ACC Austin 2014 CLE/Golf/Spa Event
May 9, 2014
Who is the Client? Ethical
Guidelines for In-House Lawyers
Michael DePonte, Shareholder and Litigation Manager – Austin,
Jackson Lewis P.C.
2
Key Considerations for In-House Counsel
• Attorney’s work is advisory and ongoing – sometimes difficult
to pinpoint when need for Company representation and
protection begins
• Relationship with officers and employees begins, and advice
is given, before act of wrong-doing occurs
• Attorney can influence future Company behavior
• Lines may be blurred between business actor and legal
advisor when events occur
• Obligation to explain that Company holds the attorney-client
privilege, controls decision to retain or waive
3
What Do You Mean Who is the Client?
• Corporation is entitled to same protection of confidentiality as
an individual client under the attorney-client privilege
• Difficulty in applying privilege in corporate context stems from
inanimate nature of corporation:
– corporation can “speak” to attorney only via its agents
– lawyer represents corporation not individual agents
• Application of attorney-client privilege often turns on which
corporate officials and employees act on behalf of the
corporate entity as a client
4
Warning: So Many Issues, So Little Time!
5
Attorney-Client Privilege
• Protects disclosure of contents of communications between
an attorney and an attorney’s client
• Applies only to private client communications
• Communications must be for purposes of securing legal
advice
• Privilege has been claimed and not waived by client
• Determining when an attorney-client relationship is created
informs the analysis of privilege in the corporate context
6
Duty of Confidentiality
Confidential information includes both privileged and
unprivileged client information
• Unprivileged client information is:
– all information relating to a client or furnished by the client
– other than privileged information
– acquired by the lawyer during the course of or by reason of the
representation of the client
7
Duty of Confidentiality
Tex. Disciplinary R. of Professional Conduct 1.05 – Confidentiality of
Information
• A lawyer shall not knowingly:
1.
8
Reveal confidential information of a client or a former client to:
i.
A person that the client has instructed is not to receive the information; or
ii.
Anyone else, other than the client, the client’s representatives, or the
members, associates, or employees of the lawyer’s firm
2.
Use [such information] to the disadvantage of the client unless the
client consents after consultations.
3.
Use [such information] to the disadvantage of the former client after the
representation is concluded unless the former client consents after
consultation or the confidential information has become generally
known.
4.
Use of privileged information of a client for the advantage of the lawyer
or of a third person, unless the client consents after consultation.
Duty of Confidentiality
A lawyer may reveal confidential information:
1.
When expressly authorized in order to carry out the representation.
2.
When client consents after consultation.
3.
To the client, the client’s representatives, or the members, associates, and employees of
the lawyer’s firm, except when otherwise instructed by the client.
4.
When the lawyer has reason to believe it is necessary to comply with a court order, a
Texas Disciplinary Rule of Professional Conduct, or other law.
5.
To the extent reasonably necessary to enforce a claim or establish a defense on behalf of
the lawyer in a controversy between the lawyer and the client.
6.
To establish a defense to a criminal charge, civil claim or disciplinary complaint against the
lawyer or his associates based on conduct involving client or representation of client.
7.
When the lawyer has reason to believe it is necessary to prevent the client from
committing a criminal or fraudulent act.
8.
To the extent revelation reasonably appears necessary to rectify the consequences of a
client’s criminal or fraudulent act committed where the lawyer’s services had been used.
See, Tex. Disciplinary R. of Prof’l Conduct 1.05 – Confidentiality of Information
9
Meet Jack Lewis - The Ethical In-House Lawyer
• Keeps a copy of the Texas Disciplinary Rules of Professional
Conduct on his desk
• Presents regularly on ethics at SBOT seminars
• Sends monthly emails to his colleagues of the latest ethics updates
from the Texas Center for Ethics
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Which Ethical Rules Apply to Jack Lewis in
Representing ABC, Inc.?
• Texas Disciplinary Rules of Professional Conduct
• ABA Model Rules of Professional Conduct
• Where Can Jack Obtain More Information?
– Texas Center for Legal Ethics: a 501(c)(3) public foundation organized
for the purposes of promoting and enhancing ethics, professionalism
and civility among the state’s lawyers” www.legalethicstexas.com
– The American Bar Association: www.abanet.org
– State Bar of Texas ethics helpline: 1-800-532-3947
11
WWJD (What Would Jack Do?)
Jack Lewis is hired as in-house counsel for Company A. Company A
and Company B are considering merging to form ABC, Inc. Company
A’s CEO tells Jack Lewis that he will become the CEO of ABC, Inc.,
and that upon completion of the merger, Jack Lewis will be employed
as in-house counsel for ABC, Inc.
Attorney for Company B tells Jack Lewis that the Company B’s CEO
has secret plans to fire Company A’s CEO and his entire senior
management – they will have no place at ABC, Inc. But the attorney
tells Jack Lewis not to worry – he will still have his job as in-house
counsel.
Who is Jack Lewis’ Client?
Any concerns here?
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WWJD (What Would Jack Do?)
The merger is complete and ABC, Inc. is up and running. One day
Jack Lewis receives notice that a claim has been filed against ABC,
Inc. The claim is insured. One of the officers of ABC, Inc., strongly
advises Jack that he wants to defend the claim all the way to trial. He
specifically tells Jack, “Do NOT settle, it’s a matter of principle!”
Jack speaks to ABC, Inc.’s insurer and learns that the insurer wants to
settle and settle quickly.
Who is Jack Lewis’ Client?
Any concerns here?
13
WWJD (What Would Jack Do?)
ABC, Inc. is now the parent company of subsidiary XYZ, Inc. For as
long as Jack Lewis has been employed as in-house counsel at ABC,
Inc., subsidiary XYZ, Inc. has shared in ABC Inc.’s goal of becoming
the world’s leading eco-friendly company.
Three years after the formation of XYZ, Inc., Jack learns that the
subsidiary has plans to launch a new product that directly contravenes
ABC Inc.’s mission.
Who is Jack Lewis’ Client?
Any concerns here?
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To Whom Does He Owe Allegiance?
ABC, Inc.
Constituents
“Officers, directors, employees, and shareholders are the constituents of
the corporate organizational client.”
See Model Rules of Professional Conduct R. 1.13(a) cmt. 1
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What Do You Mean “Who is the Client?”
• It Depends…
….Unlike individual clients who can speak and decide finally and
authoritatively for themselves, an organization can speak and
decide only through its agents or constituents such as its officers or
employees … who act[] as an intermediary between the
organizational client and the lawyer. This fact requires the lawyer
under certain conditions to be concerned whether the
intermediary legitimately represents the organizational client.
Tex. Disciplinary R. of Prof’l Conduct, R. 1.12 cmt. 1
16
WWJD (What Would Jack Do?)
One day ABC’s Compliance Officer, Ima Duwrong, comes to Jack
Lewis’s office, closes the door, and says, “I want to confide in you.
You’ve been such a great advisor to me in the past….
“I’ve been taking money from ABC, Inc. for years and no one knows.
Obviously, I couldn’t afford that Bentley on my meager salary! But I’m
getting ready to secretly repay the money because I’ve recently come
into an inheritance!”
What is Jack Lewis’ course of action?
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WWJD (What Would Jack Do?)
POSSIBLE ANSWERS:
A. Place Ima under citizen’s arrest and hold her until the police
arrive.
B. Softly tell Ima to “never speak of this again.”
C. Ask Ima for a piece of the pie.
D. Inform Ima that he does not represent her and explain that he is
going to report the matter.
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WWJD (What Would Jack Do?)
POSSIBLE ANSWERS:
A. Place Ima under citizen’s arrest and hold her until the police
arrive.
B. Softly tell Ima to “never speak of this again.”
C. Ask Ima for a piece of the pie.
D. Inform Ima that he does not represent her and explain that
he is going to report the matter.
19
Rule 1.12: ORGANIZATION AS A CLIENT
Texas Disciplinary Rules of Professional Conduct
(a) A lawyer employed or retained by an organization represents
the entity. While the lawyer in the ordinary course of working
relationships may report to, and accept direction from, an entity’s
duly authorized constituents, [in the situations described in
paragraph (b)] the lawyer shall proceed as reasonably necessary
in the best interest of the organization without involving
unreasonable risks
-- of disrupting the organization and
-- of revealing information relating to the representation to
persons outside the organization.
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Rule 1.12: ORGANIZATION AS A CLIENT
Texas Disciplinary Rules of Professional Conduct
(b) A lawyer representing an organization must take reasonable
remedial actions whenever the lawyer learns or knows that:
21
1)
an officer, employee, or other person associated with the
organization has committed or intends to commit a
violation of a legal obligation to the organization or a
violation of law which reasonably might be imputed to the
organization; and
2)
the violation is likely to result in substantial injury to the
organization; and
3)
the violation is related to a matter within the scope of the
lawyer’s representation of the organization.
WWJD (What Would Jack Do?)
Ima Duwrong insists that Jack keep her misdeeds quiet and allow her
to “secretly” repay because she was the one who stuck her neck out to
get Jack hired, and she sees Jack as “[her] lawyer” – Jack has advised
Ima through numerous sticky situations, and Ima has confided in him
before about personal issues, such as a recent divorce, usually during
many long visits to the printers while awaiting materials for filing. Ima
insists she obviously came Jack for his legal advice on how to best
secretly repay the funds based on her past experience with and trust in
him.
What should Jack Lewis do now?
22
WWJD (What Would Jack Do?)
POSSIBLE ANSWERS:
23
A.
Now Jack can place Ima under citizen’s arrest, call the police.
B.
Give Ima a 48-hour head start to leave the country before Jack
does anything.
C.
Remind Ima that when they discussed her divorce, he was
speaking with her as a concerned friend. Remind Ima that she
was represented by an attorney in the divorce and that he told
Ima he knew nothing about family law. Restate that Ima was/is
not his client, and he will report the matter to his client, ABC
Inc.
D.
Call his old law firm and ask if they are hiring.
WWJD (What Would Jack Do?)
POSSIBLE ANSWERS:
24
A.
Now Jack can place Ima under citizen’s arrest, call the police.
B.
Give Ima a 48-hour head start to leave the country before Jack
does anything.
C.
Remind Ima that when they discussed her divorce, he was
speaking with her as a concerned friend. Remind Ima that
she was represented by an attorney in the divorce and that
he told Ima he knew nothing about family law. Restate that
Ima was/is not his client, and he will report the matter to
his client, ABC Inc.
D.
Call his old law firm and ask if they are hiring.
What If the CEO Does Nothing?
Follow Up:
The CEO says to Jack, “Thanks, I will talk to Ima Duwrong, but we
don’t need any more bad press – if you know what is good for you, you
will forget you ever heard about this.”
What should Jack Lewis do now?
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Rule 1.12: ORGANIZATION AS A CLIENT
Texas Disciplinary Rules of Professional Conduct
(c) Except where prior disclosure to persons outside the organization is
required by law or other Rules, a lawyer shall first attempt to resolve
a violation by taking measures within the organization. In
determining the internal procedures, actions or measures that are
reasonably necessary in order to comply with paragraphs (a) and (b), a
lawyer shall give due consideration to:
(1) the seriousness of the violation and its consequences,
(2) the scope and nature of the lawyer’s representation,
(3) the responsibility in the organization and apparent motivation of
the person involved,
(4) The policies of the organization concerning such matters, and
(5) Any other relevant considerations.
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Rule 1.12: ORGANIZATION AS A CLIENT
Texas Disciplinary Rules of Professional Conduct
(c) ….Such procedures, actions and measures may include, but are not
limited to, the following:
(1) Asking reconsideration of the matter;
(2) Advising that a separate legal opinion on the matter be sought
for presentation to appropriate authority in the organization;
and
(3) Referring the matter to higher authority in the organization,
including, if warranted by the seriousness of the matter, referral
to the highest authority that can act on behalf of the
organization as determined by applicable law.
27
Should Jack Lewis Report Up the Ladder or Beyond?
• Refer matter to board of directors (or similar governing body)
• If unsuccessful, assess difficult issue of revealing confidential
information to persons outside the organization
• Provisions of Rule 1.02 (Scope and Objectives of Representation)
and Rule 1.05 (Confidentiality of Information) must be met in order
to reveal confidential information to 3d party
Tex. Disciplinary R. of Prof’l Conduct 1.05, 1.02, 1.12 cmt. 7
28
Should Jack Lewis Withdraw?
• Optional Withdrawal
– Lawyer may withdraw if no material adverse effects on client’s interests
– Lawyer may withdraw if client persists in course of action lawyer reasonably
believes is criminal or fraudulent
Tex. Disciplinary R. of Prof’l Conduct 1.15 cmt. 7
• Mandatory Withdrawal
– Lawyer must resign when lawyer knows the employment will result in
violation of rule of professional conduct or other law
• Withdrawal not permitted simply because client suggests such course of
conduct (client may make suggestion with hope lawyer will not be
constrained by a professional obligation)
Tex. Disciplinary R. of Prof’l Conduct 1.15 cmt. 2
29
Don’t Forget SOX!
• Sarbanes-Oxley Act: subjects attorneys to ethical standard in the
representation of certain public companies:
–
Counsel who “appear and practice“ before SEC must report material
violation of securities law or breach of fiduciary duty by company to chief
legal counsel or chief executive officer;
–
If chief counsel or executive officer fails to appropriately respond, attorney
must report to Board of Directors; and
–
If no appropriate action is taken, Counsel “may” report to the SEC:
-- information which counsel “believes necessary” to prevent company from
committing a violation likely to cause substantial financial harm to issuer or
investors, or
-- to prevent issuer from committing criminal act, or
-- to rectify material violation that caused substantial financial harm to
the issuer or investors.
Sarbanes-Oxley Act § 307; 17 CFR Part 205 (“up the ladder rule”)
30
WWJD (What Would Jack Do?)
Follow Up:
The Board of Directors says to Jack, “Thanks for letting us know;
please investigate Ima Duwrong and make recommendations to the
Special Audit Committee of the Board as to our next steps.”
What should Jack Lewis do now?
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WWJD (What Would Jack Do?)
Follow Up:
In connection with his investigation, Jack Lewis sets up an interview of
Ima Duwrong to get the details. As the interview begins, Ima
immediately asks Jack: “Am I in trouble, Jack? Do I need a lawyer?”
What should Jack Lewis do now?
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Which Hat Are You Wearing?
FRIEND
LAWYER
BOSS
COMPLIANCE
OFFICER
INVESTIGATOR
33
Providing Business Advice
• In-house counsel often blend role of business advisor,
corporate employee, and lawyer (legal and non-legal roles)
– Risk that communications with in-house lawyer may not be
protected under attorney-client privilege
• To be privileged – must be shown that communication was
for the purpose of providing legal services rather than
general business advice
• Courts have difficulty distinguishing legal and business
advice, no bright-line test but case-by-case scenario
– Courts may protect only those parts of communication that are
identifiable as legal; may not protect communications in which
in-house counsel is not acting primarily in his or her position as
legal advisor
34
Providing Business Advice
• In re Sealed Case, 737 F.2d 94,99 (D.C. Cir. 1984), the court set
the issue as follows:
The lawyer whose testimony the government seeks in this case
served as in-house counsel. That status alone does not dilute the
privilege. We are mindful, however, the attorney was a company
vice-president, and that certain responsibilities were outside the
lawyer’s sphere.
The company can shelter the attorney’s advice only upon a clear
showing that the lawyer gave it in a professional, legal capacity.
35
Internal Workplace Investigations
• Which hat are you wearing and who is the client?
• What is the objective of the investigation?
– Is it anticipated that the investigation results may become
public?
– May be necessary to a defense in court?
• What best practices apply to interviews of corporate
employees while conducting internal investigations on
behalf of the Company?
– Are investigations driven by objective principles?
– Is attorney-client privilege protected?
– Still bound by confidentiality rules.
36
When Does Privilege Attach? Upjohn Factors
• The Upjohn Factors:
“[C]ommunications…to counsel for corporation acting as such, at
direction of corporate superiors…to secure legal advice…,[with
awareness by employees] that they were being questioned so that
corporation could obtain advice, …were protected.”
• Was the information:
− necessary for the attorney to impart legal advice?
− available from someone in the “control group”?
− within the employees’ scope of corporate duties?
− made with knowledge by employees that purpose of counsel is to provide
legal advice to the Company?
− communicated as confidential and thereafter kept confidential?
37
Recommended Steps for Interviewing
Constituents
• Warnings should inform constituent that the investigating attorney is
representing Company and not the constituent.
• Warnings should be explicit and unambiguous to ensure constituent
does not believe that an attorney-client relationship has been formed
with the investigating attorney.
• Purpose of interview should be made clear so it is apparent that
counsel is acting on behalf of Company and gathering information to
provide legal advice to the corporation.
38
Recommended Steps for Interviewing
Constituents
• Give constituent opportunity to ask questions about the Upjohn
warning and counsel’s role
• Inform constituent that:
– interview is subject to the attorney-client privilege and regarded as
confidential
– the privilege belongs to the Company, not the constituent
– the Company alone may decide if or when the interview content should
be disclosed to third parties
39
Who’s There?
Agency Investigations:
The “BIG KNOCK” at Your Door
40
KEY QUESTIONS:
• What should the scope of the investigation be?
• Who in the enterprise controls the investigation?
• Who should conduct the investigation?
• How should the investigation be conducted?
• What will be done with the results?
41
Ethical Duties During Agency Investigations
• Identify “agents” who have capacity to speak for the corporate
client—and communicate this to the Agency representative;
•
Disclose your role as in-house counsel to agents and any employee
witnesses and clarify your role;
• Determine the Company position on the parameters of privilege with
respect to any prior in-house investigation(s); and
• Advise client as to strategies for response to Agency
action/subpoenas/ reports, etc.
42
Waiver of Privilege
• Attorney-client privilege may be expressly waived, or found not to
exist, by:
43
–
Voluntary disclosure of the information or documents to a person other
than the client who has no interest in maintaining the confidentiality
–
Disclosure by revealing privileged information (during trial or deposition
testimony, in court or administrative filings)
–
Disclosure to 3rd parties or others not essential to the representation
(insurance brokers, public relations specialists)
–
Failing to timely assert privilege when confidential information is sought
through the discovery process or otherwise
Protecting Privilege and Avoiding Pitfalls
• Designate Legal Advice
– Clarify legal versus business communications
– Phrases: “from a legal perspective” or “the legal conclusion is”
– Sensitive communications should be restricted to senior management
• Separate Legal Role from Business Role
– Cleary communicate role
– If Company places in-house counsel in role of officer or director, Company
should retain independent attorney in the event sensitive issues arise
– When occupying dual roles, document nature of in-house counsel’s
communications with corporate officers, employees, directors or agents
44
Protecting Privilege and Avoiding Pitfalls
• Avoid accidental or shared privilege
– Keep all legal files separate from general corporate files, to avoid
accidental disclosure
– Establish policies to protect the confidentiality of legal documents and
clearly mark such documents as “legal”
– Limit the distribution of certain communications to a need-to-know basis
45
Points to Remember
46
•
Define what activities are “lawyering” versus
“business” activities
•
Key: done in preparation to defend client(s) in
anticipated litigation?
•
Segregate
attorney/client
communication
documents and attorney work product and
clearly mark same (maintain documentation of
elements of “work product”)
Points to Remember
•
Identify reporting “ladder” channels BEFORE
there is an incident—i.e., agree on who
receives “bad news” for the Company and who
will act at the behest of counsel
•
Avoid conducting internal investigations,
unless litigation or Agency Investigation
arising from incident has already commenced
or been threatened, or attorney believes there
is substantial likelihood litigation will
commence
–
47
Necessary for work-product doctrine to apply
And Finally….
Who are you? Who? Who? We really want to know!
Think before you speak and act.
48
THANK YOU!
49
Handicapping the Appellate Season
Joe Knight, Partner
Baker Botts LLP
50
2012-2013 Statistics
United States Court
39/78 in May and June
Texas Supreme Court
38/78 in June and August
51
Pending Texas Supreme Court Cases
In re John Doe A/K/A "Trooper"
13-0073; argued 11/07/13
Can a company compel Google to reveal the
identity of an anonymous blogger who is
disparaging the company's business?
How much of a showing of disparagement must a
company make to defeat anonymity?
Must a court have personal jurisdiction over the
blogger before deciding his right to anonymity?
52
Pending Texas Supreme Court Cases
Kinney v. Barnes & Burbage v. Burbage
13-0043 & 12-0563; argued 01/09/14
If a statement is adjudged defamatory, can a
court mandate removal of the statements from
the Internet and enjoin repetition?
Does such restraint violate the Texas constitution?
"Every person is at liberty to speak, being
responsible for the abuse of this right."
53
Pending Texas Supreme Court Cases
Americo Life v. Meyer
12-0739; argued 11/06/13
Should an arbitration award be vacated because
a party was deprived of its right to appoint a nonneutral arbitrator?
When a contract specifies arbitrator qualifications,
does it preclude additional qualifications in the AAA
rules?
If so, what is the remedy?
54
Pending Texas Supreme Court Cases
Exxon Mobil v. Drennen
12-0621; argued 11/06/13
Should Texas courts honor a contractual choice
of law clause and enforce forfeiture conditions on
restrictive stock?
Do the forfeiture conditions constitute an
unenforceable restrictive covenant?
55
Pending U.S. Supreme Court Cases
Halliburton v. Erica P. John Fund
13-317; argued 03/05/14
What is the future of class-action securities fraud
cases?
Should the Court overrule the presumption of classwide reliance based on the fraud-on-the-market
theory?
If not, should a defendant be able to defeat class
certification by showing that the alleged
misrepresentation did not affect the stock price?
56
Pending U.S. Supreme Court Cases
Alice Corp. v. CLS Bank
13-298; argued 03/31/14
To what extent are computer-implemented inventions
patentable?
Can the Court articulate a test that can be reliably applied
to distinguish between inventions that merely use a
computer to implement an abstract idea versus those that
use a computer to do a new and useful thing?
57
Joseph R. Knight
joe.knight@bakerbotts.com
www.bakerbotts.com
58
Retaliation Update and The Supreme
Court’s Objective Test
Paul Hash, Shareholder and Litigation Manager – Dallas,
Jackson Lewis P.C.
59
Title VII Retaliation Provision
42 U.S.C. § 2000e-3(a)
(a) Discrimination for making charges, testifying,
assisting, or participating in enforcement
proceedings.
•
60
It shall be an unlawful employment practice for an employer to
discriminate against any of his employees or applicants for
employment . . . because he has opposed any practice made
an unlawful employment practice by this subchapter, or
because he has made a charge, testified, assisted, or
participated in any manner in an investigation, proceeding, or
hearing under this subchapter.
Adverse Employment Action
Burlington Northern & Santa Fe Railway Co. v. White:
61
•
Employees who make Title VII retaliation claims no longer must
prove they suffered an "ultimate” or “adverse” employment action
(e.g., discharge, demotion, or loss of pay).
•
Title VII prohibits subtle forms of retaliation, which can even include
a change in work schedule.
Adverse Employment Action
The New Standard:
– Whether a “reasonable employee would have found
the challenged action materially adverse?”
SCOTUS encourages a broad reading of Title VII’s antiretaliation provisions
62
What Does “Materially Adverse Action” Mean?
• Changing an employee’s position to one with same pay and title,
and even more opportunity for advancement — not materially
adverse. (Forde v. Donahue)
• Temporary move from office to cubicle — not materially adverse
because temporary move was consistent with office policy.
(Roncallo v. Sikorsky Aircraft)
• Supervisor giving complaining employee nasty looks and “cold
shoulder” — not materially adverse. Write-ups and suspensions —
materially adverse. (Nugent v. The St. Luke/Roosevelt Hospital
Ctr.)
63
The Current Standard of Proof
UT Southwestern v. Nassar
SCOTUS Holding: “But For” Causation
– A plaintiff alleging retaliation under Title VII must prove the retaliation
was the “but for” cause of the adverse employment action.
Reversal of 5th Circuit: “Motivating Factor” Test
– 5th Circuit had held that a plaintiff could prove retaliation claim by
showing retaliation was a “motivating factor” for the adverse action.
64
Associational Retaliation
Thompson v. North American Stainless
• The employer fired the fiancé of an employee who engaged in
protected activity under Title VII.
• Held: Protection against retaliation under Title VII extends to
employees who can demonstrate a close association with the
employee who engaged in protected activity.
65
Opposition: It Doesn’t Take Much
Crawford v. Metropolitan Gov’t of Nashville
– Employee gained protection by merely responding to general
questions pursuant to an internal investigation.
66
“Pattern and Practice” Retaliation
EEOC v. CVC
• Suit challenging release document as violation of 707(a).
• Employee gives up right to file charge with EEOC.
• Section 707(a): prohibits employer conduct that constitutes a
pattern or practice of impeding or resisting employee access to
EEOC.
• Reversed earlier position taken in EEOC v. Eastman Kodak (2006).
67
Tips
• HR/Legal involvement in disciplinary/termination decisions.
• Managerial training.
• Release templates should be reviewed.
68
THANK YOU!
69
Show me the Money
An Update on the Current Deal
Environment
Steven M.Tyndall, Partner
Baker Botts LLP
70
US Venture Funding by Quarter
Number of Deals
Aggregate Dollar Amount
$35,000,000,000
4,500
4,000
$30,000,000,000
3,500
$25,000,000,000
3,000
$20,000,000,000
2,500
2,000
Q4
Q4
Q3
Q3
Q2
$15,000,000,000
Q2
Q1
Q1
1,500
$10,000,000,000
1,000
$5,000,000,000
500
0
71
$0
Deals
Deals
Deals
Deals
Deals
Deals
Deals
$
$
$
$
$
$
$
2008
2009
2010
2011
2012
2013
2014
2008
2009
2010
2011
2012
2013
2014
Source: MoneyTree Report
Financings by Dollar Amount
$14,000,000,000
$12,000,000,000
$10,000,000,000
$8,000,000,000
2008
2009
$6,000,000,000
2010
2011
$4,000,000,000
2012
2013
$2,000,000,000
$0
72
Source: MoneyTree Report
1Q 2014
Financings by Number of Deals
1,400
1,200
1,000
800
2008
2009
600
2010
2011
2012
400
2013
1Q 2014
200
0
73
Source: MoneyTree Report
Texas Venture Capital Investing
Texas’ Share of US Venture Investing ($ basis)
6.00%
5.00%
4.00%
3.00%
Texas
2.00%
1.00%
0.00%
2008
74
2009
Source: MoneyTree Report
2010
2011
2012
2013
1Q 2014
VC Funding by Industry – 2009-2010
2009
75
Source: MoneyTree Report
Life
Sciences/Healthcare
2010
Life
Sciences/Healthcare
Software
Software
Industrial/Energy
Industrial/Energy
Telecom/Networking/
Computers/Electronics
Telecom/Networking/C
omputers/Electronics
Media and
Entertainment
Media and
Entertainment
IT Services
IT Services
Semiconductors
Semiconductors
Consumer Products
and Services
Consumer Products and
Services
Financial Services
Financial Services
Business Products and
Services
Business Products and
Services
Retail/Distribution
Retail/Distribution
Other
Other
VC Funding by Industry – 2011-2012
2011
76
Source: MoneyTree Report
Life Sciences
2012
Life Sciences
Software
Software
Industrial/Energy
Industrial/Energy
Telecom/Networking/Co
mputers/Electronics
Telecom/Networking/Co
mputers/Electronics
Media and Entertainment
Media and Entertainment
IT Services
IT Services
Semiconductors
Semiconductors
Consumer Products and
Services
Consumer Products and
Services
Financial Services
Financial Services
Business Products and
Services
Business Products and
Services
Retail/Distribution
Retail/Distribution
Other
Other
VC Funding by Industry – 2013-2014
2013
77
Source: MoneyTree Report
Life Sciences
1Q 2014
Life Sciences
Software
Software
Industrial/Energy
Industrial/Energy
Telecom/Networking/Co
mputers/Electronics
Telecom/Networking/Com
puters/Electronics
Media and Entertainment
Media and Entertainment
IT Services
IT Services
Semiconductors
Semiconductors
Consumer Products and
Services
Consumer Products and
Services
Financial Services
Financial Services
Business Products and
Services
Business Products and
Services
Retail/Distribution
Retail/Distribution
Other
Other
Cleantech Investing
$4,500,000,000
350
324
$4,000,000,000
296
300
294
$3,500,000,000
250
$3,000,000,000
236
228
200
$2,500,000,000
$
174
Deals
$2,000,000,000
150
$1,500,000,000
$3,785,029,600
$4,260,907,200
$2,962,278,500
$1,428,013,400
$357,473,100
$500,000,000
$2,221,285,400
$1,000,000,000
$4,166,992,500
100
2008
2009
2010
2011
2012
2013
1Q 2014
50
33
$0
78
0
Source: MoneyTree Report
Linear ($)
Venture Capital Exits – 2008-2014
800
700
600
500
Buyout
400
IPO
Acquisition
300
200
100
2008
79
2009
Source: MoneyTree Report
2010
2011
2012
2013
1Q 2014
Private Equity Fundraising – 2008-2014
$300,000,000
350
300
$250,000,000
286
267
250
$200,000,000
Axis Title
196
201
200
167
$150,000,000
Capital Raised
163
150
$100,000,000
100
$256,000,000
$143,000,000
$86,000,000
$110,000,000
$131,000,000
$220,000,000
$39,000,000
74
$50,000,000
2008
2009
2010
2011
2012
2013
1Q 2014
$0
80
50
0
Source: PitchBook
Funds Closed
Private Equity Dealflow – 2009-2014
$500,000,000
3000
$450,000,000
2544
2417
2232
$400,000,000
Q1
2012
2013
2014
$300,000,000
1583
$250,000,000
2009
1500
2010
2011
$200,000,000
2012
1000
2013
$150,000,000
$108,000,000
$455,000,000
$451,000,000
$397,000,000
$375,000,000
$168,000,000
2014
589 500
$0
$
0
2009
81
200
$150,000,000
2011
2000
$50,000,000
0
$100,000,000
2010
$350,000,000
$100,000,000
$50,000,000
2009
2500
2410
$0
2010
Source: PitchBook
2011
2012
2013
1Q 2014
Deals
400
600
800
Capital Markets and M&A Environment
• Current public market activity
• Current M&A activity
• 2014 expectations
• Final thoughts
82
Steven M. Tyndall
steve.tyndall@bakerbotts.com
www.bakerbotts.com
83
Data Breach: Managing the Fallout
Patrick Richter, Of Counsel
Jackson Lewis P.C.
84
What is a Data Breach?
Unauthorized use of, or access to, records or data
containing personal information.
• Personal Information (PI) typically includes first name or first initial
and last name in combination with:
85
−
Social Security Number
−
Drivers License or State identification number
−
Account number or credit or debit card number in combination with
access or security code
−
Biometric Information (e.g. NC, NE, IA, WI)
−
Medical Information
Why Does This Matter?
Fines, Penalties, Settlements:
• State Attorney General-Vary By State
− Multipliers: Michigan permits civil fines of not more than $250 per
failure (each person), with a maximum of $750,000
− Length of notification delay: Florida imposes fines when notification is
not provided within 45 days. Calculate the fine as $1,000 per day for
the first 30 days, and $50,000 for each 30 day period thereafter with a
maximum fine of $500,000
• Health and Human Services
− Penalties and settlements in the millions of dollars
Private Cause of Action
•
86
14 states have some form of private action
How Does a Breach Occur?
Employment Context
•
Loss, Theft, Improper Access, Inadvertent Disclosure
−
Laptop
−
iPhone, Droid, iPad, Tablet, Blackberry
−
Thumb Drive, Hard Drive
−
Email
Can you identify all the devices containing PI?
87
Key Action Items
Identify the internal team who will be handling the
incident
Adhere to existing internal procedures
• Data Incident Response Plan
• Document steps taken
Notify/Coordinate with insurance carrier
88
Key Action Items
Determine whether this is a reportable breach
•
•
State breach notification statutes and regulations
−
46 states have a data breach notification requirement
−
Definitions vary state by state
−
Residency of the affected individual is key
Risk of harm trigger
−
What is it? How can you make this decision?
−
Document your decision
Employee Relations Concerns?
89
Key Action Items
Determine whether credit monitoring services will be
offered
90
•
State laws do not require credit monitoring services in the
case of a data breach
•
Protection? (e.g. only names and medical information, but not
social security # or financial account #)
•
Peace of mind for affected employees?
•
Company image to state agency investigator
•
Review service agreements with vendors and coordinate
notification letters
Key Action Items
Be prepared for complaints and agency inquiry
•
91
Complaints with the FTC or the state Attorney General’s office
about breach notification or safeguarding information. Consider the
following:
−
Establish a complaint process for responding timely
−
Review existing data privacy and security policies to ensure
compliance
−
Have rapid-response procedures in place to react to agency inquiry
THANK YOU!
92
How the Tail End of the Contract Can Sting
Dangerous “Miscellaneous” Terms
Stephanie F. Cagniart, Associate
Baker Botts LLP
93
Overview
• Boilerplate vs. Design
• Freedom of Contract vs. Public Policy
94
Choice of Law / Forum Clauses
Your rules, your turf
• Increasingly favored and enforced
• Promotes
−
−
−
•
95
Predictability
Efficiency
Parties' expectations
Make them work together
Choice of Law: Texas
• Most significant relationship test
• Restatement Section 187
• Qualified transaction exception
96
Choice of Law: Practice Pointers
• Which law is most favorable?
• Conflict-of-laws exclusion
• Scope
−
−
Types of claim
Non-contractual obligations
• Floating clause
• Splitting
• Forum-selection clause
97
Choice of Forum: Texas
• Presumptively valid
• Unless…
−
−
−
−
−
98
Unjust and unreasonable
Fraud, overreaching, etc.
Public policy of forum
Seriously inconvenient for trial
Would it deny the party its day in court?
Choice of Forum: Practice Pointers
• Choice-of-Law
• Convenience / Assets
• Who is bound
• Floating
• Mandatory / Exclusive
• Federal / state ("in" vs. "of")
• "Filed in" vs. "filed and litigated in"
• Conspicuous (<$50,000)
99
Choice of Forum: Enforcement
Atlantic Marine Const. Co., Inc. v. U.S. Dist. Ct.
for West. Dist. of Tex., 134 S. Ct. 568 (Dec. 3, 2013)
• "all but the most exceptional cases"
• 28 U.S.C. § 1404(a)
−
−
−
•
100
Public-interest factors only
No weight to plaintiff's choice or private interests
Choice-of-law rules of chosen forum
Forum non conveniens (state or foreign)
Disclaimer of Reliance Clause
Building Walls Around Your Contract
•
Merger / Integration / "Entire Agreement"
−
•
Disclaimer of Reliance
−
101
Parol evidence rule (+)
Fraud protection
Disclaimer of Reliance: The Big Three
Schlumberger Tech. Corp. v. Swanson,
959 S.W.2d 171 (Tex. 1997)
•
Release (specific)
•
Language
−
•
102
"no promise or agreement which is not herein expressed has
been made . . . none of us is relying upon any statement or
representation of any agent of the parties being released
hereby. Each of us is relying on his or her own judgment. . .
."
Context
Disclaimer of Reliance: The Big Three
Forest Oil Corp. v. McAllen,
268 S.W.3d 51 (Tex. 2008)
• Release (broad)
• Language
−
"no promise or agreement which is not herein expressed has
been made . . . none of them is relying upon any statement or
any representation. . . . [Plaintiff] is relying on his . . . own
judgment and each has been represented by . . . legal counsel."
• Factors
103
Disclaimer of Reliance: The Big Three
Italian Cowboy Partners v. Prudential Ins. Co. of
Am., 341 S.W.3d 323 (Tex. 2011)
• Lease Agreement
• Language
−
−
"neither Landlord nor Landlord's agents . . . have made any
representations or promises . . . except as expressly set forth
herein."
"This lease constitutes the entire agreement between the parties
hereto with respect to the subject matter hereof."
• Factors (modified)
104
Disclaimer of Reliance: Practice Pointers
Drafting from the Big Three
• Language
−
−
−
Disclaimer of representations clause
No-reliance clause
Prominently displayed
• Factors (non-exclusive)
−
−
−
−
−
105
Negotiated
Specific issue
Arm's length
Counsel
"Knowledgeable"
Disclaimer of Reliance: Practice Pointers
Beyond the Big Three
•
Potential Factors
−
−
−
−
•
Beginning vs. End
Non-disclosure
Custom / Usage
Course of Performance
Unjustified reliance
− Miller Global Prop., LLC v. Marriott Int'l, Inc., 418 S.W.3d 342 (Tex.
App.--Dallas 2013) (pet. filed)
106
Amendments Clause
If you can make it, you can unmake it!
• “No Oral Modifications”
• Intent
107
Amendments: Arbitration at Risk?
Unilateral-Amendment Clause and Arbitration:
Is the agreement illusory?
•
In re Halliburton, 80 S.W.3d 566 (Tex. 2002)
•
Post-Halliburton approaches
108
Amendments: Practice Pointers
Unilateral-Amendment + Arbitration:
Drafting options
• ADR carve-out
or
• Halliburton-type savings clause
− Notice and Acceptance
− Prospective application
− Termination
109
Severability Clause
Double-edged sword
110

Saves your contract
x
Binds you to a bargain you don't want
Severability Clause: Practice Pointers
Tailoring the clause
• Blue line vs. reasonableness
• Savings clause
• Executor
• Deletion vs. reformation
• Economic adjustment clause
• Identify "essential" terms
111
Stephanie F. Cagniart
stephanie.cagniart@bakerbotts.com
www.bakerbotts.com
112
The New I-9: A Brave New World
of Compliance and Enforcement
Kevin Lashus, Office Managing Shareholder, Jackson Lewis P.C.
Maggie Murphy, Shareholder, Jackson Lewis P.C.
113
Revised Form I-9 – What Has Changed?
114
Section 1 (Employee Information)
Section 1. Employee Information and Attestation (Employees must complete and sign Section 1 of Form I-9 no later
than the first day of employment, but not before accepting a job offer.)
115
Section 2 (Documentation)
(Employers or their authorized representative must complete and sign Section 2 within 3 business days of the employee’s first day of employment.
You must physically examine one document from List A OR examine a combination of one document from List B and one document from List C as
listed on the “Lists of Acceptable Documents” on the next page of this form. For each document you review, record the following information:
document title, issuing authority, document number, and expiration date, if any.)
116
Section 2 (Certification)
117
Dire Consequences for Employers
118
Latest Developments
• From FY 2009 through FY2012, ICE conducted about
9,140 administrative I-9 inspections
• During that time, 1,174 employers received final fine
assessments totaling $31.17M (ICE sought $52.72M in
assessments)
• Pew Research Center: an estimated 11.5M unauthorized
workers made up an estimated 5.2% of the active
workforce in the US
• DHS OIG: “HSI’s inconsistent implementation of the
administrative inspection process . . may have hindered
its mission” (Feb. 2014)
119
What’s Ahead
• Battle between compliance and reform advocates
• Increases in government audit activity, less incentive to
negotiate fines, greater oversight over the local offices
• Growing (liaison) role of ICE at the worksite
• Discreet information gathering (data-mining)
• Resolutions to “help” business with mandatory E-Verify
(EEVS)
120
THANK YOU!
121
Troll Update: Can These
@#$%&! be Stopped?
Nick Schuneman, Senior Associate
Baker Botts LLP
122
Outline
• Understanding the problem
− Troll impact
− The many species of troll
• What can be done?
− Anti-troll weapons from legislation and the courts
− Defensive strategies
123
Understanding the troll problem
124
The Impact of the Troll Problem
• In 2013, NPEs filed 4,800 patent infringement suits
− Total number of patent infringement suits = 6,200
− 2,700 unique defendant companies
• RPX estimates total cost of NPE activity in 2013 at
$12.8 billion
− Includes litigation costs, attorney's fees, and
settlements/judgments
Source: RPX, 2013 NPE Cost Report
125
The Many Species of Troll
• Common troll (Example: TracBeam, LLC)
− Shell companies and/or plaintiff's attorneys that acquire
patents to assert in litigation
• Bankrupt troll (Example: Williamson (AtHome))
− A practicing entity goes bankrupt and asserts its patents as a
means to cover debts / recoup investment
• Privateer
− Practicing entity spins off IP holdings into a troll
• Supertroll (Example: Acacia)
− NPE with hundreds of individual portfolios
• Megatroll (Example: Intellectual Ventures)
− NPE with thousands of patents in a giant portfolio and
significant financial backing
126
What can be done about trolls?
127
Current Status of Patent Legislation
• America Invents Act
− Signed into law September 16, 2011
• House Bill H.R. 3309 ("Innovation Act")
− Passed on December 5, 2013
• Senate Bill ("Patent Transparency and Improvements
Act of 2013")
− Currently in Judiciary Committee
− Introduced by Sen. Leahy
− On April 18, Sens. Schumer and Cornyn proposed an
amendment incorporating various concepts from the House
bill
128
Some anti-troll provisions in the legislation
• Strict requirements on demand letters
• Heightened pleading standard
• Identifying real parties in interest
• Joinder reform, and its effect on transfer
• Customer stay
• Discovery limits and cost-shifting
• Fee-shifting
129
Demand Letters and Pre-suit Investigation
• House: demand letter cannot be used as evidence of
willful infringement unless it includes detailed information
about patent, patent owner, and infringement theory
• Senate:
− Same willful infringement limits as House Bill
− Inadequate demand letter → suit may not proceed
− Limited to NPEs and customer suits
− Does not apply to communications re: existing license agreements
• Notes
− Frivolous demand letters can be ignored?
− Greater incentive to sue without pre-suit notice
130
Pleading Specificity
• House & Senate bills both eliminate Form 18 and require
heightened specificity in pleading, including:
− Identification of each asserted patent, each asserted claim, each
accused product (name or model number)
− Element-by-element infringement theory -- Claim charts?
− Indirect infringement - description of underlying direct infringement
− Standing, jurisdiction, list of other complaints asserting the patents
− Whether the patents are SSO-essential or subject to government
licensing requirements
• Possible escape clause?
− Information "not readily accessible" can be plead generally, along
with description of efforts made to obtain required information
131
Identification of Real Party in Interest
• House
− Complaint must disclose: assignee; entities with right to
sublicense; ultimate parent; and any entity with a financial
interest
− Must be disclosed to PTO, court, and adverse party
− Ongoing duty of disclosure to the PTO
• Senate
− Same as the House, except no requirement to disclose to the
PTO upon filing a complaint
132
Improper Joinder
•
Under the AIA, plaintiffs may no longer join
multiple unrelated defendants
−
•
In theory, new joinder law should make transfer
easier
−
−
133
35 U.S.C. § 299
Transfer analysis on case-by-case basis, not net
convenience across all related cases
But plaintiff's ties to district, judicial economy, and
court's prior familiarity may still be enough
Stay of Actions against Customers
• House and Senate bills would both stay actions against
customers if:
−
−
−
−
Manufacturer is party to an action involving the same patent
Customer agrees to be bound by res judicata
Manufacturer and customer consent in writing
Motion filed timely
− Later of 120 days after service of complaint or entry of the first
scheduling order
 Notes
− Will it backfire?
−
Could incentivize plaintiffs to sue customers and ignore manufacturers, or wait to
sue manufacturers later
− Can the manufacturer file the motion to stay?
134
Stay of Action Pending IPR or CBM
• Stay pending inter partes review
− Analysis same as in reexamination
• AIA includes specific requirements regarding stay
pending review of covered business method
patent
− Court must consider specific factors
− Moving party has right to immediate interlocutory
appeal of denial
− VirtualAgility v. Salesforce (ED Tex, 2014)
135
Discovery Limitations: Pre-Markman Stay
• House
− If claim construction is required, discovery shall be limited to only information
necessary for claim construction until after a Markman order
− Exceptions: when necessary to ensure timely resolution, when necessary to
resolve a motion, when denial would be a manifest injustice, when necessary
for actions seeking relief based on competitive harm
• Senate similar to House, except:
− Only applies to NPE plaintiffs
− No exception for timely resolution
• Notes
− Only applies if court determines claim construction is necessary.
−
136
Return to the days of eve of trial claim constructions?
Discovery Limitations: Core Documents and Cost-Sharing
• House
− Rule-making responsibility assigned to Judicial Conference
− Suggested rules:
− Core document discovery
− Electronic communication (specificity; limits; cost-shifting
beyond limits)
− Additional documents (cost-shifting / fee-shifting; bond; limits)
• Senate
− Similar to House, but suggestions are not as loaded
137
Fee Shifting
• House: reasonable fees and expenses to prevailing
party
− …unless the position and conduct of the nonprevailing party
was reasonably justified or special circumstances exist to
make an award unjust
− Bill as introduced set standard at "substantially justified"
− Unilateral covenant not to sue = non-prevailing
− Interested parties may be joined to pay the fees
• Senate: Same as House, but standard is whether
nonprevailing party was objectively reasonable
138
In the Meantime… Lower Bar for § 285 Fee Awards
• 35 U.S.C. § 285 authorizes attorneys fees in "exceptional
cases"
• The Supreme Court recently broadened the district court's
discretion for § 285 awards
− "Exceptional case" = "simply a case that stands out from others"
− Awards are now reviewed for abuse of discretion
− Highmark Inc. v. Allcare Health Mgmt. Sys., Inc. (April 29, 2014)
− Octane Fitness, LLC v. Icon Health & Fitness, Inc. (April 29, 2014)
139
Defense Strategies
• "Consistent Porcupine"
• "Play the man, not the hand"
• "Pay the man"
• Insurance-like mechanisms
140
141
Nick Schuneman
nick.schuneman@bakerbotts.com
www.bakerbotts.com
142
Tips from the Trenches
Sujata Ajmera, Associate, Jackson Lewis P.C.
Julie Tower, Associate, Jackson Lewis P.C.
143
Tips from the Trenches: 1 and 2
1. Using Trayvon Martin look-a-likes for target practice
isn’t a good idea. Port Canaveral, Florida (April 2013)
2.
144
If you don’t tell employees that it is inappropriate to lick
someone’s face, how else are they supposed to
know? Jackson v. City of San Diego (2013)
Tips from the Trenches: 3
3. In case you were wondering, this is not how you
respond to a wage and hour complaint. Lolange v. Z-Two
Diner New York (July 2013)
145
Tips from the Trenches: 4
4. Note to supervisors – if an employee is pranked with a
“kick me” sign…don’t actually kick him. Palacio v. Intel
Corp, Albuquerque, New Mexico (May 2013).
146
Tips from the Trenches: 5
5. You may have an obligation to provide a reasonable
accommodation…but giving a legally blind work a power
saw may not end up well. Theis v. Oklahoma League for
the Blind, Oklahoma City, OK (May 2013)
147
Tips from the Trenches: 6 and 7
6. You can’t fire employees who refuse to have “staring
contests” or “scream at ashtrays.” EEOC v. Dynamic
Medical Services, Southern District Florida (2013)
7. But you probably can fire someone for being a “brony.”
Reddit.com (September 2013)
148
Tips from the Trenches: 8
8. Employees take these words seriously. Miami, Florida
(December 2013)
149
Tips from the Trenches: 9
9. Asking your paralegal to join your polygamous union as
a “third wife” probably isn’t the advancement opportunity
she was looking for. Rafi v. Ray, S.D.N.Y. (2013)
150
Tips from the Trenches: 10
10. Just because she looks like a lady…doesn’t mean “she”
wants to be called one. Valeria Jones v. Bon Appetit
Management, Oregon (February 2014)
151
Tips from the Trenches: 11 and 12
11. Be sure to read the fine print. Allen v. Chanel, Inc.,
S.D.N.Y. (2013)
12. Don’t forget to check Facebook. Gulliver Schools, Inc.
v. Snay, Florida App. Ct. (2014)
152
Ethics and The Modern AttorneyClient Relationship
Kevin Meek, Partner
Baker Botts LLP
DISCLAIMER: I am not an ethics expert, nor do I want to be.
153
Lawyers = Kindergarteners
In a 20 case before Judge Sparks the lawyers were invited to a
"kindergarten party."
The party will feature many exciting and informative lessons,
including:
 How to telephone and communicate with a lawyer;
 How to enter into reasonable agreements about deposition
dates . . . and;
 An advanced seminar on not wasting the time of a busy
federal judge and his staff . . . .
Morris v. Coker, No. A-11-MC-712-SS (W.D. Tex. Aug. 26, 2011).
154
"All I really need to know I learned in kindergarten."
-- Roger Fulghum
Share everything.
Play fair.
Don't hit people.
Put things back where you found them.
Clean up your own mess.
Don't take things that aren't yours.
Say you're sorry when you hurt somebody.
Wash your hands before you eat.
Flush.
Warm cookies and milk are good for you.
Live a balanced life - learn some and think some and draw some and paint and
sing and dance and play and work every day some.
Take a nap every afternoon.
When you go out into the world, watch out for traffic, hold hands and stick together.
Be aware of wonder.
155
Share everything.
ABA Model Rule 3.3
Texas Disciplinary Rule of Professional Conduct 3.03
A lawyer shall not "knowingly":
• make "a false statement of fact or law" or fail to "correct a false
statement of material fact or law previously made,"
• fail to disclose controlling legal authority that is directly adverse
and not disclosed by opposing counsel,
• offer false evidence or fail to take remedial measures where the
lawyer later learns of its falsity.
156
Share everything.
157
Play fair.
ABA Model Rule 3.4--Fairness to opposing party and
counsel
A lawyer shall not:
• unlawfully obstruct another party's access to evidence or unlawfully alter, destroy,
or conceal a document or other material having potential evidentiary value;
• falsify evidence, counsel / assist a witness to testify falsely, or offer an unlawful
inducement to a witness;
• knowingly disobey an obligation under the rules of the tribunal;
• make frivolous discovery requests or fail to make reasonably diligent efforts to
comply with a legally proper discovery request; and
• in trial
− allude to any matter in trial that the lawyer does not reasonably believe is
relevant or that will not be supported by admissible evidence;
− state a personal opinion as to the justness of a cause, the credibility of a
witness, the culpability of a civil litigant, or the guilt or innocence of an
accused.
158
Play fair.
Texas Disciplinary Rule of Professional Conduct 3.04
ABA Model Rule 3.4
+
A lawyer shall not, in trial:
• habitually violate an established rule of procedure or
evidence; and
• engage in conduct intended to disrupt the proceedings.
159
Play fair.
"Would it be a violation of the Canons of Ethics for an
attorney to file with the trial judge a brief covering the
principal points involved in a pending action without
furnishing a copy to opposing counsel?"
OF COURSE IT WOULD!!
See Texas Ethics Opinion 88, 18 Baylor L. Rev. 232 (1966)
160
Play fair.
Don't try to establish personal jurisdiction over the
defendant based on a single purchase of the defendant's
products in the forum state, especially if you were the
purchaser.
• Plaintiff's counsel asserted that jurisdiction was proper based on
a single purchase order for the "sale of two hundred of the
alleged infringing products" in the forum state.
• The court criticized the plaintiff's lack of candor, noting that the
one purchase order on which plaintiff exclusively relied was
"made at the behest of [plaintiffs]."
See Edberg v. Neogen, 17 F.Supp.2d 104 (D. Conn. 1998).
161
Don't hit people.
In a letter to a British lawyer regarding a divorce proceeding,
the author (a Texas lawyer) included the following paragraph:
At this time, it looks that we are going to furnish your little country with a
lot more American dollars, and I suppose in time our boys will be
returning to fight your battles with American dollars and weapons as in
the last two wars; however, we are a free democratic people and believe
in helping the weak nations. We go where we please and do just about
as we desire.
The Ethics Committee had the following thoughts:
The committee deeply deplores the gratuitous insult contained in such
last paragraph. We . . . feel that it may possibly call for action by a
grievance committee.
See Texas Ethics Opinion 20, 18 Baylor L. Rev. 204 (1966).
162
Don't hit people.
163
Put things back where you found them.
ABA Model Rule 3.4(a)
Texas Disciplinary Rule of Professional Conduct 3.04(a)
"A lawyer shall not unlawfully obstruct another party's access to
evidence."
164
Put things back where you found them.
Don't tamper with the evidence--produce what
should be produced in a timely manner.
• In a patent infringement suit, defendants' counsel initially
claimed that source code and other reports were either lost or
destroyed.
• Although the documents were eventually produced, the court
was not pleased.
See Keithley v. HomeStore.com, Inc., 2008 WL 3833384, at *1 (N.D.
Cal. Aug. 12, 2008).
165
Clean up your own mess.
If you screw up, correct the mistake instead of
covering it up.
•
The plaintiff in a patent infringement suit filed a motion to strike
defendant's pleadings based on the failure of defense counsel
to respond to discovery requests.
•
Defense counsel claimed that he had sent the plaintiff's counsel
an e-mail regarding the discovery requests, but the plaintiff
claimed this e-mail was never received.
Furminator, Inc. v. Petvac Group LLC, Case No. 2-08-cv-338-TJW
(E.D. Tex. Aug. 5, 2011).
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Clean up your own mess.
And if you don't clean up your mess before anyone
finds out, the rest of us will have to report your bad
behavior.
ABA Model Rule 8.3
and
Texas Disciplinary Rule of Professional Conduct 8.03
With some narrow exceptions, "a lawyer having knowledge that
another lawyer has committed a violation of applicable rules of
professional conduct that raises a substantial question as to that
lawyers honesty, trustworthiness or fitness as a lawyer in other
respects, shall inform the appropriate disciplinary authority."
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Don't take things that aren't yours.
ABA Model Rule 1.15
Texas Disciplinary Rule of Professional Conduct 1.14
A lawyer shall hold property of clients or third persons . . . separate from
the lawyer's own property.
Upon receiving funds or other property in which a client or third person
has an interest, a lawyer shall promptly notify the client or third person.
Except as stated in this rule or otherwise permitted by law or by
agreement with the client, a lawyer shall promptly deliver to the client or
third person any funds or other property that the client or third person is
entitled to receive . . . .
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Don't take things that aren't yours.
This includes your client's spouse.
According to the South Carolina Supreme Court:
Sexual involvement with the spouse of a current client, while
not expressly prohibited by the language of our Rules of
Professional Conduct, . . . is a per se violation of [the Rules of
Professional Conduct], as it creates the significant risk that the
representation of the client will be limited by the personal
interests of the attorney.
http://www.abajournal.com/news/article/sex_with_clients_spouse_i
s_a_per_se_legal_ethics_violation_top_s.c._court_s/
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Wash your hands before you eat.
ABA Model Rule 1.9
Texas Disciplinary Rule of Professional Conduct
1.09(a)(3)
A lawyer who has formerly represented a client in a matter shall not
thereafter represent another person in the same or a substantially
related matter in which that person's interests are materially
adverse to the interests of the former client unless the former client
gives informed consent, confirmed in writing.
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Wash your hands before you eat.
Conflicts arising from joint defense agreements
5th Circuit:
•
•
Analyzes the issue as one of contract and confidentiality
rather than conflict.
Non-clients, by definition cannot rely upon rules imputing
knowledge among members of a firm because those rules
apply to clients only.
See Wilson P. Abraham Constr. Corp. v. Armco Steel Corp.,
559 F.2d 250 (5th Cir. 1997) (per curiam).
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Wash your hands before you eat.
Conflicts arising from joint defense agreements
Texas courts:
•
Every lawyer in a firm is irrebutably presumed to be
disqualified from representing a party adverse to a former
co-defendant of a client.
See Nat'l Med. Enterprises v. Godbey, 924 S.W.2d 123 (Tex.
1996).
172
Wash your hands before you eat.
Conflicts arising from joint defense agreements
Federal Circuit:
173
•
AMD and Nintendo were parties to a Joint Defense
Agreement ("JDA"), which provided:
•
"Nothing contained in this Agreement has the effect of
transforming outside or
inside counsel for either party into
counsel for the other party . . . . The parties
expressly
acknowledge and agree that nothing in this Agreement . . . shall
be used as a basis to seek to disqualify the respective counsel
of such party in
any future litigation."
•
AMD's former in-house counsel later represented SMG
against Nintendo, who moved to disqualify his entire firm.
Wash your hands before you eat.
Conflicts arising from joint defense agreements
Federal Circuit (Cont'd)
174
•
The district court granted Nintendo's motion, concluding
that the JDA's waiver provision did not apply to an in-house
lawyer who was no longer employed by a party to the
agreement.
•
On petition for a writ of mandamus, the Federal Circuit
ordered the district court to vacate its disqualification order.
Wash your hands before you eat.
Conflicts arising from joint defense agreements
Federal Circuit (Cont'd)
•
The Federal Circuit stated:
"[T]he Agreement's terms clearly point away from the district
court's conclusion . . . . Nintendo agreed not to seek
disqualification of then 'respective counsel of such party [i.e.,
AMD] in any future litigation.' [The attorney in question] was
indisputably a 'respective counsel' of AMD, and, contrary to
Nintendo's objections, the breadth and temporal scope of the
waiver are broad enough to include 'any future litigation' between
Nintendo and a party employing, or represented by, [the attorney
in question]."
In re Shared Memory Graphics, 659 F.3d 1336 (Fed. Cir. 2011)
175
Wash your hands before you eat.
176
Flush.
ABA Model Rule 1.5
177
•
Upon termination of representation, a lawyer shall take steps to
the extent reasonably practicable to protect a client's interests,
such as giving reasonable notice to the client, allowing time for
employment of other counsel, surrendering papers and
property to which the client is entitled and refunding any
advance payments of fee that has not been earned.
•
The lawyer may retain papers relating to the client to the extent
permitted by other law only if such retention will not prejudice
the client in the subject matter of the representation.
Flush.
Texas Ethics Opinion 570
178
•
A former client has demanded to see the lawyer's file on the
representation of the client.
•
The lawyer previously provided a copy of the majority of the
documents contained in the file, but withheld copies of the
lawyer's notes.
•
"A lawyer's ethical obligations may vary depending on the type,
source, or content of the document and other relevant factors."
•
Regarding the lawyer's notes, "the attorney is the agent of the
client, and the work product generated by the attorney in
representing the client belongs to the client."
Take a nap every afternoon.
But not in court . . .
•
The 5th Circuit granted a new trial to an inmate whose lawyer
consistently slept during the trial, noting the "fundamental
unfairness in [the inmate's] capital murder trial created by the
consistent unconsciousness of his counsel."
Burdine v. Johnson, 262 F.3d 336 (5th Cir. 2001).
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When you go out in the world, watch out for traffic, hold hands,
and stick together.
180
Kevin J. Meek
kevin.meek@bakerbotts.com
www.bakerbotts.com
181