16. SUBORDINATE / SUPERVISOR
Read rules 5.1 – 5.3
All students
Ex. 16.4
Richmond article
All students review;
no cold calls
16.5
Subordinate lawyer
hypos
All students review
and be prepared to
discuss
16.7
“Breaking Up
Hard To Do”
All students read
and be prepared to
discuss
Is
16.4. Example: Professional Responsibilities of Law Firm
Associates (Douglas Richmond, Aon Risk Services)
I.
Introduction
Most American lawyers practice in law firms.1 These firms may be as small as
two lawyers or they may be very large firms with international offices. Although law
firms are variously structured and are often comprised of several categories or
classes of lawyers, the lawyers who practice in law firms can generally be divided
between partners and associates. Partners hold equity stakes in their firms, or, in the
case of non-equity partners in multi- tiered partnerships, at least have some voice in
the direction of their firms and in the management of their practices. Regardless, they
are superior to associates, who are at-will employees.2 Although there are
exceptions, associates tend to be relatively young and inexperienced in the practice
1
Michael Asimow, Embodiment of Evil: Law Firms in the Movies, 48 UCLA L. REV. 1339, 1340
(2001).
2
See Douglas R. Richmond, Associates as Snitches and Rats, 43 WAYNE L. REV. 1819, 1820 (1997).
1
of law as compared to partners. Partners have the right to direct associates'
professional activities and to insist upon their obedience in work-related matters.3
Associates must please the partners for whom they work in order to succeed at their
firms; indeed, they must please those partners simply to remain employed. There is,
in short, great asymmetry between associates and partners in terms of experience,
knowledge, control over one's time and work, and power.
The fact that law firm partners and associates hold different professional ranks
and often operate on different professional levels is, in many respects, unremarkable;
other professional service firms also have distinct hierarchies. But law is different in
that it is a self-regulating profession that vigorously enforces its ethics rules, and,
while associates and partners share professional duties and problems, in several key
aspects "[t]he ethical problems of the law firm associate differ from the ethical
problems of the law firm partner."4 This Article has its genesis in those differences
and in the common perception that law firm associates are increasingly pressured to
act unethically.5
This Article's examination of associates' professional responsibilities begins in
Part II with a brief look at law firm culture. Part III discusses associates in the
professional responsibility framework, concentrating on Model Rule of Professional
Conduct 5.26 and section 12 of the Restatement (Third) of the Law Governing
Lawyers.7 Part IV discusses associates' related duties of competence and diligence.
Part V examines the duty of confidentiality. Part VI discusses overbilling, which is a
serious and recurring issue for associates, who regularly are compensated and
evaluated based on billable hours. Because associates spend considerable time
writing, Part VII looks at three related professional responsibility issues: disclosing
to courts directly adverse authority in the controlling jurisdiction, mischaracterizing
facts or legal authority in pleadings and briefs, and plagiarism. Part VIII explores the
duty to report another lawyer's professional misconduct, focusing on the special
problems associates face when the lawyer they are obligated to report is a colleague
and especially when that lawyer is a partner. Finally, Part IX examines associates'
duty of loyalty to their firms.
II.
Law Firm Culture
3
Leonard Gross, Ethical Problems of Law Firm Associates, 26 WM. & MARY L. REV. 259, 261
(1985).
4
Id. at 259.
5
See, e.g., Patrick J. Schiltz, Legal Ethics in Decline: The Elite Law Firm, the Elite Law School, and
the Moral Formation of the Novice Attorney, 82 MINN. L. REV. 705, 707 (1998) (“Over the past
decade or so, the pressure on novice lawyers to act unethically has increased substantially.”).
6
MODEL RULES OF PROF’L CONDUCT R. 5.2 (2004).
7
RESTATEMENT (THIRD) OF THE LAW GOVERNING LAWYERS § 12 (2000).
2
It is easy to identify ethics rules of particular importance to law firm associates.
Before doing that, however, we must pay some attention to law firm culture. Every
firm's culture is different, and it is firm culture more than ethics rules or other
published professional standards that influences associates' behavior.8
Law firm "culture" is not easily defined. For lawyers who have never practiced
in law firms, and certainly for non-lawyers, law firm culture is not easily described.
Generally speaking, law firm culture "is the system of beliefs that members share
about the goals and values that are important to them and about the behavior that is
appropriate to obtain those goals and live those values."9 A firm's founders initially
create its culture.10 Over time, a firm establishes its culture through formal and
informal training programs, and through lawyers' interaction with others in the
firm.11
The fact that law firm culture influences associate behavior more than ethics
rules will surprise no practicing lawyer. Ethics rules are general and sometimes
vague, they establish only minimum standards of conduct, and clever lawyers can
skirt them.12 Additionally, practicing lawyers make ethical judgments on the fly;
professional responsibility problems often present themselves when lawyers perceive
that they have no time to consult rules.13
Although lawyers usually do have time to consult ethics rules and prudent
lawyers routinely suppress feelings of urgency to consider decisions with ethical
implications, it remains true that professional responsibility is first a matter of habit
and instinct. If nothing else, it is instinct that prompts lawyers to consult colleagues
and to seek second opinions before embarking on courses of action with professional
responsibility implications.
Most discussions of law firm culture focus on large firms,14 perhaps because
large law firms are bureaucracies, and it is widely thought that bureaucracies
influence the behavior and thinking of those who work in them. Perhaps it is because
8
Patrick J. Schiltz, On Being a Happy, Healthy and Ethical Member of an Unhappy, Unhealthy, and
Unethical Profession, 52 VAND. L. REV. 871, 912 (1999).
9
Stephen P. Gallagher & Leonard E. Sienko, Jr., Yesterday’s Strategies Rarely Answer Tomorrow’s
Problems, N.Y. ST. B. ASS’N J., Sept. 2004, at 40, 44 n.9.
10
Ellen Freedman, What Makes a Law Firm a Good Place to Work?, PA. LAW., Nov.-Dec. 2004, at
14, 16.
11
See Mark C. Suchman, Working Without a Net: The Sociology of Legal Ethics in Corporate
Litigation, 67 FORDHAM L. REV. 837, 862-63 (1998).
12
See Schiltz, supra note 5, at 713-14.
13
See id. at 719.
14
See, e.g., Kimberly Kirkland, Ethics in Large Law Firms: The Principle of Pragmatism, 35 U.
MEM. L. REV. 631 (2005); Schiltz, supra note 8, at 910-15; Suchman, supra note 11, at 959-70.
3
law firms are growing increasingly large,15 or because large law firms are perceived
as the domain of the legal elite.16 Maybe it is because large firms disproportionately
influence the legal profession.17 Regardless, it is wrong to assume that only large
firms have cultures that influence young lawyers.
This is first because the description of a law firm as "large" is imprecise; a
fifteen-lawyer firm in Hutchinson, Kansas, is large for that city, but even the largest
firms based in Kansas City, Louisville, or Memphis are unlikely to be considered
large in Chicago or New York. Second, small firms have cultures with significant
professional responsibility aspects, both good and bad.18
Unfortunately, examples of unethical cultures in large law firms abound.
Consider two, both drawn from large regional law firms that are prominent in the
states they serve.19
In the first example, the firm instituted an incentive compensation system for
associates linked to billable hours. While associates were only required to bill 1800
hours, they began receiving bonuses at increasing billable hour increments (1950
hours, 2050 hours, and so on).20 Three highly-regarded associates complained to a
respected partner, Edwards, about another associate, Austin. Austin seldom arrived
at the office before 8:30 a.m., rarely stayed past 4:30 p.m., always took lunch, took
vacation, did not work weekends, did not take work home, and did not travel much
in his practice. Yet, Austin billed over 2200 hours for the year. This upset the three
associates, all of whom worked hard but billed nowhere near the hours that Austin
did, and thus received far smaller bonuses. The associates were also offended by the
fact that Austin's billing fraud amounted to the theft of $25,000 from the firm in the
form of an unearned bonus, and the theft of roughly $120,000 from clients via hours
falsely billed. In fact, Austin's billing practices were well known throughout the
firm's associate ranks.
See Asimow, supra note 1, at 1340 (“Very large firms have been growing steadily, both in size and
in market share.”); Robert W. Hillman, Organizational Choices of Professional Service Firms, 58
BUS. LAW. 1387, 1401 (2003) (noting that approximately 750 firms have fifty or more lawyers).
16
Suchman, supra note 11, at 837.
17
LISA G. LERMAN & PHILIP G. SCHRAG, ETHICAL PROBLEMS IN THE PRACTICE OF LAW 598 (2005).
18
See, e.g., In re Yacavino, 494 A.2d 801, 803 (N.J. 1985) (criticizing partners of twenty-lawyer firm
for leaving associate “virtually alone and unsupervised” in a branch office).
19
The names used in these examples are fictitious.
20
Such compensation systems are common. For example, Arnold & Porter LLP employs a bonus
system under which associates “take home $15,000 a year if they bill 1950 hours, [and] double that if
they hit 2200 hours.” Emma Schwartz, Pay Raise, LEGAL TIMES, July 11, 2005, at 3,3. Associates
“who cross the 2,400 hour mark are in for the jackpot: $32,000 for associates up to the sixth year and
$37,500 for seventh years and above.” Id.
15
4
Edwards confronted Austin in the presence of Curtis, the firm's managing
partner. Curtis was also the partner for whom Austin principally worked. Austin
admitted inflating his time, but arrogantly brushed aside Edwards' concerns, saying
that Edwards should not care about his fraud so long as the clients paid their bills.
After all, as a partner, Edwards was profiting from Austin's billing excess. In
Austin's view, the fact that he earned a bonus from the firm to which he was not truly
entitled, while amounting to theft in the abstract, was unimportant given that the firm
earned more in fees for his extra time than it paid to him by way of bonuses.
Edwards and Curtis excused Austin. When Edwards told Curtis that the firm
had to take action against Austin, Curtis disagreed. After all, Curtis said clients liked
Austin. (They might have liked him less if they knew he was stealing from them.)
Curtis contended that Austin's conduct could not constitute fraud because clients had
not complained about it. (Never mind that fraud depends on unsuspecting victims.)
As for the effect of Austin's conduct on associate morale, Curtis told Edwards that he
should inform the complaining associates that if they truly thought the situation to be
unfair, they should start billing like Austin. The firm never took any action. To the
contrary, Curtis championed Austin's election to partnership within the year.
In the second example, a law firm experienced a downturn in its corporate
practice and, as a result, discharged eight junior associates. All of them had recently
received favorable year-end evaluations. Yet, when explaining the firings to a
reporter for a local business journal, the firm's managing partner, Davis, asserted that
the firm discharged the associates for inferior performance. The terminations were
not a product of a slowdown in business as the reporter suspected, Davis said, but a
manifestation of the firm's need to maintain its high professional standards. Davis's
statements were outright lies and certainly violated ethics rules prohibiting
dishonesty.21 The statements, when published, surely hurt the associates, who had to
seek new jobs having been branded incompetent by their former employer in the
press. Davis's statement also told the remaining associates much about the firm's
culture, especially the value the firm placed on honesty.
Of course, the fact that a law firm has an unethical culture does not mean that
all of its associates are or will become unethical. Associates in pervasively unethical
firms may have characteristics or values that enable them to resist the corrosive
effects of these cultures.22 They may find mentors who encourage and inspire ethical
See MODEL RULES OF PROF’L CONDUCT R. 8.4(c) (2004) (prohibiting “conduct involving
dishonesty, fraud, deceit or misrepresentation”); MODEL CODE OF PROF’L RESPONSIBILITY DR 1102(A)(4) (2004) (same).
22
Ideally, associates will not join law firms with unethical cultures, either because they detect cultural
problems when interviewing or because they sense them as summer associates. Unfortunately, novice
21
5
practice, and who foster good lawyering generally.23 Moreover, law firm cultures can
change. Cultural change may be event driven, as where a firm pays a significant sum
to settle a lawsuit against it and thereafter sets about reforming the practices that
gave rise to the litigation.24 Key lawyers may leave, improving culture by subtraction
if the departing lawyers contributed to the undesirable culture, or forcing the firm to
undergo self-critical analysis if the defectors are productive and ethical lawyers who
left because of their unhappiness with the culture. Law firm culture can also
transform with changes in firm leadership.25 Finally, law firm cultures can change as
a result of conscious decisions and efforts by their lawyers geared toward making
their firms better places.26
Many law firms have positive ethical cultures. For these firms, the issues are
cultural development and maintenance through associate selection, socialization, and
interaction. In otherwords, how do they identify associates who share their values?
How do they communicate ethical values to associates? How do they integrate young
lawyers into their cultures? These questions cannot be uniformly answered, because
law firms do different things in different ways. Beyond that, associate selection is a
notoriously imprecise process, and the subject of law firm culture is too broad and
complex to be approached simply. Nonetheless, it is possible to outline some
principles, recognizing that most associates want to be comfortable raising ethics
issues with colleagues and want their law firms to communicate norms.27
First, law firms must encourage day-to-day contact between partners and
associates.28 This may come through formal or informal mentoring relationships, but
it need not be so limited. For example, practice group and departmental meetings at
which lawyers share experiences and compare approaches provide valuable teaching
opportunities. Second, firms should provide formal in- house training for associates
on professional responsibility issues. Training should focus on ethical problems that
associates are likely to encounter and should span all stages of associates' careers.29
attorneys often lack the instincts or nuanced judgment needed in this area. Furthermore, firms tend to
put their best foot forward in recruiting and during summer programs, obscuring cultural deficiencies
from young lawyers and law students seeking employment.
23
See Schiltz, supra note 5, at 720-21, 737-38 (describing a positive mentoring relationship).
24
See Peter J. Winders, Law Firm Culture—Its Importance and How to Overcome It, PROF. LAW.
(2004 SYMPOSIUM ISSUE) 11, 12-13.
25
Freedman, supra note 10, at 16.
26
See Winders, supra note 24, at 14-20.
27
See Suchman, supra note 11, at 863.
28
See id. at 862 (identifying “informal day-to-day contacts between associates and partners as
providing the primary socialization forum in most firms”).
29
See id. at 863 (surveying associates and reporting their concern that most training was concentrated
very early in their careers, before they had enough experience to make it meaningful, and additionally
6
Third, firms must clearly communicate their expectations to associates when
evaluating them and candidly explain their performance relative to those
expectations.30 Fourth, firms must treat associates fairly in everything they do,
whether it is compensation, evaluation, promotion to partnership, or the resolution of
personal issues. Unfairness breeds dishonesty, disloyalty, and resentment, all of
which violate or erode professional values. Fifth, firms must ensure that associates
do not perceive important practice management tools such as billable hour models as
diminishing the importance of responsible lawyering.31 Sixth, when it comes to
compensation, firms must reward lawyers whose practices reflect the firm's values,
and penalize those whose practices do not. Seventh, firms of sufficient size should
appoint general counsel or loss prevention partners charged with helping lawyers
practice responsibly. Many firms have already done this.32 Finally, when firms
identify lawyers whose behavior is seriously incompatible with the firm's culture or
standards, they must either require those lawyers to quickly modify their behavior or
sever those relationships.
Naturally, most law firm cultures are neither intolerable nor ideal from a
professional responsibility standpoint, but instead fall somewhere along a continuum.
For firms in this vast middle ground, it is not sufficient to simply rely on their
lawyers to always do the right thing. Lawyers' behavior, like that of all people, may
be influenced by situational variables. Firms must therefore find ways to incorporate
professional responsibility into their daily practices. Failing to do so is unwise in
many respects, not least because valuable associates who find their firms' cultures to
be undesirable will ultimately leave. Returning to our earlier examples, two of the
associates who complained about Austin's behavior later left the firm, and Davis's
firm has experienced high associate dissatisfaction and turnover since his public
statements about the lay offs. In short, the threat of associate turnover and related
costs ought to influence even ethically ambivalent firms to improve their cultures.33
III.
Associates In The Professional Responsibility Framework
The importance of law firm culture should not obscure the importance of ethics
rules. The Model Rules of Professional Conduct,34 which have been adopted in
reporting their complaint that formal ethics training tended to neglect day-to-day issues).
30
See Freedman, supra note 10, at 15-16 (identifying this as a cultural factor that can influence
associates’ perceptions of firms as good places at which to practice).
31
See Suchman, supra note 11, at 863-64.
32
Elizabeth Chambliss, The Scope of In-Firm Privilege, 80 NOTRE DAME L. REV. 1721, 1721-22
(2005).
33
See Freedman, supra note 10, at 14 (stating that while associate retention can lead to increased
profitability, turnover cost is 100-150% of an individual’s annual salary).
34
See supra note 6.
7
almost all jurisdictions, address the responsibilities of subordinate lawyers in Rule
5.2. That rule provides:
(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.35
Law firm associates are subordinate lawyers for Rule 5.2 purposes.36
Subordinate lawyers' duties are also expressed in section 12 of the Restatement
(Third) of the Law Governing Lawyers:
(1) For purposes of professional discipline, a lawyer must conform to the
requirements of an applicable lawyer code even if the lawyer acted at the direction of
another lawyer or other person.
(2) For purposes of professional discipline, a lawyer under the direct
supervisory authority of another lawyer does not violate an applicable lawyer code
by acting in accordance with the supervisory lawyer's direction based on a
reasonable resolution of an arguable question of professional duty.37
Section 12, like Model Rule 5.2(a), applies to law firm associates.38.
IV.
Associates' Duties Under Model Rule 5.2
All lawyers, including associates, are responsible for their own misconduct.39
Rule 5.2(a) simply makes clear that subordinate lawyers should not defer all
decisions involving professional responsibility issues to their superiors.40
Furthermore, Model Rule 5.2(a) states that a lawyer is bound by applicable ethics
rules notwithstanding the fact that she acted at the direction of another person, as
compared to another lawyer.41 Associates therefore remain accountable for their
MODEL RULES OF PROF’L CONDUCT R. 5.2 (2004).
Irwin D. Miller, Preventing Misconduct By Promoting the Ethics of Attorneys’ Supervisory Duties,
70 NOTRE DAME L. REV. 259, 294 (1994).
37
RESTATEMENT (THIRD) OF THE LAW GOVERNING LAWYERS § 12 (2000).
38
See id. cmt. b (referring to “a junior law-firm associate”).
39
See In re Howes, 940 P.2d 159, 164 (N.M. 1997) (noting that case law upholds the theory “that an
attorney is always answerable for his or her own actions”).
40
See McCurdy v. Kan. Dept. of Transp., 898 P.2d 650, 653 (Kan.Ct. App. 1995).
41
MODEL RULES OF PROF’L CONDUCT R. 5.2(a) (2004).
35
36
8
actions when they act at the direction of a client or a non-lawyer manager, such as a
law firm executive director.
While Model Rule 5.2(a) is straightforward, Model Rule 5.2(b) has proven
somewhat troublesome. Critics contend that it provides junior lawyers with a
"Nuremberg" defense.42 People asserting a Nuremberg defense argue that their
misconduct should be excused because they were simply functionaries following
superiors' orders.43 Scholars further contend:
[Ethics] rules should inspire every lawyer to stop and consider the propriety of
his actions. Rule 5.2(b) does just the opposite. It tells the subordinate lawyer that he
may sit back and let his supervisor make the decision on close ethical questions.
Because the senior lawyer takes the responsibility for any misjudgment, the junior
lawyer has little incentive to even consider tough ethical issues, let alone raise them.
In sum, Rule 5.2(b) singles out precisely the issues that need ethical debate-the
arguable questions-and chills that debate.44
In fact, Rule 5.2(b) precludes a Nuremberg defense,45 because it protects a
subordinate lawyer only where the question of professional duty is arguable and the
supervisory lawyer's resolution of it is reasonable.46 The rule affords junior lawyers
no defense in cases where the professional duty allegedly breached was clear. Nor is
the rule any help where their professional duty was uncertain but a supervisory
lawyer ignored the issue or resolved the question in an obviously unsatisfactory
fashion. Supervisory lawyers are not, as critics contend, responsible for "any
misjudgment"47 —only for their own.48 Subordinate lawyers must always consider
the propriety of their actions and address tough ethical issues; again, Rule 5.2 does
not allow them to escape responsibility by claiming they were just following
orders.49 It is acceptable for associates to let their superiors decide close ethical
questions because those senior lawyers presumably have more experience and
greater professional knowledge from which to draw.50 Finally, Rule 5.2(b) does not
chill debate between junior and senior lawyers. The rule simply recognizes that
42
Carol M. Rice, The Superior Orders Defense in Legal Ethics: Sending the Wrong Message to Young
Lawyers, 32 WAKE FOREST L. REV. 887, 888-89 (1997).
43
Id. at 889.
44
Id. at 890.
45
See Wallace v. Skadden, Arps, Slate, Meagher & Flom, 715 A.2d 873, 884 (D.C. 1998) (stating that
Rule 5.2’s “main thrust is to foreclose any ‘Nuremberg defense’”).
46
See MODEL RULES OF PROF’L CONDUCT R. 5.2(b) (2004).
47
Rice, supra note 42, at 890.
48
See In re Anonymous Member of the S.C. Bar, 552 S.E.2d 10, 12 (S.C. 2001) (explaining that
Model Rule 5.1 does not create or impose vicarious liability on or for supervisory lawyers).
49
In re Howes, 940 P.2d 159, 164 (N.M. 1997).
50
See CHARLES W. WOLFRAM, MODERN LEGAL ETHICS § 16.2.2, at 883 (1986).
9
lawyers in law firms and other organizations "must often act as one,"51 and thus
permits a junior lawyer to defer to a senior lawyer's reasonable determination of an
arguable issue once debate is exhausted and a decision must be made.52
In the end, it falls to courts to determine whether a question of professional
responsibility was "arguable" or a supervisory lawyer's resolution of it was
"reasonable." Case law suggests that associates should take little comfort in Rule
5.2(b).53
In In re Okrassa,54 for example, a prosecutor who prosecuted a former client
from his days as a public defender was charged with violating Rule 1.9, which
governs conflicts of interest in successive representations.55
The prosecutor, Okrassa, had discussed the case with the County Attorney and
his chief criminal deputy before taking it, and neither believed that the situation
presented a problem.56 The Arizona Supreme Court rejected Okrassa's attempt to
raise that consultation as a defense to discipline, reasoning that "[e]ven minimal
research" would have revealed that his conduct was unethical.57 The court suspended
him for ninety days.58
The lawyer in People v. Casey,59 William Casey, represented a woman who
had given the police an acquaintance's driver's license when arrested. She was
processed and jailed under her acquaintance's name, and Casey perpetuated that
51
Thomas D. Morgan, LAWYER LAW 695 (2005).
2 GEOFFREY C. HAZARD, JR. & W. WILLIAM HODES, THE LAW OF LAWYERING § 43.5, at 43-5 (3d
ed. 2001).
53
See, e.g., In re Odrassa, 799 P.2d 1350, 1353-54 (Ariz. 1990) (rejecting junior prosecutor’s defense
based on consultation with superiors); People v. Casey, 948 P.2d 1014, 1015-18 (Colo. 1997)
(sanctioning associate where ethics rule clearly governed his conduct); Statewide Grievance Comm.
V. Glass, No. CV950144258 S, 1995 WL 541810, at *2 & n. 1 (Conn. Super. Ct. Sept. 6, 1995)
(declining to excuse associate’s dishonesty); Attorney Grievance Comm’n v. Kahn, 431 A.2d 1336,
1351 (Md. 1981) (stating that junior lawyers may never act unethically simply because their
employers so direct them, but referring to no ethics rules); In re Douglas’ Case, 809 A.2d 755, 761-62
(N.H. 2002) (rejecting Rule 5.2(b) defense because question of professional duty was not arguable);
In re Kelley’s Case, 627 A.2d 597, 600 (N.H. 1993) (rejecting associate’s Rule 5.2(b) defense because
“there could have been no ‘reasonable’ resolution of an ‘arguable’ question of duty”); In re Howes,
940 P.2d at 164 (rejecting junior prosecutor’s defense based on New Mexico version of Rule 5.2(b)
principally because “there was no ‘arguable question of professional duty’”); In re Bowden, 613
S.E.2d 367, 368-69 (S.C. 2005) (reprimanding associate).
54
799 P.2d 1350 (Ariz.1990).
55
Id. at 1351-52.
56
Id. at 1351.
57
See id. at 1353.
58
Id. at 1353-54.
59
948 P.2d 1014 (Colo. 1997).
52
10
fraud.60 Casey consulted the senior partner at his law firm about his conduct,
although the details of the conversation were never made public.61 The fraud was
exposed, and Casey was charged with several ethics violations. He invoked Rule
5.2(b), claiming that he had been caught in an uncertain situation, torn between his
duty of loyalty to his client and his duty of candor to the trial court.62 The Colorado
Supreme Court disagreed, reasoning that Colorado Rule 3.3(b), which required a
lawyer to be truthful to a court even if doing so meant disclosing confidential
information, "clearly" resolved Casey's "claimed dilemma."63 Thus, the rule
foreclosed the argument that Casey's duty to his client prevented him from honoring
his duty of candor to the court.64 The court briefly suspended Casey and imposed
other sanctions.65
In In re Bowden,66 the associate managing a small firm's South Carolina branch
office, John Bowden, "learned it was the firm's practice to inflate government
recording fees on HUD-1 settlement statements."67
Bowden's superior, Robert Forquer, kept an office in North Carolina. When
Bowden questioned Forquer about inflating the fees, Forquer assured him "that the
practice was ethical and legal."68 Bowden thus allowed the practice of fee inflation to
continue in his branch office. Accordingly, the South Carolina Supreme Court
reprimanded Bowden for violating numerous ethics rules, including Rule 5.2.69
The practical problem for associates is that partners may see no reason to
justify decisions to them.70 Partners certainly do not view themselves as answering to
associates.71 What then should an associate do when a partner instructs her to act in a
manner that the associate believes to be unethical? How is an associate who raises a
professional responsibility question with a partner supposed to judge whether the
question is arguable, or the partner's resolution of it reasonable?
60
Id. at 1015.
Id.
62
Id at 1016.
63
Id.
64
Id.
65
Id. at 1018.
66
613 S.E.2d 367 (S.C. 2005).
67
Id. at 368.
68
Id.
69
Id. at 368-69.
70
RONALD D. ROTUNDA 7 JOHN S. DZIENKOWSKI, LEGAL ETHICS: THE LAWYER’S DESKBOOK ON
PROFESSIONAL RESPONSIBILITY § 5.2-1, at 822 (2005-06).
71
Id. at 821.
61
11
As for the situation in which a partner instructs an associate to engage in
conduct that the associate considers unethical, the associate should first consult
another associate whose judgment she trusts to see whether she perceives the issue
correctly. The associate might also consult a partner whom she considers a mentor.
Assuming that her colleagues validate her concern, the associate should then explain
to the partner instructing her why she believes the conduct is unethical. This
conversation should not be accusatory or confrontational, since the associate may not
have sufficient facts to make an informed judgment about the issue or the partner's
reasons for the original instruction.
The associate may simply be wrong.
If the associate has correctly assessed the situation, the partner may
acknowledge her mistake and rescind her instructions. If the partner does not relent,
and the associate remains convinced that her assignment is unethical, she has four
choices. Her first and best option is to seek the assistance or guidance of a senior
lawyer. This might be a trusted partner, mentor, her practice group leader, the firm's
ethics partner or general counsel, or a member of the firm's executive or management
committee. Ideally, this senior lawyer will explain why the assigning partner's
judgment is correct, or intervene tactfully to resolve the problem in a responsible
fashion. Second, she can refuse to obey the partner's instructions. Third, she can
request that the matter be reassigned, thus avoiding the offending instructions.
Fourth, and as a last resort, she can resign from the firm. If she pursues the second,
third, or fourth options, she should still discuss the matter with firm management or
the general counsel.72 Depending on the facts, the associate may be compelled to
report the partner to disciplinary authorities.73 Regardless, she cannot obey a
partner's command that she knows is wrong.
Suppose that the situation is less clear, and the partner decides how the issue is
to be resolved. May the associate consider the issue settled and move on? There is
authority for the proposition that the associate is obligated to conduct factual or legal
research to determine whether the question is arguable and whether the partner's
resolution is reasonable.74 That approach is impractical in many cases, but the
These lawyers may intervene to the associate’s benefit. Regardless, they need to be aware of the
situation for the good of the firm. Rule 5.2 does not require the associate to report her concerns to
supervisory lawyers. See Wallace v. Skadden, Arps, Slate, Meagher & Flom, 715 A. 2d 873, 884
(D.C. 1998).
73
See infra Part VIII.
74
See e.g., In re Okrassa, 799 P.2d 1350, 1353 (Ariz. 1990) (stating that had subordinate attorney
conducted “[e]ven minimal research,” he would have learned that intended conduct was unethical); In
re Rivers, 331 S.E. 2d 332, 333 (S.C. 1984) (“It is the duty of attorneys to discover and comply
with…rules of practice and professional responsibility….”) (emphasis added).
72
12
associate should still ask the partner how she resolved the issue and why she
resolved it as she did. Beyond the obvious learning opportunity, the associate needs
this information to judge whether she has satisfied her obligations under Rule 5.2. If
the partner's explanation is unsatisfactory, the associate may have to conduct
research. If that research suggests that the question was not actually arguable, or that
the partner's resolution was unreasonable, the associate is in the same position as the
associate who sensed at the outset that her instructions would lead to misconduct.
Some commentators suggest that associates facing this kind of ethical quandary
consider consulting a former law professor or a lawyer from another firm who
specializes in the law of lawyering.75 This is good advice in some cases, although
associates who look outside their firms for guidance must be careful not to reveal
client information in the process.76 Associates who reveal client information to
outsiders in this situation may be able to justify doing so on the basis that the client
has impliedly authorized disclosure to carry out the representation,77 but
confidentiality clearly is less worrisome in jurisdictions that have adopted Model
Rule
1.6(b)(4), which expressly permits this sort of consultation.78 Associates must
also be aware that reliance on the advice of a practicing lawyer or professor
perceived to be a professional responsibility expert is no defense to misconduct
allegations. Courts do not recognize advice of counsel as a defense in disciplinary
cases,79 although they may consider it as a mitigating factor when settling on a
sanction.80
While a young lawyer who acts at a superior's direction may sometimes invoke
Rule 5.2(b) to avoid discipline, a lawyer's mere youth or inexperience never excuses
professional misconduct. As with reliance on advice of counsel, a lawyer's youth or
inexperience is at most a mitigating factor to be weighed when imposing discipline.81
See, e.g., LAWRENCE J. FOX & SUSAN R. MARTYN, RED FLAGS: A LAWYER’S HANDBOOK ON LEGAL
ETHICS 309 (2005).
76
See id. at 121-22 (explaining how this may be done); ABA Comm. on Ethics & Prof’l
Responsibility, Formal Op. 98-411 (1998) (discussing lawyer-to-lawyer consultations).
77
MODEL RULES OF PROF’L CONDUCT R. 1.6(a) (2004).
78
Id. at R. 1.6(b)(4) (permitting a lawyer to “reveal information relating to the representation of a
client to the extent the lawyer reasonably believes necessary…to secure legal advice about the
lawyer’s compliance with these Rules”).
79
People v. Katz, 58 P.3d 1176, 1187 (Colo. 2002); Attorney Grievance Comm’n v. Pennington, 876
A.2d 642, 656 (Md. 2005).
80
See, e.g., Ky. Bar Ass’n v. Gidugli, 867 S.W.2d 587, 589 (Ky. 1998).
81
See, e.g., In re Burton, 625 N.E.2d 457, 458 (Ind. 1993) (finding lawyer’s inexperience a mitigating
factor in case involving Rule 1.1, 1.3, 1.4 and 8.4(d) violations); Attorney Grievance Comm’n v.
Jaseb, 773 A.2d 516, 526 (Md. 2001) (noting young lawyer’s inexperience when deciding on
75
13
But even then courts give it little consideration in cases of serious
misconduct.82 Similarly, young lawyers cannot avoid or lessen professional
discipline by attributing their errors to a lack of supervision. For that matter, courts
may interpret associates' claims of insufficient supervision as unwillingness to accept
responsibility for their actions and thus an aggravating factor supporting enhanced
discipline.83
V.
Duties of Subordinate Lawyers According to Section 12 of the
Restatement
Model Rule 5.2(b) affords subordinate lawyers broader protection than does the
regime expressed in section 12(2) of the Restatement. The rule does this by allowing
a subordinate lawyer to act in accordance with the directions of "a supervisory
lawyer" in appropriate situations, while the section 12(2) approach protects a
subordinate lawyer only when he acts at the direction of "the" lawyer who has "direct
supervisory authority" over him.84 This difference has practical implications.
Consider the situation in which an associate seeks the guidance of his law firm's
general counsel on an arguable question of professional duty, rather than the partner
supervising his work on the case in which the question arises. Under Rule 5.2(b), the
associate is shielded from professional discipline if he acts in accordance with the
general counsel's reasonable resolution of the issue. He is not shielded under the
Restatement approach, however, because the general counsel is not his direct
sanction); Disciplinary Counsel v. Johnson, 835 N.E.2d 354, 360 (Ohio 2005) (accounting for
associate’s inexperience and reliance on senior lawyer when suspending her for fraudulent billing); In
re Billewicz, 64 A.2d 368, 369 (Vt. 1994) (taking lawyer’s inexperience into account when imposing
discipline for breaching confidentiality).
82
See, e.g., In re Helman, 640 N.E.2d 1063, 1065 (Ind. 1994) (“[A]lthough Respondent had been
admitted to practice for only a brief time before the misconduct at issue here, we do not give that fact
significant weight as a mitigating circumstance in this case [involving blatant deceit]”); In re
Landrith, 124 P.3d 467, 485-86 (Kan. 2001) (suspending lawyer indefinitely while noting that
misconduct was perhaps the result of inexperience; lawyer had been practicing for roughly five
years); In re Watley, 902 So. 2d 593, 597 (La. 2001) (considering in mitigation that lawyers “were
relatively inexperienced in the practice of law…having been admitted for just over five years,” the
court nonetheless imposed a one-year suspension); Attorney Grievance Comm’n of Md. V. Kahn, 431
A.2d 1336, 1350-52 (MD.1981) (disbarring lawyer who had been out of law school for about three
years at the time of serious misconduct); In re Petition for Disciplinary Action Against Pierce, 706
N.W.2d 749, 757 (Minn. 2005) (“The fact that an attorney is relatively new to the profession is not a
mitigating factor where serious misconduct…is present.”); In re Petition for Disciplinary Action
Against Ward, 563 N.W.2d 70, 72-73 (Minn. 1997) (rejecting recommended ninety-day suspension
that took into account lawyer’s youth and inexperience and instead suspending the lawyer for six
months because “youth and inexperience do not mitigate acts of dishonesty”).
83
See, e.g., In re Eager, 708 N.E.2d 584, 586 (Ind. 1999) (suspending associate and recognizing as an
aggravating factor associate’s claim that “a lack fo supervision from the senior members of the law
firm where he worked was at the root of his problems”).
84
Compare MODEL RULES OF PROF’L CONDUCT R. 5.2(b), with RESTATEMENT (THIRD) OF THE LAW
GOVERNING LAWYERS § 12(2) (2000).
14
supervisor on the subject case. The same result obtains where the associate seeks the
advice of his practice group leader, a member of his firm's executive committee, his
partner mentor, or any other partner besides his direct supervisor.
The Rule 5.2(b) approach is clearly better. It permits associates to seek
guidance from senior lawyers other than their direct supervisors, who often will be
mired in the problems spawning questions of professional duty. In this way, Rule
5.2(b) increases the probability of a reasonable resolution by involving an objective
lawyer in the decision-making process. Furthermore, assuming that a firm's general
counsel or ethics partner has greater knowledge of the law of lawyering than does the
average partner, encouraging associates to approach this lawyer increases the
likelihood that questions of professional duty will be reasonably resolved.
Although section 12 refers to the remedy of professional discipline, the
Restatement addresses lawyers' civil liability.85 As section 12 suggests, then,
associates who breach professional duties may face malpractice liability even if their
errors are partly attributable to inadequate supervision by senior lawyers. In Beverly
Hills Concepts, Inc. v. Schatz & Schatz, Ribicoff & Kotkin,86 for example, a junior
associate, Jane Seidl, botched some franchising documents.87 She had no experience
in franchising law.88 She defended herself by arguing that she gave drafts of the
documents to the responsible partner, Goldman, and another senior lawyer, Dansky,
to review. She assumed that "'somebody was . . . watching, taking care of looking at
[her] work.'"89
The client sued the law firm and the lawyers involved. After the client
prevailed in a bench trial, the defendants appealed.90 The Connecticut Supreme Court
reversed the judgment on issues of causation and damages, but reasoned that the trial
court reasonably could have found that Seidl committed malpractice because, "as a
junior associate, she failed to seek appropriate supervision."91 Had she sought
appropriate supervision, she could have competently represented the client, and thus
satisfied her duty of competence under Rule 1.1.92 She failed to do so. Her pursuit of
85
RESTATEMENT (THIRD) OF THE LAW GOVERNING LAWYERS, Foreword, at xxi.
717 A.2d 724 (Conn. 1998).
87
Id. at 728-29.
88
Id. at 728.
89
Id. at 730 (quoting Seidl’s trial testimony).
90
Id. at 727.
91
Id. at 730.
92
Id.
86
15
supervision went no further than giving copies of her work to Goldman and
Dansky.93 Seidl's "passivity" was a breach of the standard of care.94
Though not a disciplinary case, Beverly Hills establishes that associates cannot
invoke Rule 5.2(b) to avoid discipline for incompetence. The duty of competence
includes a duty to seek appropriate supervision. Being left by partners to sink or
swim is not a "reasonable resolution" of anything, and partners' abdication of
supervisory responsibility is not "an arguable question of professional responsibility"
in light of their duties under Model Rule 5.1(a).95
With rare exception,96 associates are also responsible for their own misconduct
when facing sanctions under procedural rules,97 as Levin v. Siegel & Capitel, Ltd.98
illustrates. In that case, the law firm of Siegel & Capitel represented Bill Spivey in a
suit against First Midwest Bank. Siegel & Capitel associate Samuel Levin was
Spivey's attorney of record and signed all of the pleadings.99 First Midwest won at
summary judgment and then sought sanctions against Spivey, Siegel & Capitel, and
Levin for filing a frivolous action.100 In response, Levin filed a complaint for
contribution or indemnity against Siegel & Capitel.101 He alleged that the law firm's
partners supervised his handling of Spivey's lawsuit, and that he was acting in the
course and scope of his duties as an associate at the time.102 Thus, he contended,
under agency law principles, Siegel & Capitel should be held jointly and severally
liable for any sanctions imposed against him.103 The trial court dismissed the
complaint and Levin appealed.104
The Levin court held that contribution and indemnity were not available to
Levin. First Midwest's sanctions motion was not a tort action, and, therefore, Levin
and his firm could not be joint tortfeasors.105 Rather, the motion was premised on
93
Id.
Id.
95
See MODEL RULES OF PROF’L CONDUCT R. 5.1(a)(2004) (“A partner in a law firm…shall make
reasonable efforts to ensure that the firm has in effect measures giving reasonable assurance that all
lawyers in the firm conform to the Rules of Professional Conduct”).
96
See, e.g., Blue v. U.S. Dep’t of the Army, 914 F.2d 525, 546 (4th Cir. 1990) (reversing Rule 11
sanctions against “a very junior associate” who came into the case late and at a very difficult time, and
who was placed in untenable position by senior lawyer).
97
Robert v. Lyons, 131 FR.D. 75, 84 (E.D. Pa. 1990).
98
733 N.E.2d 896 (Ill. App. Ct. 2000).
99
Id. at 897.
100
Id.
101
Id.
102
Id.
103
Id.
104
Id.
105
Id. at 898.
94
16
Illinois Supreme Court Rule 137, which is specifically intended to prevent "the abuse
of the judicial process by punishing individuals who sign pleadings bringing
vexatious or harassing litigation based upon unfounded statements."106 Rule 137
imposes responsibility on the person who signs a pleading to validate its truth and
legal reasonableness.107 "This personal responsibility is nondelegable and not subject
to principles of agency or joint and several liability."108 It was Levin's responsibilitynot his superiors'-to ensure that the allegations made in the pleadings he signed were
in all ways proper.109
VI.
Competence and Diligence
Associates, like all other lawyers, owe clients duties of competence and
diligence. These duties are closely related and, in most jurisdictions, are enforced in
disciplinary contexts through Model Rules 1.1 and 1.3.110 These duties are also
commonly enforced by way of legal malpractice suits.111
Model Rule 1.1 provides: "A lawyer shall provide competent representation to
a client. Competent representation requires the legal knowledge, skill, thoroughness
and preparation reasonably necessary for the representation."112 Mere admission to
the bar does not make a lawyer competent, but rather evidences a lawyer's
"professional fitness" to represent clients in legal matters.113 Put another way, bar
admission makes a lawyer "capable of competence."114 Once in practice, lawyers
must achieve and maintain competence, and those who do not are accountable for
their failures.115 Because competence is a minimum standard, a lawyer's inexperience
will not excuse a Rule 1.1 violation.116
106
Id.
Id. at 899.
108
Id.
109
Id. (quoting Pavelic & LeFlore v. Marvel Entm’t Group, 493 U.S. 120, 127 (1989)).
110
1 HAZARD & HODES, supra note 52, § 6.2, at 6-3.
111
Id.; see also Thomas D. Morgan, What Insurance Scholars Should Know About Professional
Responsibility, 4 CONN. INS. L.J. 1, 2 (1997-98) (asserting that "violation of the substance of Rules
1.1 and 1.3 is what underlies most lawyer malpractice actions").
112
MODEL RULES OF PROF’L CONDUCT R. 1.1. (2004). In those few states still adhering to the Model
Code, lawyers’ duty of competence is enforced through DR 6-101(a). See MODEL CODE OF PROF’L
RESPONSIBILITY DR 6-101(a) (1989).
113
State ex. rel. Okla. Bar Ass’n v. Dobbs, 94 P.3d 31, 44 (Okla. 2004).
114
1 HAZARD & HODES, supra note 52, § 3.2, at 3-5 (emphasis omitted).
115 Id.; see also Dobbs, 94 P.3d at 44 ("Professional competence is a mandatory obligation imposed
upon licensed practitioners. It is the very minimum to be expected from a lawyer....Anything less is a
breach of the lawyer's duty to serve the client.") (footnote omitted).
116 See, e.g., In re Johnson, 32 P.3d 1132, 1142-43 (Kan. 200 1) (suspending young lawyer while
noting that he "was relatively inexperienced," that "[i]nexperience could be an explanation for some
107
17
New associates' lack of experience may cause them to feel incompetent when
presented with unfamiliar assignments, but such feelings do not necessarily
foreshadow a breach of duty. A lawyer need not be experienced in a type of matter in
order to competently handle a case or transaction.117 There is, after all, a first time
for everything, and it is proper for a lawyer to accept an unfamiliar matter and
thereafter achieve related competence.118 Depending on the lawyer and the matter, a
novice lawyer can be as competent as "a practitioner with long experience."119
Young lawyers may achieve competence through preparation and study, or by
working with more experienced lawyers.120 The more complex or difficult the
matter, the more study, preparation, or supervision required for a lawyer to become
competent.121
To the extent associates risk breaching their duty of competence, many lawyers
would probably contend that the threat is greatest in small law firms. This may be so
because associates in small law firms tend to assume significant responsibility early
in their careers as compared to their counterparts at large firms, regardless of their
readiness; because associates in small firms may handle matters in a variety of
substantive areas of the law, while associates at large firms work in specialized
practice groups; or because large law firms tend to have formal training programs
that small firms cannot replicate. On the other hand, associates in small law firms
may receive personal instruction from senior lawyers that associates in large law
firms do not enjoy. Regardless, all associates must understand that their duty of
competence requires them to seek appropriate supervision when working in areas in
which they are inexperienced.122
of [his] actions," and that an additional explanation for misconduct "could be the lack of a mentor").
117
MODEL RULES OF PROF’L CONDUCT R. 1.1. cmt. 2 (2004).
118
This does not mean that a client should have to bear the full expense of a lawyer's education in
unfamiliar matters. See, e.g., In re Fordham, 668 N.E.2d 816, 822-24 (Mass. 1996) (finding lawyer's
fee excessive even though he worked all of the hours billed and won the case; lawyer was handling
his first DUI case, had no experience in criminal law, and billed 200 hours to prepare for trial); Robert
L. Wheeler, Inc. v. Scott, 777 P.2d 394, 396 (Okla. 1989) (stating that if a lawyer takes a case "in an
area in which he or she is totally unfamiliar or inexperienced, the client should not have to pay for
every minute of the lawyer's preparation"); In re Estate of Larson, 694 P.2d 1051, 1059 (Wash. 1985)
(observing that "clients should not be expected to pay for the education of a lawyer when he spends
excessive amounts of time on tasks which, with reasonable experience, become matters of routine").
119
MODEL RULES OF PROF’L CONDUCT R. 1.1. cmt. 5.
120
ROTUNDA & DZIENKOWSKI, supra note 70, § 1.1-1, at 76.
121
See MODEL RULES OF PROF’L CONDUCT R. 1.1. cmt. 5 (discussing thoroughness and preparation
required for competence).
122
See Beverly Hills Concepts, Inc. V. Schatz & Schatz, Ribicoff & Kotkin, 717 A.2d 724, 730
(Conn. 1998).
18
Unfamiliarity with substantive legal areas and inadequate supervision are not
the only threats to competence. Lawyers' competence may be compromised by client
demands. Clients' expectations for quick responses to sometimes very difficult
questions have increased with advances in wireless technologies, and lawyers who
feel compelled to satisfy clients' every need may answer complex questions without
sufficient time for analysis. These practical realities do not mean that associates
should not attempt to satisfy partners' urgent demands for answers to clients'
questions, should not strive to promptly complete all assignments, ought not attempt
to timely answer clients' questions posed directly to them, or should not adjust their
schedules to accommodate short deadlines in client matters. What they do mean is
that associates should respectfully decline or postpone assignments they cannot
competently perform because of related deadlines; should not rush to judgment when
the situation demands deliberation, even if that requires extending related deadlines;
and should appropriately qualify answers or opinions when time does not permit the
consideration required for a confident response. Associates must learn to reconcile
the occasional tension between expedience and competence.
Associates will, of course, make mistakes. They may make poor judgment
calls. This does not necessarily mean that they are incompetent.123 Even experienced
lawyers err, and the best lawyers sometimes make misjudgments.124
With respect to diligence, Rule 1.3 provides that "[a] lawyer shall act with
reasonable diligence and promptness in representing a client."125 The rule reflects
lawyers' basic obligation to timely perform the work for which clients engage them.
Although lawyers' lack of diligence often results in harm to clients, as where lawyers
miss statutes of limitation or other critical deadlines, a Rule 1.3 violation does not
turn on harm to the client.126 A lawyer may be disciplined for violating Rule 1.3 even
where the client is not prejudiced by the lawyer's misconduct.127 In contrast, a legal
123
See STEPHEN GILLERS, REGULATION OF LAWYERS: PROBLEMS OF LAW AND ETHICS 23 (5th ed.
1998) (“A mistake does not necessarily equal incompetence.”).
124
Id.
125
MODEL RULES OF PROF’L CONDUCT R. 1.3..
126 Statewide Grievance Comm. v. Palmieri, No. CV020472045S, 2003 WL 963240, at *3 (Conn.
Super. Ct. Feb. 25, 2003) (suspending associate for violating Rules 1.1, 1.3 and 1.7 even though client
was not harmed); In re Lewis, 689 A.2d 561, 564 (D.C. 1997) ("The failure to take action for a
significant time to further a client's cause, whether or not prejudice to the client results, violates this
Rule."); In re Application of Disciplinary Action Against Seaworth, 603
N.W.2d 176, 180 (N.D. 1999) (explaining that Rule 1.3 "does not require a client to be prejudiced by
his or her lawyer's failure to act with reasonable diligence and promptness for a violation.., to occur").
127 See, e.g., In re Lewis, 689 A.2d at 568 (suspending lawyer and requiring showing of fitness for
reinstatement); In re Hearin, 897 So. 2d 579, 583 (La. 2005) (stating that "[a]lthough the record does
not indicate any actual harm resulting from [the lawyer's] action, there was potential for serious harm
to both clients" and suspending lawyer); Attorney Grievance Comm'n v. Harris, 784 A.2d 516, 527,
19
malpractice claim grounded in a lawyer's alleged lack of diligence will fail without
harm to the client, because damages are an essential element of a malpractice cause
of action.128
When a client engages a lawyer, the lawyer and the client typically discuss fees
and expenses, the scope of the engagement, the facts of the matter as then developed,
any deadlines or time constraints, the client's expectations with respect to the
representation, and a schedule for the matter's completion. These factors influence
the reasonableness of the lawyer's diligence or promptness in the client's
representation, especially the lawyer's explanation of a proposed schedule for the
matter.129 Although client engagements and the proposed scheduling of related work
are often dictated by partners, this is not always so, and associates must be careful
when accepting representations not to propose or agree to schedules that they cannot
reasonably meet, or even to accept matters with unreasonably short deadlines, as
where a period of limitation is quickly expiring. Likewise, an associate participating
in a client meeting or conference call with a partner who hears the partner proposing
a deadline or schedule that is unreasonable must consider how she can tactfully
suggest modifications. There is nothing wrong with postponing tasks or extending
deadlines if doing so will not prejudice the client. Indeed, clients prefer that lawyers
propose reasonable deadlines or schedules, rather than promising promptness when
they should not and later attempting to excuse their inaction.
The biggest concern for associates insofar as diligence goes is workload.
Associates may find it difficult to decline assignments. Partners sometimes fail to
appreciate associates' time demands. Deadlines in several matters may hit at the same
time, or multiple crises may arise at the same time, through no fault of the lawyers
involved. In any event, a heavy workload does not mitigate an associate's failure to
diligently represent a client.130 Associates are responsible for controlling their
workloads in a fashion that allows them to competently handle all of their client
matters.131 A heavy workload will not excuse undue delay, missed deadlines,
533 (Md. 2001) (suspending lawyer even though clients were not prejudiced by his failure to appear at
trial when judgment was modified on appeal); In re Application of Disciplinary Action Against
Seaworth, 603 N.W.2d at 182; State ex rel. Okla. Bar Ass'n v. McGee, 48 P.3d 787, 793-94 (Okla.
2002) (suspending lawyer even though "clients may not have been appreciably harmed by his
conduct").
128
See RESTATEMENT (THIRD) OF THE LAW GOVERNING LAWYERS §§ 48, 53 (2004) (listing injury as
an element of legal malpractice).
129
ROTUNDA & DZIENKOWSKI, supra note 70, § 1.3-2(a), at 110.
130
In re Charges of Unprofessional Conduct Filed Jan. 20, 2005 in Panel Case No. 19453, 690
N.W.2d 716, 720 (Minn. 2005) (addressing lawyers generally); State ex rel. Okla. Bar Ass’n v.
Besley, 136 P.3d 590, 603 (Okla. 2006) (same).
131
MODEL RULES OF PROF’L CONDUCT R. 1.3 cmt. 2 (2004).
20
inadequate investigation, or a failure to properly prepare. And, while delegation to
junior lawyers and legal assistants is an appropriate means of managing one's
workload, such delegation does not excuse an associate's duty of diligent
representation.132 To the contrary, an associate's delegation of work to more junior
colleagues and non-lawyer staff may impose upon the delegating associate additional
duties under Rules 5.1(b) and 5.3(b).133 Associates who have direct supervisory
authority over other lawyers and staff have the same responsibility as partners to
assure that those they supervise comply with ethics rules.134
[rest of article omitted]
16.5.
1.
Example: Four Hypotheticals about Subordinates
Document Review and Double Standards
Associate supervises document review and production. Brings troubling hot
document to Partner before producing it. Partner reads document request and
construes it quite narrowly, in a way that is arguably frivolous but possibly
legitimate. Partner decides not to produce the hot document. Associate asks if you
can review the documents under two different standards of if he should go back and
re-do production decisions under the new, narrower standard. Partner says not to redo prior decisions, that Associate should not produce the hot document, and
Associate should sign the document production responses. Associate feels the
Partner's construction of the document request is not tenable.
*****************
2.
Don‘t Stand Idly By?
Associate stands next to Partner at oral argument when judge says that it
appears that their client has not had any prior convictions. Partner and Associate both
know that client has had a conviction in another state and that in the normal course
the judge should have been aware of it. Obviously some clerical error has been made
somewhere. Partner does not correct the judge's misimpression. Associate whispers
See In re Sheridan’s Case, 781 A. 2d 7, 10 (N.H. 2001) (discussing lawyer’s supervisory duties).
See MODEL RULES OF PROF’L CONDUCT R. 5.1 (b) ("A lawyer having direct supervisory authority
over another lawyer shall make reasonable efforts to ensure that the other lawyer conforms to the
Rules of Professional Conduct."); Id. at R. 5.3 ("With respect to a nonlawyer employed or retained by
or associated with a lawyer[, ... a lawyer having direct supervisory authority over the nonlawyer shall
make reasonable efforts to ensure that the person's conduct is compatible with the professional
obligations of the lawyer .. "); see also In re Baker, 598 S.E.2d 277, 278-79 (S.C. 2004) (finding Rule
5.3 violation and suspending young lawyer who, during her second and third years of practice, failed
to supervise an unlicensed law school graduate assisting her in real estate closings).
134
PROFESSIONAL RESPONSIBILITY, PROBLEMS AND MATERIALS 182 (Thomas Morgan & Ronald D.
Rotunda eds., 2004).
132
133
21
to Partner, "Shouldn’t we speak up?" Partner says "No, it's a client confidence, and
besides we haven't said anything false here. If the judge doesn't ask us, we don't need
to volunteer that fact."
****************
3.
What is a Billable Hour?
Associate hopped in her car at 8:00 a.m. and arrived at court at 8:45 a.m. for a
9:00 a.m. settlement conference for client Acme in its suit against Baker. Partner
arrives at the same time. Over lunch, the associate makes a 15-minute call on the
David v. Echo matter and spends 30 minutes working on a brief in that matter. A
settlement is reached and Associate and Partner walk out of the courthouse at 5:00
p.m. Associate starts tallying the billables for that day and asks the partner whether
to bill the downtime when the settlement judge was hammering the other side and
Partner, Associate, and the client Acme's representative were chatting about current
events. Partner says that Associate should calculate from the time she opened her car
door until 5:00 p.m. because "but for" the settlement conference she would have
spent all that time in some other productive capacity.
**************
4.
Losing Faith in the Client?
Rene Robertson, a sixth-year lawyer who is only one year away from
partnership consideration, has been working at a mid-sized law firm doing
construction defect litigation. His boss, Paula Prentiss, has a large book of business
and often leaves senior associates to mind her cases for months at a time.
Prentiss and Robertson have been representing Acme Construction, the
defendant in a case alleging that substandard pipes have led to huge repair bills in an
apartment complex. The plaintiff, Peninsula Properties, Inc., which is the property
owner, is represented by Saunders & Saunders (S&S). Discovery has been tedious
and hotly contested. Each side has filed motions against the other asking for sanction
and penalties. Each has accused the other side of stonewalling and failing to produce
documents. Some of the most important documents are the daily logbooks kept by
Acme‘s president, David Vladeck, which provide details of the construction project.
Acme made copies of the log books and other relevant documents and sent them to
Robertson, who produced them to S&S in response to document requests.
One afternoon, Robertson received a letter from S&S claiming that Vladeck‘s
logbooks had been altered from their original condition. S&S claimed that several
entries favorable to Acme had been entered after the dispute arose, in an attempt to
make it seem as if some of Acme‘s construction decisions had been requested by the
22
building’s architects. S&S claimed that a few of the key entries appeared to reflect
information that Vladeck could not have possibly possessed at the time he
supposedly wrote the handwritten entries in the margin of the logbook. When
Robertson showed the letter to Vladeck, Vladeck was furious at S&S. "Those guys
stop at nothing!" he screamed. "Now those liars are accusing me of this? Rene, you
can‘t let them get away with this. It’s not enough they‘re after my money; now
they’re trying to destroy me!" Vladeck added that logbooks are always works in
progress and that it’s standard practice to go back and amend entries as more
information is learned—but that Vladeck in no way falsified any information or
made changes after the litigation started. Robertson wrote a letter back to S&S
denying the accusation.
S&S wrote back again, demanding production of the original logbooks so that
they might be examined by a specialist in detecting false documents and forgeries.
Vladeck once again demanded that Robertson put an end to S&S’s false accusations
and told Robertson to call Vladeck’s administrative assistant and have the original
logbooks sent by messenger to Robertson. Robertson did so. The next day the
assistant said he couldn’t find the logbooks anywhere, although he thought he had
seen them recently in their normal spot on the shelves.
S&S moved for an order requiring production of the logbooks. Robertson
argued that copies of the logbooks had already been produced, and that no further
court orders were necessary. However, the judge seemed intrigued and perhaps even
convinced that the entries in the margin of the logbook had been added after the
lawsuit started. She ordered Acme to search again for all the logbooks and said that
if they didn’t turn up, S&S could, if it wished, file a motion seeking severe sanctions
against Acme. When Robertson told Vladeck about the hearing, Vladeck said that
they’d search again. The next day Vladeck said that his assistant had found half the
logbooks, but not the most critical ones, behind some cabinets. The logbooks that
turned up had no entries with additions or amendments in the margin. Robertson was
beginning to have doubts about his client, so he said he wanted to come down
himself and see where the logbooks had been found. Vladeck screamed at Robertson
and said, "Whose side are you on anyway?"
Robertson called for a meeting with Prentiss and went over all the recent
history. Robertson said, "Look, I’ve been working very closely with Vladeck, and I
don’t believe my client at all anymore. Every explanation is too convenient. Every
tough question makes the client get all defensive. I don’t trust him. My gut instinct
tells me that my client altered the documents and is now covering it up. At the
upcoming hearing I do not want to defend his factual position on the logbooks at all."
23
Prentiss said, “You have offered me no proof and only speculation that our
client is lying. Guess what? That isn’t nearly good enough. If you can’t present the
client’s case with zeal, tell me so right now. But make no mistake. This isn’t a firm
where lawyers turn on their clients based on hunches without proof. Words cannot
explain how disappointed I am in you.”
16.7.
Example: Breaking Up is Hard to Do (Kelley)
Read the book chapter, “Breaking Up Is Hard To Do,” which follows the
explanation of this exercise. Assume for purposes of this exercise that the law firm
(Pillsbury) had to settle the suit against it out of court, rather than taking the matter
through trial. The firm‘s insurer had to pay all the costs of defense and indemnity
that exceeded the firm‘s deductible of $200,000, and in the final tallying the insurer
had to pay $150,000 in defense costs and $2.5 million to the plaintiff.
Team One will role play being the insurer. Make a list of all the issues that
arose within the law firm that you feel were not handled appropriately. Think about
the structure of the firm and how the decisions were made—and who made them.
Two members of the team will play the insurers. You may not speak to the other
teams involved in this exercise about the exercise in advance of the class!
Team Two will role play being the insurance broker. Your goal in life is to renegotiate the insurance policy for the law firm at as low a rate as possible. Because
you know that the insurance market is now hard (i.e., insurance rates are rising), you
fear that the insurer will use this incident as a basis to quote a much higher rate
against your client (the law firm). One person from the team plays the broker. You
can prepare in conjunction with the law firm team, but you may not speak to the
insurer‘s team before class!
Team Three will include three members of the firm‘s management committee.
Your goal is to improve the ethical decision making in the firm and to obtain
inexpensive insurance. You realize that because of this incident you may have to pay
higher rates this year. Use your own experience working in teams this semester (and
elsewhere) to think about what might be workable and enforceable. You may work
with the team that is playing/preparing the insurance broker‘s role, but you may not
speak to the insurer‘s team before class!
Scene 1: The insurer has a face-to-face discussion with the broker about the
upcoming negotiations with the law firm. In this discussion, the insurer can be very
frank in its language about what it thinks about the incident (that is, the case
described in ―Breaking Up Is Hard To Do‖) and about the risks of insuring a law
firm that acts that way. The insurer isn‘t at all angry with the broker and it is
24
understood between the insurer and the broker that the broker will relay the insurer‘s
concerns in a far more polite way to the law firm. Because the insurer and broker
have known each other and dealt with each other for many years, this is ―just
business‖ and nothing is taken personally. This discussion should last about 5-7
minutes.
Scene 2: The broker has a face-to-face discussion with the three members of
the management committee about the insurer‘s concerns and about the benefits that
might flow from showing the insurer that the law firm now has steps in place to
prevent such occurrences (i.e., the Breaking Up facts). One of the members of the
management committee has a huge book of business and in general thinks that giving
more power to the management committee or to the firm‘s general counsel or other
―bureaucrats without enough clients‖ is counter-productive. He thinks that you
don‘t add layers of expensive decision-makers; you fire the partner who made the
mistake and you move on. This discussion should last 10 minutes.
Scene 3: In a meeting in London, attend by the law firm management, the
broker, and the insurer, the insurer lays out its concerns in a more polite way. The
law firm responds and the broker tries to keep things moving. The insurer is very
polite, but in a polite way expresses its disappointment and pushes for real changes.
The law firm is very polite but in a polite way tries not to expand any promises to the
insurer that it doesn‘t think it can really accomplish, given the opposition of some
partners to layers of bureaucracy.
Breaking Up Is Hard To Do (Kelley)
"Were you aware that on or about July 16, 1992 your company's law firm was
considering whether Admiral Murphy could divert business to a new company,
allowing your company to wither?
No. Why would I think that? They were our lawyers."
-Colloquy between examining attorney and Margot Bester of Murphy &
Demory, in Murphy & Demory v. Admiral Murphy
Murphy & Demory, Ltd., a Washington, D.C. public relations firm, was
founded in 1987 by Daniel Murphy, a former Admiral and Deputy Director of the
Central Intelligence Agency, and Will Demory, a lawyer and economist. The firm
prospered, generating $2.5 million in revenues in 1991, from which the Admiral (as
he was called) and Demory took home $340,000 apiece. The Admiral as the
rainmaker while Demory ran the office seemed to be a winning formula.
Unfortunately, the firm's success was accompanied by growing tensions between the
25
two owners over the kinds of business they should cultivate, over their respective
roles, and—from the Admiral's perspective—over Demory's performance. With each
owning fifty percent of the company's stock, neither was in a position to assert
control. Power was also shared through corporate offices, with the Admiral as
chairman of the board and Demory the CEO.
Demory responded to a worsening situation by standing apart and keeping his
own counsel. The Admiral took a more aggressive approach. Without consulting
Demory, he began to explore ways he might take over the firm, or, failing that, start
his own firm, taking along the clients he had brought in. This chapter tells the story
of how Murphy & Demory, Ltd. ("M&D") was broken up, leading to court
judgments against the Admiral and Pillsbury, Madison & Sutro—M&D's corporate
counsel which took sides with the Admiral.
In June 1992, the Admiral met with Deanne Siemer, a partner in the
Washington office of Pillsbury, Madison & Sutro, a national law firm based in San
Francisco. The Admiral's relationship with Siemer went back to 1977 when he was
Deputy Undersecretary of Defense for Policy and Siemer, not yet forty, was General
Counsel of the Defense Department. He had continued to seek her advice from time
to time after leaving Defense. Seimer's work for M&D had begun shortly after the
firm was founded in 1987 and Siemer was a partner at Wilmer, Cutler & Pickering.
She continued to represent M&D on a variety of matters after she moved to the
Pillsbury firm in 1990. She also worked for the Admiral on personal matters, like his
will, and on matters involving both personal and firm interests which were not
readily separable. However, all Pillsbury bills, whether related to M&D or the
Admiral, were sent to and paid by M&D.
After their meeting, Siemer directed Frazer Fiveash, an associate, to do
research and write a memorandum on the law governing dissolution of Virginia
corporations, the state in which M&D was incorporated. In July, Siemer asked
Fiveash for a memorandum concerning whether the Admiral would have the right to
divert business from M&D to a new company to be controlled by him alone,
allowing M&D to "wither." Fiveash expressed concern about a conflict of interest,
but did as she was told. Siemer reviewed the Fiveash memoranda and conveyed their
substance to the Admiral by phone. In August, another young associate was assigned
to draft a complaint for the judicial dissolution of M&D, with the Admiral as
plaintiff and M&D as defendant. Demory was to learn of the memoranda and
complaint only after M&D sued the Admiral.
The Admiral and Demory had always operated their firm informally, more like
a partnership than a corporation. Board meetings had been viewed as a formality,
26
with no real business transacted. By this time, however, the Admiral had learned
enough corporate law from Deanne Siemer to know that a vote of the board of
directors could shift control to him, despite the equal shareholdings of himself and
Demory. There were three board members: the Admiral, Demory, and Margot
Bester, a lawyer who had been with the firm from the beginning. The Admiral
believed that if he could persuade Bester to join forces with him, together they could
activate a dormant board and vote effective control to him.
Apparently assuming that the husband could control the wife, in late August
the Admiral directed Jeff Grieco, an M&D employee, to meet with Bester's husband,
Bruce Markowitz. Grieco immediately phoned Markowitz and arranged an
appointment at his law office for later that day. As Grieco described his mission:
"The Admiral asked me to get a pulse from Bruce as to what Bruce thought Margot
would want to do" if the Admiral "had to restructure the firm or start a new
company."
Grieco and Markowitz knew one another socially. Both were avid Buffalo Bills
fans, the kind who debate the merits of draft choices. Following pleasantries of the
"how 'bout them Bills" sort, Grieco outlined the Admiral's concerns about M&D and
his plans for either taking control or leaving. Grieco charged Demory with various
faults and transgressions, personal and professional: Demory was involved in illegal
transactions with Libya and Iraq; he had opened foreign bank accounts to evade
income taxes; he wasn't developing business for M&D and was undermining clients
of others to win them over to himself. As if that weren't enough, Grieco claimed that
Demory was on anti-depressant medication.
Markowitz thought Grieco had come to him "to convince me to persuade
Margot to leave Will [Demory] and join the Admiral in a new firm and to poison my
mind against Demory." Markowitz was "extremely concerned and upset" by Grieco's
statements and, believing his wife might be in professional jeopardy, phoned her
right after Grieco left. She told him Grieco's charges were baseless and that she
would side with Demory in any struggle for control. In hindsight, Markowitz found it
"rather humorous that [Grieco] thought I would have that kind of influence over her.
She's a lawyer and her office was two doors down from the Admiral's. All he had to
do was ask her himself."
Frances Gray was the office manager at M&D during the breakup. Several days
before the Admiral resigned, Grieco asked Gray to copy the contents of the safe.
Gray made the requested copies—including client contracts, income tax returns,
balance sheets, income statements, and current bank and money market balances—
and sent them by messenger to the Pillsbury firm, as Grieco had requested. After the
27
breakup, Gray had to decide whether to stay with M&D or join the Admiral's new
company. It was "one of the hardest decisions I've ever had to make, but I just didn't
think Will was going to be viable."
As the break-up became imminent, the legal work involved in making it
happen fell primarily to Keith Mendelson. Mendelson had come to Pillsbury,
Madison & Sutro as an associate in 1984. He was promoted to "senior counsel" in
1991 and was under consideration for partner in August 1992 when Siemer drew him
into the problems at M&D. Mendelson first became involved on Friday, August 28,
when he was called into meetings with other Pillsbury lawyers, Grieco and another
M&D employee, ostensibly for his expertise in corporate law. Mendelson's notes
included the statement that he was "uncomfortable that what we were trying to do
was find out information about a client of ours," but he was not uncomfortable
enough to decline becoming involved. After that meeting, Siemer asked Mendelson
to accompany her to talk with Demory the next day in response to the Admiral's
request.
Siemer and Mendelson met with Demory at M&D the next morning, a
Saturday. As Mendelson recalled the meeting, Siemer opened on a conciliatory note,
saying they were there to "help you guys work out your problems." At that point,
Mendelson recalled that Demory "looked like he was going to cry" as he said:
"Deanne, I can't tell you how happy I am that you are taking that approach." But as
the meeting progressed, Demory's answers to Siemer's questions (according to
Mendelson) became evasive and defensive. Siemer closed the meeting by urging
Demory to meet with the Admiral over the weekend to "see if they could sort things
out."
Demory remembered the meeting with Siemer and Mendelson somewhat
differently. Siemer had begun by saying that she was representing M&D, neither
Demory nor the Admiral individually. The meeting proceeded on a cordial note with
general discussion of company business and prospects. Siemer went on to comment,
however, that she had met with the Admiral several times in the past year to discuss
"restructuring" or breaking up M&D, a disclosure which "came as pretty much of a
shock" to Demory. After that, the tone of the meeting changed. Demory sensed that
he was being interrogated, that Siemer was becoming accusatory and implying he
might be involved in illegal dealings.
After Siemer and Mendelson left his office, Demory phoned Margot Bester to
report what had been said and his impression that Siemer was acting at the Admiral's
direction. Putting that meeting together with what Grieco, the Admiral's agent, had
said to Bester's husband earlier that week, Demory and Bester decided to fire the
28
Pillsbury firm and hire new corporate counsel. They called John Dowd of the
Washington firm of Akin, Gump, Strauss, Hauer & Feld, still on Saturday morning.
Dowd then called Siemer's office and left a message informing her of his firm's
representation and that Demory would not meet with the Admiral over the weekend.
Siemer interpreted Dowd's message to mean that he was representing Demory
individually. As far as she was concerned, the Pillsbury firm still represented both
M&D and the Admiral.
That afternoon, Mendelson helped the Admiral draft a letter to Demory
proposing that he be given control of M&D. The letter was delivered by messenger
and Demory found it on his front stoop on Sunday morning. In the meantime, the
Admiral renewed his efforts to gain the support of Margot Bester for his takeover
proposal. He phoned her and she agreed, reluctantly, to meet with Mendelson at her
home. Mendelson went to Bester's home in Potomac, Maryland on Sunday around
noon. Bester's husband, Bruce Markowitz, joined the discussion. Mendelson began
by saying he was there as counsel for M&D, not for the Admiral personally. That got
him a cool reception. Bester told him that, in her view, the Pillsbury firm had a
conflict of interest and that, as a director of M&D, she did not acquiesce to his
presence in their home as counsel for the firm. Markowitz, an experienced corporate
bankruptcy lawyer who dealt with conflict of interest problems routinely, added his
opinion that the Pillsbury firm "had a blatant conflict." Markowitz later testified: "I
found that outrageous. I couldn't believe that this was happening in my living room.
It was something you learn about in law school, Ethics 101." The meeting went
nowhere, and Mendelson departed.
Mendelson had expressed concerns about a conflict of interest to Siemer before
his Sunday meeting with Bester. Demory was strongly opposed to the Admiral's
takeover plan, and he did own half of M&D and was its CEO. Immediately after
leaving Bester's home, Mendelson called Siemer from a phone booth to restate his
concerns. She reassured him that they didn't have a conflict. Siemer flew to
California that afternoon on other business and later to Europe, leaving Mendelson to
cope with a rapidly unraveling situation.
That Sunday afternoon, Demory drove to the Admiral's home and handed him
a letter rejecting the Admiral's restructuring proposal. The two sat at the kitchen table
while the Admiral read the letter. There was no discussion and Demory departed to
fax a letter to Siemer firing the Pillsbury firm as counsel to M&D. When the Admiral
learned of that the next day, he purported to rehire the firm, even though that
authority was vested in Demory as CEO.
29
The Admiral, a former commander of the Sixth Fleet, would later refer to that
Monday as "D Day." In the morning, accompanied by Mendelson and armed with a
statement Mendelson had written for him, he met with the M&D employees. He
stated that he and Demory "have drifted apart over the last three months." The
Admiral expressed regret for having "delegated too much of the management" but
asserted that he "cannot accept this situation any longer." He outlined his proposal to
transfer a controlling stock interest and management authority to himself, the
proposal Demory had rejected the day before. The Admiral expressed his willingness
to "try to work things out" with Demory. Failing that, however, he would "seek to
dissolve M&D and form a new company of my own." And if that were to happen, all
the employees would be invited to join his new company.
Over the next three days, the Admiral and Demory met several times in
fruitless attempts to resolve their differences. Then on September 4, Demory fired
Grieco, the Admiral’s factotum, without consulting the Admiral. Grieco went
directly to the Admiral who rehired him on the spot. Demory took the position that
“in light of what Mr. Grieco has done over the preceding week or so,” it was
necessary to fire him before there could be “constructive discussions.” But as the
Admiral saw the firing of Grieco: “That’s a deal breaker; that’s the end of it.”
The board of directors was to meet on the afternoon of September 9.
Mendelson met with the Admiral, Grieco, and several other employees in the
morning to review their resignations and letters to M&D clients soliciting their
business for the new company. Mendelson also drafted a resignation letter and a
statement for the Admiral to deliver at the board meeting. Before the meeting,
Mendelson discussed his conflict-of-interest concerns once again with another
Pillsbury lawyer. As he recalled: “I wanted to be sure in my own mind what capacity
I was going in. It was pretty clear by that time that Admiral Murphy was our client
and our only client.”
The board meeting was brief, its outcome foreordained. The Admiral brought
the meeting to order and moved that M&D be “voluntarily dissolved.” As expected,
that motion failed for want of a second. The Admiral then submitted his letter of
resignation, along with the resignations of several employees who moved out that
afternoon to new office space in the same building. The next day, articles of
incorporation for Murphy & Associates were duly filed in Richmond.
Margot Bester stayed with M&D. She described the breakup as “devastating.”
Within a short time, “the employees left, the majority of the clients left, which really
affected our income stream. That in turn affected our ability to hire new people who
could bring in new business.”
30
Making a bad situation worse, M&D had recently entered into a new lease for
new space which called for payments of $1.5 million over seven years. The
Admiral’s new firm could have made effective use of that space, but the Admiral
declined to assume the lease.
A few months after the breakup, M&D sued the Admiral, Siemer, Mendelson,
and Pillsbury, Madison & Sutro in the Circuit Court for Fairfax County, Virginia.
The complaint alleged breach of contract and violation of fiduciary duty by the
Admiral and legal malpractice by Siemer, Mendelson, and the Pillsbury firm. The
Akin, Gump firm represented M&D. The Pillsbury firm hired another firm to defend
it against the malpractice claim. The Admiral opted for local representation, possibly
on the theory—mistaken, as it turned out—that Fairfax lawyers would connect better
with a Fairfax County judge. Following a period of discovery, the case went to trial
on April 25, 1994 before Judge Jane Roush, sitting without a jury. The trial lasted six
days; fifteen witnesses testified; some four hundred exhibits were offered in
evidence.
Winston Churchill once summoned a waiter, saying: "Pray remove this
pudding. It has no theme." A court case, like a pudding, needs a theme, a compelling
message to shape the facts and impress the judge with the justice of your cause. The
plaintiffs would speak of betrayal. They were the innocent victims of a treacherous
scheme. The Admiral, assisted by the Pillsbury lawyers, destroyed the firm he and
Demory had worked so hard to build. For their part, the Admiral's lawyers would
portray him as the practical businessman, the one who had sought a constructive
compromise, the reasonable one. It was Demory, they said, who had shown a
"remarkable lack of common sense," who had "dropped a bomb on himself" and
M&D.
As the plaintiff, M&D had the burden of proving that the Pillsbury firm had
deviated from the standard of care—the basis of a legal malpractice claim. Stated
another way, the issue was whether the firm had acted like hypothetical "reasonable
lawyers" would have acted under similar circumstances? And in a case like this,
where rules of legal ethics prescribe conduct in some detail, those rules may go far in
determining the standard of care.
M&D relied on its expert witness, David Epstein, to establish the standard of
care and to prove that Siemer and Mendelson had breached it. Epstein's
qualifications were impressive. A graduate of Harvard Law School, he was a
founding member of the District of Columbia's Board of Professional Responsibility.
He had taught professional responsibility at the Georgetown University Law Center
and had served as an Assistant United States Attorney before entering private
31
practice. He had represented lawyers charged with ethics violations and served as an
expert witness in cases involving professional misconduct.
Epstein's testimony was elicited by hypothetical questions incorporating the
basic facts of the plaintiff's case. He was asked to assume that the Pillsbury firm had
an attorney-client relationship with M&D when the Admiral went to Siemer for
advice on restructuring or leaving the firm; that the Pillsbury lawyers provided the
Admiral with the requested advice that neither the Admiral nor the lawyers disclosed
to M&D that the Pillsbury firm was working for the Admiral; and that they assisted
him in carrying out a strategy to break up the firm.
The principle is embedded in Western culture: “no man can serve two masters”
(Bible, Matthew 6:24). “Whose bread I eat, his song I sing” (German proverb).
Conflicts of interest are among the most pervasive, difficult and consequential
problems faced by lawyers. The Model Rules of Professional Conduct, in force in
Maryland and over forty other jurisdictions, contain no fewer than eight conflict-ofinterest rules, farm more attention than the Model Rules devote to any other topic.
All parties agreed that the law of the District of Columbia, where most of
Pillsbury’s work for the Admiral had been done, would govern the malpractice issue.
Epstein cited Rule 1.7 of the District of Columbia’s Rules of Professional Conduct—
adapted from the ABA’s Model Rule—as the best evidence of the applicable
standard of care. That rule prohibits simultaneous representation of two clients
whose interests are “adverse”—the classic, direct conflict of interest. Textbook
examples include the lawyer who represents both husband and wife in a divorce, or
both buyer and seller in a real estate sale—situations where it’s impossible to fully
represent one side without compromising the other.
In Epstein’s opinion, when Admiral Murphy set out to explore a takeover his
objective was adverse to M&D—a corporate entity represented by its CEO and its
board of directors. Epstein reasoned: “Once the third party [the Admiral] starts
moving off in a direction that is serving only his interests, and the CEO of the
corporation [Demory] and the board are not kept informed of that divergence, the
law firm should advise the president and the board that there’s a conflict.” Unless
both sides then consent to its continued participation, the law firm should then
withdraw from the matter altogether, leaving both sides free to retain separate
counsel.
Here, the conflict should have been apparent back in June, when Siemer
assigned Fiveash to research the Admiral’s options without telling Demory.
According to Epstein, the Pillsbury firm’s failure to withdraw at that point began a
continuing violation of the rule, until the firm was fired in late August. And even if
32
the situation in June were viewed as not involving a present conflict, the lawyer is
expected to look ahead and see that—as Judge Roush expressed it—"this situation is
fraught with potential adversity."
After Demory fired the Pillsbury firm and hired Akin, Gump, Pillsbury ceased
to be in violation of Rule 1.7 because that rule applies only to present clients.
However, Pillsbury went on to violate a separate conflict-of-interest rule by
continuing to represent the Admiral against its former client, M&D. The District of
Columbia's ethics rules prohibit a lawyer from switching sides during a controversy,
unless the former client consents. According to Epstein, the rule is aimed at the law
firm that switches clients after learning confidential information from the former
client—information that may now be used against it. Pillsbury had obtained a wealth
of inside information about the company while claiming to represent M&D and
secretly helping the Admiral to break it up. In addition to violating the Rules of
Professional Conduct, Epstein pointed to the common-law principle—a precursor of
more recent rules of ethics—that a fiduciary (a lawyer or a trustee, for example)
owes a duty of "undivided devotion and attention" to the client. In Epstein's opinion,
the Pillsbury firm had violated that principle by covertly assisting the Admiral
against its own client.
Counsel for the Pillsbury lawyers didn't call an expert witness of their own to
controvert Epstein's opinions. It fell to Deanne Siemer to convince the judge that the
Pillsbury lawyers, following her lead, had not committed malpractice. Siemer was a
veteran trial lawyer with an abrasive manner. During her years at Wilmer, Cutler &
Pickering and later at the Pillsbury firm, she was widely respected but disliked by
some opposing counsel. Exceptionally gifted, energetic and ambitious, she had
written a book, Understanding Modern Ethical Standards, for the National Institute
of Trial Advocacy, of which she was chair-elect at the time of trial. Siemer might
well have qualified as an expert on legal ethics in a case in which she wasn't herself a
defendant.
Siemer began by describing herself as the Admiral's long-time lawyer,
downplaying her work for M&D as "discrete matters" and suggesting that there was
no lawyer-client relationship between the Pillsbury firm and M&D when the Admiral
began to explore abandoning ship. It was shown, however, that Siemer had done
significant work for M&D on numerous occasions and that Demory and Bester
considered the Pillsbury firm to be counsel for their company. In any event, Epstein
laid that question to rest when he testified that the comparative duration of two
concurrent representations was irrelevant—a conflict would remain "if you've been
representing one client for fifty years and a second one for three weeks."
33
Siemer testified that she had become aware of a possible conflict of interest
problem when the Admiral had asked her about restructuring M&D in June 1992,
and again in July when she asked Fiveash to look at diverting business to a new
corporation, allowing M&D, in Siemer's words' "to wither.'' As Siemer had seen it
then: "I had been asked to provide information. It was my judgment that [it was] in
Admiral Murphy's interest he should receive correct information, then he knows
what to do, and he'll act correctly. It was [also] in the corporation's interest that he
receive accurate information. ...They had the same interest." Seemingly incredulous,
counsel asked Siemer: "You didn't possibly think, did you, that the corporation had
an interest in having its business diverted elsewhere and it withering up?" Unfazed,
Siemer responded: "That wasn't the question that was asked. Whatever information
needed to be delivered to Dan Murphy so that he could make a decision, that was in
the corporation's interest." As long as the Admiral hadn't made a final decision to
leave, she thought it proper to assist him, without informing Demory—even to the
point of preparing a formal complaint for dissolution of M&D which she termed "a
housekeeping matter."
Siemer didn't recall considering the conflict of interest issue again until after
her somewhat confrontational meeting with Demory on August 28—a meeting she
had arranged at the Admiral's request but in which she claimed to be representing
M&D. By that time the Admiral, with Mendelson's help, was drafting his
restructuring proposal and Grieco was meeting with Pillsbury lawyers to work out
the details of setting up a new firm. In this advanced stage of the Admiral's plans,
Siemer discussed the conflicts issue with Mendelson and other Pillsbury lawyers.
Nothing had happened to that point to change her mind. "We thought it was really
quite clear there was not a conflict," adding, however: "I made the judgment."
Mendelson hadn't found Siemer's judgment completely reassuring. On
September 1, after Demory had fired the Pillsbury firm but it was still representing
the Admiral, Mendelson telephoned Ben Vandegrift in Sweden. Vandegrift was
Mendelson's supervisor and head of the corporate group in the Washington office.
Mendelson had come to recognize that they were dealing with "a thorny, hard issue"
and he wanted to get Vandegrift's judgment on it. Mendelson described the facts to
Vandegrift who concluded that they didn't present a problem. Vandegrift added that
"ultimately, the partner in charge [Siemer] has to make that decision." Mendelson
also sought out George Sugiyama, a member of the firm's professional responsibility
committee. Sugiyama had acknowledged that it was a "tough call" but he, too, saw it
as Siemer's decision.
Judge Roush asked Epstein whether there are distinctions in the potential
malpractice liability of a partner like Siemer, compared to Mendelson, the senior
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counsel, and to associates. The judge expressed particular concern about the
exposure of a young associate like Fraser Fiveash. "She's raised the issue and she's
been overruled and she's a year and a half out of law school." Under the District's
Rule 5.2 subordinate lawyers are bound by the rules "notwithstanding that the lawyer
acted at the direction of another person." Epstein responded: "Today is the funeral of
former President Nixon [which recalls] a situation where many people were doing
what they were asked to do, but knew that it was wrong, and they got into a lot of
difficulty and were disbarred for following orders." Subordinate lawyers may avoid
responsibility only if they acted "in accordance with a supervisory lawyer's
‘reasonable’ resolution of an ‘arguable’ question of professional duty. In Epstein's
opinion, Siemer's resolution of the question had not been reasonable, nor had the
question itself been arguable.
The plaintiffs called a certified public accountant with extensive experience in
business valuations in support of their claim of damages. Using alternative methods,
the accountant came up with pre-breakup values ranging between $1.5 and $2.5
million. He testified that after the break-up M&D's assets exceeded its liabilities and
therefore its worth was $0.
Judge Roush rendered her decision from the bench in June 1994, about a month
after the trial ended. She found that, prior to his resignation on September 9, the
Admiral had breached his employment contract with M&D "by devoting his energies
to activities other than those in the corporation's best interest." Among other things,
the Admiral had formed a new company "whose primary purpose is to offer
consulting services in direct competition with M&D" and induced its employees to
leave and join his new company. She assessed compensatory damages of $1 million
against the Admiral for breach of contract.
The judge also found that the Admiral had breached his fiduciary duty as an
officer and director of M&D. She acknowledged that "some amount of pre-departure
planning is permissible. A fiduciary need not wait until he is out in the street until he
looks for other work." She concluded, however, that Admiral Murphy's
"preresignation planning crossed the line by a considerable amount into
impermissible acts of disloyalty to M&D." Before embarking on that course, he
"should have disclosed his intentions or resigned to form his new company."
Judge Roush turned to the malpractice claim against Siemer, Mendelson, and
the Pillsbury firm. She ruled that the Pillsbury defendants had committed malpractice
at every stage of their involvement with the Admiral in the breakup of M&D, listing
numerous specifics, among them:
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by accepting representation of the Admiral in his efforts to take control of
M&D or to form a new corporation, before resigning from M&D;
by simultaneously representing the Admiral in matters adverse to their client
M&D without disclosing the dual representation;
by meeting with director Margot Bester to enlist her support in the Admiral's
takeover plans;
by inducing M&D employees to resign and to join Murphy & Associates;
by drafting the Admiral's restructuring proposal;
by drafting letters for M&D clients terminating their relation- ships and
directing that their files be sent to Murphy & Associates;
by filing a lawsuit seeking judicial dissolution of their then-former client,
based in part on confidential information, obtained from M&D employees
during their representation of M&D.
Judge Roush found that Deanne Siemer's testimony—that the interests of the
Admiral and M&D had been the same—"lacked credibility." She expressed
agreement with Epstein that M&D "had no interest in Admiral Murphy's knowledge
of how to undermine the company." She concluded that "Ms. Siemer willfully
ignored the District of Columbia Rules of Professional Conduct with which she was
well familiar, having written a treatise on legal ethics."
Judge Roush was disturbed that "the Pillsbury defendants ignored the warnings
of associates at the law firm that the dual representation of Admiral Murphy was rife
with conflicts of interest. Every inquiry by an associate into the propriety of the
firm's actions had been referred back to Ms. Siemer for resolution. Clearly, Pillsbury,
Madison & Sutro's internal mechanisms for resolution of ethical issues are seriously
deficient. The partner in charge of the client relationship who is least likely to be
objective is the ultimate arbiter of whether the firm has a conflict of interest."
That left the question whether Keith Mendelson, a senior counsel at the time,
was liable for malpractice equally with Siemer and the firm. Siemer had been in
charge and had, as she put it, "made the call." Normally, Mendelson would be
expected to take directions from Siemer, the responsible partner. Should he refuse to
take orders, he might jeopardize his chances for partnership for which he was under
consideration at the time. Such pressures are not always subtle. Mendelson recalled
Siemer saying to him as she was getting on an elevator: "Keep in mind you are a
senior counsel, sort of pushing partner on this." Judge Roush noted that she was "not
unsympathetic to Mr. Mendelson's difficult position," but found that "he was equally
responsible for the legal malpractice. Simply put, Mr. Mendelson was senior enough
that he should have put a stop to the undisclosed dual representation by disclosing it
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to the board in obtaining their consent of, failing that, by withdrawing from the
representation."
Judge Roush found that the Pillsbury defendants' malpractice had damaged
M&D in the amount of $500,000. How she arrived at that figure (or, for that matter,
the $1 million damage awards against the Admiral) she did not explain. Some forms
of damage, such as hospital bills, can be calculated to the dollar. In a case like this,
however, damage awards are often highly judgmental. A few weeks after the trial,
the parties settled all claims in the lawsuit for undisclosed amounts, foreclosing any
appeals.
Keith Mendelson made partner at Pillsbury, Madison & Sutro in January 1995.
Deanne Siemer and her lawyer husband had worked in the Trust Territory of the
Pacific Islands in the 1970s. She left the Pillsbury firm and they returned to establish
Siemer & Willens, a civil practice firm, on Saipan, the Mariana Islands.
Comments and Questions
1. This chapter introduces the subject of conflicts of interest with a direct and
blatant conflict in violation of Model Rule 1.7(a), which states the general conflicts
rule. (The substance of the District of Columbia rule, as relevant here, is the same.)
Note that Judge Roush found multiple acts of malpractice, based on conflict-ofinterest violations, from the time the Admiral first sought Siemer's advice about his
"options" until he resigned to form his own firm. According to an article in Of
Counsel (August 15, 1994, p.20) "some observers have publicly marveled at the
obviousness" of the conflict. The article cites Professor Stephen Gillers' suggestion
that "there doesn't seem to have been anything subtle, much less waivable, about this
particular conflicts charge." By contrast, the two chapters that follow raise difficult
questions about former-client and non-waivable conflicts.
One can only speculate why Deanne Siemer, a veteran litigator and author of a
book on lawyer ethics, could have gotten into this conflict, and stayed in it,
especially after an experienced lawyer like Keith Mendelson kept questioning her
decision. Could she have convinced herself, as she claimed, that her services were
beneficial to M&D as well as to the Admiral? Judge Roush flatly rejected that
explanation, finding that it "lacked credibility." Did her long-term professional
relationship with the Admiral, perhaps unconsciously, divert her loyalty in his
direction at M&D's expense? Or did she commit a deliberate violation of Rule 1.7, as
Judge Roush found? If the judge was right, why might a lawyer in Siemer's position
commit such a violation?
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2. Keith Mendelson, the senior associate up for partner, was in a bind. He was
uncomfortable helping the Admiral dismantle M&D, a client of the firm, and he
expressed conflict-of-interest concerns to Deanne Siemer, the partner in charge of
the matter. She kept telling Mendelson there was no conflict. She also implied that
his performance on the matter would be considered in his bid for partnership. Not
reassured, Mendelson voiced his concerns to a member of the firm's ethics
committee and to his regular supervisor, then in Sweden. Both deferred to Siemer.
His concerns thrice rejected, Mendelson soldiered on and eventually had a
malpractice judgment entered against him. Under the circumstances, what should
Mendelson have done?
Judge Roush identified part of the problem: "Pillsbury, Madison & Sutro's
internal mechanisms for resolution of ethical issues are seriously deficient. The
partner in charge of the client relationship who is least likely to be objective is the
ultimate arbiter of whether the firm has a conflict of interest." How might a firm like
Pillsbury structure "internal mechanisms for resolution of ethical disputes?"
Pillsbury, like most big firms has an ethics committee to which problems are
sometimes referred. Here the committee member apparently chose not to refer
Mendelson's concern to the committee. (A similar non-referral occurs in the next
chapter.) Should all concerns from associates be referred to committee? Should a
lawyer concerned about a conflict be permitted to report to the ethics committee
anonymously? If so, how long do you think it would take for the lawyer's supervisor
to figure out who raised the concern? Should a lawyer be free to decline to work on a
matter because of conflicts (or other ethics) concerns if the lawyer's supervisor
believes her concern is unfounded? If an associate were to exercise that option,
would it be likely to affect salary increases or chances for partnership?
3. It was one thing to hold Keith Mendelson responsible for malpractice,
despite his "difficult position," as Judge Roush termed it. "He was senior enough that
he should have put a stop to the dual representation ... or by withdrawing from the
representation." But what about Fraser Fiveash, the associate less than two years out
of law school? She had raised the conflicts issue with Siemer, had been reassured,
and wrote memoranda on legal questions. Assuming Fiveash knew about the firm's
relationship with M&D, she would be held responsible for violating Rule 1.7(a).
That conclusion follows from Model Rule 5.2, under which a lawyer is held
responsible for a rule violation "notwithstanding that the lawyer acted at the direction
of another person," unless she acted in accordance with her supervisor's "reasonable
resolution of an arguable question." David Epstein, the plaintiff's expert stated,
correctly, that Siemer's position was neither reasonable nor arguable. But was it fair
of Epstein to compare Fiveash to the co-conspirators in Watergate? Might someone
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in Fiveash's position be found in violation of the ethical rule but not guilty of
malpractice? If so, on what theory?
4. Counsel for the defendants did not call an expert witness to counter the
opinions of Epstein that they knew from depositions were forthcoming. Their only
testimony on those issues came from Siemer whose conduct was being challenged.
Can you explain that strategy, if strategy it was?
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