer in conduct that is a violation of
applicable rules of judicial conduct or other law.
Advocate
Rule 3.5 Impartiality And Decorum Of The Tribunal
A lawyer shall not:
(a) seek to influence a judge, juror, prospective juror or other official by means
prohibited by law;
Chapter 6-14
•
Attorney represents Defendant, a prominent businessman, in a civil paternity
suit brought by Plaintiff, who was formerly Defendant's employee. Blood tests
did not exclude Defendant's paternity, and the case is being tried before a jury.
The result turns on questions of fact. Defendant has steadfastly denied that he
had sexual relations with Plaintiff, while Plaintiff has testified that they had
sexual relations while on business trips and in her home. The trial has
generated great public interest and is closely followed by the news media.
When Plaintiff completed her testimony, Attorney was interviewed by a
newspaper reporter. Which of the following statements, if believed by the
attorney to be true, would be proper for attorney to make. I."As stated in our
pleadings, we expect to prove that other men could be the father of Plaintiff's
child." II."We have scientific medical tests proving that Defendant is sterile."
III."We have been unable to locate several people whose testimony will be
helpful to us, and I implore them to contact me immediately."
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II only
III only
I and III, but not II
I, II, and III
Rule 3.6
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(a) A lawyer who is participating or has participated in the investigation or litigation of a matter shall not make an
extrajudicial statement that the lawyer knows or reasonably should know will be disseminated by means of public
communication and will have a substantial likelihood of materially prejudicing an adjudicative proceeding in the
matter.
(b) Notwithstanding paragraph (a), a lawyer may state:
(1) the claim, offense or defense involved and, except when prohibited by law, the identity of the persons
involved;
(2) information contained in a public record;
(3) that an investigation of a matter is in progress;
(4) the scheduling or result of any step in litigation;
(5) a request for assistance in obtaining evidence and information necessary thereto;
(6) a warning of danger concerning the behavior of a person involved, when there is reason to believe that there
exists the likelihood of substantial harm to an individual or to the public interest; and
(7) in a criminal case, in addition to subparagraphs (1) through (6):
(i) the identity, residence, occupation and family status of the accused;
(ii) if the accused has not been apprehended, information necessary to aid in apprehension of that person;
(iii) the fact, time and place of arrest; and
(iv) the identity of investigating and arresting officers or agencies and the length of the investigation.
(c) Notwithstanding paragraph (a), a lawyer may make a statement that a reasonable lawyer would believe is
required to protect a client from the substantial undue prejudicial effect of recent publicity not initiated by the
lawyer or the lawyer's client. A statement made pursuant to this paragraph shall be limited to such information as
is necessary to mitigate the recent adverse publicity.
Gentile v. State Bar of Nevada
• Gentile holds press conference stating that “the evidence
demonstrated his client’s innocence,” that the likely culprit
was a police detective, and that “other victims were not
credible.”
• Nevada disciplines.
• Violation under Rule 3.6 (a) and (b)?
• Supreme Court upholds Nevada rule substantially similar to
Rule 3.6 but limits it to “attorney[] speech that will have a
“substantial likelihood of materially prejudicing an
adjudicative proceeding.” Not demonstrated here and, as
applied, Nevada rule void for vagueness.
• Rule 3.6 (c)?
Chapter 6-15
•
An attorney regularly appears before a trial court judge who is running for
reelection in six months. Over the past year, the attorney had noticed that the
judge has become increasingly ill tempered on the bench. Not only is the judge
abrupt and critical of lawyers appearing before him, he is also rude and abusive to
litigants. On more than one occasion, the judge has thrown his gavel across the
courtroom in a fit of temper. The judge's conduct on the bench is often the subject
of discussion whenever a group of lawyers meets. Some lawyers are automatically
filing requests for judicial substitution whenever a case in which they are to appear
is assigned to the judge. The attorney discussed the matter with her law partners,
who rarely make court appearances. The attorney's law partners suggested that
she, too, file a request for judicial substitution whenever one of her cases is
assigned to the judge. In addition, the attorney and her law partners discussed the
possibility of reporting to the judge to the appropriate disciplinary authority but
are concerned that this would alienate the other judges to whom their cases are
assigned. The attorney has reluctantly started filing for substitution of the judge in
every one of her cases to which the judge is assigned but she has taken no further
action. Is the attorney subject to discipline?
– Yes, because the attorney failed to inform the appropriate authorities about
the judge's conduct.
– Yes, because, by filing automatic requests for substitution of the judge, the
attorney undermined public confidence in the administration of justice.
– No, because the attorney has a duty to represent her clients zealously.
– No, because the judge is running for reelection and may not be reelected.
• Rule 8.3(a) A lawyer who knows that another lawyer has
committed a violation of the Rules of Professional Conduct
that raises a substantial question as to that lawyer's
honesty, trustworthiness or fitness as a lawyer in other
respects, shall inform the appropriate professional
authority.
• (b) A lawyer who knows that a judge has committed a
violation of applicable rules of judicial conduct that raises a
substantial question as to the judge's fitness for office shall
inform the appropriate authority.
• (c) This Rule does not require disclosure of information
otherwise protected by Rule 1.6 or information gained by a
lawyer or judge while participating in an approved lawyers
assistance program.
• Professionalism?
6-16
• An attorney practices law in the same community as a lawyer who is
running for election as a state judge. The attorney has frequently observed
the judicial candidate's courtroom demeanor in litigated cases. Based on
those experiences, the attorney believes that the judicial candidate does
not have a proper judicial temperament. A local news reporter asked the
attorney how he would rate the candidate, and the attorney responded in
good faith that he believed the candidate was unsuited for the bench and
lacked the proper judicial temperament for a judge. A local newspaper
with a wide circulation quoted the attorney's remarks. Were the
attorney's remarks proper?
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Yes, because the attorney was not seeking judicial office.
Yes, because the attorney believed the candidate was unsuited for the bench.
No, because the remarks serve to bring the judiciary into disrepute.
No, because a lawyer should not publicly comment on candidates for judicial
office.
• Rule 8.2(a) A lawyer shall not make a
statement that the lawyer knows to be false or
with reckless disregard as to its truth or falsity
concerning the qualifications or integrity of a
judge, adjudicatory officer or public legal
officer, or of a candidate for election or
appointment to judicial or legal office.
In re Holzman v. Standing Comm. v.
Yagman
• Holtzman: Court upholds discipline of DA for relying on ADA’s
account in alleging that Judge asked sexual assault victim to
demonstrate the assault in robing room. Holds that “criticism
adversely affects the administration of justice and adversely reflects
on the attorney’s judgment and, consequently her ability to practice
law.”
– Query: Rule 8.2 (a): (a) A lawyer shall not make a statement that the
lawyer knows to be false or with reckless disregard as to its truth or
falsity concerning the qualifications or integrity of a judge,
adjudicatory officer or public legal officer, or of a candidate for
election or appointment to judicial or legal office.
• Yagman: Court rejects discipline for lawyer who described judge as
“anti-semitic,” “dishonest,” and “drunk on the bench.” Court held
that first two statements were protected as opinion and that “drunk
on the bench” had not been disproven. Controversial decision.
Kunstler v. Galligan: Contempt
• Bill Kunstler
• Lawyer describes judge’s decision as “outrageous” and tells judge
“[y]ou have exhibited what your partisanship is . . . . You are a
disgrace to the bench.”
• Court holds lawyer in contempt for “[d]isorderly, contemptuous, or
insolent behavior . . . Directly tending to interrupt court
proceedings, or to impair respect to its authority.” See also Rule 3.5
(d) (“engag[ing] in conduct intended to disrupt a tribunal”)
• Kunstler later disciplined for “committing a ‘serious crime’ in
violation of the disciplinary rules.” See Rule 8.4 (b)(“commit[ting] a
criminal act that reflects adversely on the lawyer's honesty,
trustworthiness or fitness as a lawyer in other respects”)
6-17
• An attorney represented a respondent in proceedings instituted by a child
protection services agency to establish the paternity of a child and to
recover past-due child support. The mother of the child had refused to file
a complaint, had refused to retain a lawyer, and in fact had asked that the
agency not file any action whatsoever. However, state law permitted the
agency to commence paternity and support proceedings in its own name
in such circumstances. The attorney contacted the mother without the
knowledge or consent of the agency or its lawyers. The attorney identified
himself to the mother as "an officer of the court" and told the mother that
he was investigating the matter. Based upon what she told him, the
attorney prepared and the mother signed an affidavit truthfully stating
that the respondent was not the father of the child. Is the attorney subject
to discipline?
– Yes, because the attorney acted without the knowledge or consent of the
agency or its lawyers.
– Yes, because the attorney implied that he was disinterested in the matter.
– No, because all of the attorney's statements to the mother were true.
– No, because the attorney did not give the mother legal advice.
Rule 4.3
• In dealing on behalf of a client with a person who is
not represented by counsel, a lawyer shall not state or
imply that the lawyer is disinterested. When the
lawyer knows or reasonably should know that the
unrepresented person misunderstands the lawyer’s
role in the matter, the lawyer shall make reasonable
efforts to correct the misunderstanding. The lawyer
shall not give legal advice to an unrepresented person,
other than the advice to secure counsel, if the lawyer
knows or reasonably should know that the interests of
such a person are or have a reasonable possibility of
being in conflict with the interests of the client.
6-18
• John Lawyer represents Larry Landlord in a nonpayment eviction suit
against Thomas Tenant. At court, the case is called and Lawyer asks Tenant
to step outside to talk. Tenant tells Lawyer he would like to pay his rent to
Landlord but that for two months Landlord has refused to repair his
broken refrigerator. Lawyer tells Tenant that he has a legal obligation to
pay his rent and will be evicted if he doesn't do so. Lawyer does not advise
Tenant that Tenant may have potential claims against Landlord under the
warranty of habitability. Lawyer suggests that if Tenant signs a stipulation
agreeing to pay the back rent, Landlord will look into the repair. Has John
Lawyer committed a disciplinary violation?
– Yes
– No
Rule 4.3
• In dealing on behalf of a client with a person who is
not represented by counsel, a lawyer shall not state or
imply that the lawyer is disinterested. When the lawyer
knows or reasonably should know that the
unrepresented person misunderstands the lawyer’s
role in the matter, the lawyer shall make reasonable
efforts to correct the misunderstanding. The lawyer
shall not give legal advice to an unrepresented
person, other than the advice to secure counsel, if the
lawyer knows or reasonably should know that the
interests of such a person are or have a reasonable
possibility of being in conflict with the interests of the
client.
6-19
•
A seller was engaged in negotiations to sell his interest in a large tract of land
to a buyer who was unrepresented in the transaction. Before the seller went
out of town for a few days, he told the buyer to call his attorney if the buyer
had any questions about the property. The buyer called the seller's attorney,
responded that, based on his experience handling real estate transactions in
the neighborhood, the buyer would be getting a lot of property for the price.
At the time the attorney spoke to the buyer, the attorney knew that there was
a defect in the title and that the buyer's attempt to purchase the seller's
interest in the tract would not result in the buyer's acquisition of any interest
in the property. Relying on the attorney's assurance, the buyer agreed to make
the purchase. Shortly after the sale closed, the buyer discovered that his
acquisition was worthless. Is the attorney subject to civil liability to the buyer?
– Yes, because the attorney knowingly made false representations of fact to the
buyer.
– Yes, because the attorney implied that his opinion regarding the value of the
property was a disinterested opinion.
– No, because the attorney's statement that the buyer would be getting a lot of
property for the money was a statement of opinion regarding the value of the
property.
– No, because the buyer was not a client of the attorney.
Rule 4.1
• In the course of representing a client a lawyer
shall not knowingly:
• (a) make a false statement of material fact or
law to a third person; or
• (b) fail to disclose a material fact to a third
person when disclosure is necessary to avoid
assisting a criminal or fraudulent act by a
client, unless disclosure is prohibited by Rule
1.6.
6-20
• An attorney represented a seller in negotiating the sale of his ice cream
parlor. The seller told the attorney in confidence that, although the
business had once been very profitable, recent profits had been stable but
modest. As the negotiations proceeded, the buyer appeared to be losing
interest in the deal. Hoping to restore the buyer's interest, the attorney
stated, "The ice cream business is every American's dream: happy kids,
steady profits, and a clear conscience." The buyer bought the ice cream
parlor but was disappointed when his own profits proved to be modest. Is
the attorney subject to discipline?
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Yes, because the attorney made a false statement of fact to the buyer.
Yes, because the attorney exaggerated the profitability of the business.
No, because the attorney represented the seller, not the buyer.
No, because the attorney's statement constitutes acceptable puffing in
negotiations.
Rule 4.1
• In the course of representing a client a lawyer shall not knowingly:
• (a) make a false statement of material fact or law to a third person;
or
• (b) fail to disclose a material fact to a third person when disclosure
is necessary to avoid assisting a criminal or fraudulent act by a
client, unless disclosure is prohibited by Rule 1.6.
• Comment [2]: Under generally accepted conventions in
negotiation, certain types of statements ordinarily are not taken as
statements of material fact. Estimates of price or value placed on
the subject of a transaction and a party’s intentions as to an
acceptable settlement of a claim are ordinarily in this category, and
so is the existence of an undisclosed principal except where
nondisclosure of the principal would constitute fraud.
6-21
• An attorney represented a plaintiff in a civil lawsuit against a defendant
who was represented by other counsel. In the course of developing the
plaintiff's case, the attorney discovered evidence that she reasonably
believed showed that the defendant had committed a crime. The attorney
felt that the defendant's crime should be reported to local prosecutorial
authorities. After full disclosure, the plaintiff consented to the attorney's
doing so. Without advising the defendant's counsel, the attorney informed
the local prosecutor of her findings, but she sought no advantage in the
civil suit from her actions. The defendant was subsequently indicted, tried,
and acquitted of the offense. Was the attorney's disclosure to
prosecutorial authorities proper?
– Yes, because the attorney reasonably believed the defendant was guilty of a
crime.
– Yes, because the attorney was required to report knowledge of criminal
conduct when that knowledge was obtained through unprivileged sources
– No, because the attorney did not advise the other counsel of her disclosure
before making it.
– No, because the plaintiff's civil suit against the defendant was still pending
• The Model Code “expressly prohibit[ed] a lawyer from
threatening to use, or using, the criminal process solely
to enforce a private civil claim.” DR 7-105(A).
• No equivalent Model Rule.
• ABA Formal Op. 92-363 (1992): “a threat to bring
criminal charges for the purpose of advancing a civil
claim would violate the Model Rules if the criminal
wrongdoing were unrelated to the client’s civil claim, if
the lawyer did not believe both the civil claim and the
potential criminal charges to be well-founded, or if the
threat constituted an attempt to exert or suggest
improper influence over the criminal process.”
Chapter 6-22
• An attorney is employed by a client who is a fugitive from justice under
indictment for armed robbery. The attorney, after thorough legal research
and investigation of the facts furnished by the client, reasonably believes
the indictment is fatally defective and should be dismissed as a matter of
law. The attorney advised the client of his opinion and urged the client to
surrender. The client told the attorney that she would not surrender. The
attorney informed the district attorney that he represented the client and
that he had counseled her to surrender but that she refused to follow his
advice. The attorney has not advised his client on how to avoid arrest and
prosecution and does not know where she is hiding. Is the attorney
subject to discipline if he continues to represent the client?
– Yes, because the client is engaging in continuing illegal conduct.
– Yes, because the client refused to accept the attorney's advice and surrender.
– No, because the attorney is not counseling the client to avoid arrest and
prosecution.
– No, because the attorney believes the indictment is defective.
Rule 1.2(d)
• A lawyer shall not counsel a client to engage,
or assist a client, in conduct that the lawyer
knows is criminal or fraudulent, but a lawyer
may discuss the legal consequences of any
proposed course of conduct with a client and
may counsel or assist a client to make a good
faith effort to determine the validity, scope,
meaning or application of the law.
Enron
6-23
• For many years, Attorney has served as outside counsel to Corp, a
corporation. Shortly after a change in management, Attorney discovered
what she reasonably believed to be a material misstatement in a
document she had drafted that Attorney was about to file on Corp's behalf
with a government agency. Attorney advised Corp's Board of Directors that
filing the document was probably criminal. However, the Board disagreed
that there was any material misstatement and directed Attorney to
proceed with the filing. Attorney did so. It later becomes known that the
document did indeed include a material misstatement. Attorney faces:
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No liability
Discipline
Potential civil and criminal liability
Discipline, as well as potential civil and criminal liability
Rule 1.6
• (b) A lawyer may reveal information relating to the
representation of a client to the extent the lawyer
reasonably believes necessary:
• (2) 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;
• (3) 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 the client's
commission of a crime or fraud in furtherance of which the
client has used the lawyer's services;
Rule 1.2 (d)
• A lawyer shall not counsel a client to engage,
or assist a client, in conduct that the lawyer
knows is criminal or fraudulent, but a lawyer
may discuss the legal consequences of any
proposed course of conduct with a client and
may counsel or assist a client to make a good
faith effort to determine the validity, scope,
meaning or application of the law.
Rule 1.13
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(b) If a lawyer for an organization knows that an officer, employee or other person associated with
the organization is engaged in action, intends to act or refuses to act in a matter related to the
representation that is a violation of a legal obligation to the organization, or a violation of law that
reasonably might be imputed to the organization, and that is likely to result in substantial injury to
the organization, then the lawyer shall proceed as is reasonably necessary in the best interest of
the organization. Unless the lawyer reasonably believes that it is not necessary in the best interest
of the organization to do so, the lawyer shall refer the matter to higher authority in the
organization, including, if warranted by the circumstances to the highest authority that can act on
behalf of the organization as determined by applicable law.
(c) Except as provided in paragraph (d), if
(1) despite the lawyer's efforts in accordance with paragraph (b) the highest authority that can act
on behalf of the organization insists upon or fails to address in a timely and appropriate manner an
action, or a refusal to act, that is clearly a violation of law, and
(2) the lawyer reasonably believes that the violation is reasonably certain to result in substantial
injury to the organization,
then the lawyer may reveal information relating to the representation whether or not Rule 1.6
permits such disclosure, but only if and to the extent the lawyer reasonably believes necessary to
prevent substantial injury to the organization.
Rule 1.16
• Except as stated in paragraph (c), a lawyer
shall not represent a client or, where
representation has commenced, shall
withdraw from the representation of a client
if:
• (1) the representation will result in violation of
the rules of professional conduct or other law;
Hazard Test
(1) The client is engaged in a course of conduct
that violates the criminal law or is an intentional
violation of a civil obligation, other than failure to
perform a contract or failure to sustain a good
faith claim to property;
(2) The lawyer has knowledge of the facts
sufficient to reasonably discern that the client's
course of conduct is such a violation; and
(3) The lawyer facilitates the client's course of
conduct either by giving advice that encourages
the client to pursue the conduct or indicates how
to reduce the risks of detection, or by performing
an act that substantially furthers the course of
conduct.
• .
6-24
• L&C is representing S&L, a savings and loan, in defending against
Government Regulator's investigation. Associate brings to Partner's
attention that a board resolution previously filed with Government
Regulator has been back-dated to give the appearance of
contemporaneous board approval of a particular transaction. Associate
urges disclosure. Based upon review of the relevant law and rules, which
are not clear, Partner decides against disclosure and instructs Associate
not to disclose. Partner and Associate make arguments to Government
Regulator predicated on the veracity of the particular board resolution. It
is later determined that both the law and rules required disclosure of the
back-dating to the government. Which of the following is true:
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Partner and Associate face discipline but not liability.
Partner and Associate face liability but not discipline.
Partner and Associate face both discipline and liability.
Partner faces discipline and liability; Associate faces liability only.
Partner faces liability only; Associate faces discipline and liability.
Rule 5.2 (subordinate lawyer)
• (a) A lawyer is bound by the Rules of
Professional Conduct notwithstanding that the
lawyer acted at the direction of another
person.
• (b) A subordinate lawyer does not violate the
Rules of Professional Conduct if that lawyer
acts in accordance with a supervisory lawyer's
reasonable resolution of an arguable question
of professional duty.
6-25
• Lincoln & Center ("L&C") wrote an opinion letter for a transaction
between Ronen Corp & Serenity, a partnership. A key issue was whether
Serenity was independent of Ronen, which required that at least 3% of its
equity was independent of Ronen. L&C did not investigate the
independent investors, but if it had it would have discovered that they
were paper entities lacking in capital. The deal is later found to be
unlawful. L&C potentially faces:
– Sanctions under the Sarbanes-Oxley regulations
– Sanctions under Sarbanes Oxley regulations and discipline under the
Rules
– Discipline under the Rules
– None of the above
Sarbanes-Oxley
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The Sarbanes-Oxley Regulations, 17 C.F.R. § 205.3, Casebook p.
595, require lawyers “appearing and practicing before the
Commission” to report “evidence of a material violation . . .
EITHER to the issuer’s chief legal officer . . . or to both the issuer’s chief legal officer
and its chief executive officer.”
Unless the “attorney who has made
the report . . . reasonably believes that the chief legal officer or the
chief executive officer . . . has provided an appropriate response within
a reasonable time, the attorney shall report the evidence of a material
violation to: (i) [t]he audit committee of the issuer’s board of directors,
(ii) [a]nother committee” of independent directors “if the issuer’s board
of directors has no audit committee[;]” or “[t]he issuer’s board of
directors . . . if the board of directors” has no committee of
independent directors. 17 CFR § 205.3 (b).
OR If the client “has
established a qualified legal compliance committee[,]” the lawyer may
report “evidence of a material violation” directly to that committee and
need not follow-up as required if the lawyer reports to the chief legal
officer and/or chief executive officer. 17 CFR § 205.3 (c).
(Note that the attorney
has no obligation to report ‘[i]f the attorney was retained or directed . .
. to investigate such evidence of a material violation. . . [or] to assert . .
. a colorable defense on behalf of the issuer[.]”)
Rule 1.6
• (b) A lawyer may reveal information relating to the
representation of a client to the extent the lawyer
reasonably believes necessary:
• (2) 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;
• (3) 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 the client's
commission of a crime or fraud in furtherance of which the
client has used the lawyer's services;
Rule 1.2 (d)
• A lawyer shall not counsel a client to engage,
or assist a client, in conduct that the lawyer
knows is criminal or fraudulent, but a lawyer
may discuss the legal consequences of any
proposed course of conduct with a client and
may counsel or assist a client to make a good
faith effort to determine the validity, scope,
meaning or application of the law.
Rule 1.13
•
•
•
•
•
(b) If a lawyer for an organization knows that an officer, employee or other person associated with
the organization is engaged in action, intends to act or refuses to act in a matter related to the
representation that is a violation of a legal obligation to the organization, or a violation of law that
reasonably might be imputed to the organization, and that is likely to result in substantial injury to
the organization, then the lawyer shall proceed as is reasonably necessary in the best interest of
the organization. Unless the lawyer reasonably believes that it is not necessary in the best interest
of the organization to do so, the lawyer shall refer the matter to higher authority in the
organization, including, if warranted by the circumstances to the highest authority that can act on
behalf of the organization as determined by applicable law.
(c) Except as provided in paragraph (d), if
(1) despite the lawyer's efforts in accordance with paragraph (b) the highest authority that can act
on behalf of the organization insists upon or fails to address in a timely and appropriate manner an
action, or a refusal to act, that is clearly a violation of law, and
(2) the lawyer reasonably believes that the violation is reasonably certain to result in substantial
injury to the organization,
then the lawyer may reveal information relating to the representation whether or not Rule 1.6
permits such disclosure, but only if and to the extent the lawyer reasonably believes necessary to
prevent substantial injury to the organization.
Rule 1.16
• Except as stated in paragraph (c), a lawyer
shall not represent a client or, where
representation has commenced, shall
withdraw from the representation of a client
if:
• (1) the representation will result in violation of
the rules of professional conduct or other law;
Rule 1.1
• A lawyer shall provide competent representation to a
client. Competent representation requires the legal
knowledge, skill, thoroughness and preparation reasonably
necessary for the representation.
• Comment [5]: Competent handling of a particular matter
includes inquiry into and analysis of the factual and legal
elements of the problem, and use of methods and
procedures meeting the standards of competent
practitioners. It also includes adequate preparation. The
required attention and preparation are determined in part
by what is at stake; major litigation and complex
transactions ordinarily require more extensive treatment
than matters of lesser complexity and consequence.