Legal Ease Blog

Ethics Rules Updates: How Do Technology and Globalization Affect the Practice of Law?

The ABA Commission on Ethics 20/20 has released resolutions and reports to be submitted to the House of Delegates at the upcoming ABA annual meeting scheduled in August concerning recommendations and changes to the ABA Model Rules of Professional Conduct. An overview of these resolutions and reports can be found on the American Bar Association site. 

While each state has is own set of Rules, many states follow the ABA's lead, and craft their rules based on the ABA Model Rules. As always, I recommend that you review the rules in your own jurisdiction as well as reviewing the ABA Model Rules and comments.

The Commission did make several recommendations, some of which are highlighted below, but they did not recommend a complete overhaul or substantial changes to the Rules.

Technology

One of the main areas addressed by the Ethics 20/20 Commission was the effect of technology on legal ethics, and the need for some clarification (and in some cases, slight expansion) of the Model Rules with regard to new technologies. The Commission noted that technology has changed the way lawyers communicate with clients, the manner in which clients find a lawyer, how discovery and investigations are conducted, and how legal services are provided. Electronic communication and mobility also affect client confidentiality. 

The report makes it clear that lawyers must be up to date on technology in order to serve their clients well and to comply with their ethical obligations.

The Commission's proposals include:

Expansion of Model Rule 1.6 (Confidentiality of Information), identifying various factors lawyers should use to determine whether the measures they are taking to protect a client’s confidential information from inadvertent disclosure, unauthorized disclosure, and unauthorized access - regardless of the medium used - are reasonable.

That the  ABA create and maintain a regularly updated user-friendly website to provide more specific and timely guidance regarding lawyers’  use of commonly encountered technology

An amendment to Model Rule 1.1 (Competence) to explicitly include the phrase, "including the benefits and risks associated with relevant technology” as part of a lawyer's obligation to remain competent

An update to Model Rule 4.4 (Respect for Rights of Third Persons) regarding notification of receipt of electronic material (including emails and metadata contained within electronic documents) which was inadvertently sent

Change to comment 4 to Rule 1.4 (Communications) indicating that lawyers should not only promptly respond to client telephone calls, but should promptly respond to client communications of any type.

Amendments to Model Rule 1.18 (Duties to Prospective Client) and its Comments, including a new Comment to "help lawyers identify the precautions that they should take to prevent the inadvertent creation of a prospective client-lawyer relationship in a digital age and help the public understand the consequences of communicating electronically with a lawyer."

An update to Model Rule 7.2 (Advertising) to clarify obligations with regard to pay per click and pay per lead advertising and sharing fees with non-lawyers.

Amendments to Model Rule 7.3 (Direct Contact with Prospective Clients) to provide guidance about when a lawyer's online communications rise to the level of "solicitations."

You can read the Commissions resolutions regarding technology and confidentiality here.

Globalization and Cross-Jurisdictional Practice

One of the results of new technology is globalization of the legal marketplace; the Commission notes that clients increasingly expect their lawyers to be able to practice in multiple jurisdictions, and the economy has forced many lawyers to relocate. These changes can create ethical issues for lawyers as well.

The Commission has recommendations related to these issues, including:

Changes to the Model Rules (and the addition of a new rule) regarding practice in a new jurisdiction.

Changes to Comments for Rules 1.1 (Competence), 5.3 (Responsibilities Regarding Nonlawyer  Assistants) and 5.5 (Unauthorized Practice of Law; Multijurisdictional Practice)to give further guidance about the use of lawyers or non-lawyers from outside the firm to assist on a client's matter.

The resolutions related to outsourcing (whether lawyers or non-lawyers) can be found here, and you can read the resolutions regarding changing firms, mergers and sale of a law practice here.

Future Developments

The Commission is still working on a report regarding alternative law firm structures.

To learn more, read this article in this month's ABA Journal.

New York Judge Sides with Law Firm on Fee Dispute Issue

Earlier this week, in a case entitled, Emery Celli Brinkerhoff & Abady, LLP v. Michael Rose, Manhattan Supreme Court Justice Joan Madden sided with a law firm in a fee dispute with a client who began paying the firm, but never completed all of the payments.

According to a New York Law Journal article about the case, the judge's opinion cited the "account stated rule;" since the client paid part of the bill, the client was deemed to have accepted the entire billing as valid.

The opinion notes that during the first year the firm represented Rose, monthly bills were regularly paid, but that those regular payments ended in January 2006, following which sporadic partial payments were made up until August 2009.

Notably, the firm contends that Rose did not contest any portion of any outstanding bill until late in November 2009, when minimal objections were made for a total of less than $3,000, which the firm subtracted from the amount it sought to recover from Rose in the suit. Once the suit was commenced, Rose did not assert in his answer that there was any malpractice or misconduct on the part of the firm, however, these allegations were raised subseqently when the firm attempted to assert a charging lien against the proceeds of the settlement previously negotiated by the firm on Rose's behalf. Rose was subsequently provided a number of opportunities to amend his answer to assert claims of malpractice, but never did so.

The court found that there was an implicit agreement that Rose would pay the firm's outstanding bills, stating that an implicit agreement to pay can be the result of either "the absence of any objection to a bill within a reasonable time or a partial payment of the outstanding bills.” (citing additional cases). The court noted that the client claimed to have objected orally to the bills earlier, but these undocumented assertions, without specifics about when the objections were made, to whom, which invoices and specific charges were objected to, and what the substance of the conversation with the firm was, were insufficient to defeat the firm's claim of account stated.

In this case, one of the saving graces for the law firm was the level of detail contained in their bills. This, coupled with the late (and extremely vague) objections from the client about the outstanding charges, served the firm well. Word to the wise: document the work done for your clients well, and be sure to keep good records of oral communications, too.

 

 

 

NY Rules on Lawyer Advertising Take Another Hit

 

The United States Court of Appeals for the Second Circuit struck down another portion of New York's ethical rules governing lawyer advertising which required lawyers who identify themselves as certified specialists to include a prominent disclaimer stating that certification is not required to practice law and does not indicate greater competence. The decision was rendered March 5, 2012.

 

J. Michael Hayes, a trial lawyer from Buffalo, New York, was board certified in trial advocacy by the National Board of Trial Advocacy in 1995. His firm letterhead noted the certification, but did not include a disclaimer. Hayes also ran billboard ads which did include the disclaimer, although the Grievance Committee questioned whether the disclaimer was prominent enough. The Grievance Committee began an investigation and Hayes brought suit challenging the constitutionality of the disclaimer rule. 

The Western District of New York, who initially heard Hayes' challenge, upheld the New York rule, stating that the State had a substantial interest in protecting consumers from potentially misleading attorney advertisements, but the Second Circuit reversed on appeal. The Second Circuit opinion noted that as written, the disclaimer required by the rule may defeat its purpose by creating misunderstandings, rather than dispelling them.

The rule Hayes was alleged to have violated is Rule 7.4, (and its predecessor, Disciplinary Rule 2-105(C)(1) of New York’s Code of Professional Responsibility), which states:

A lawyer who is certified as a specialist in a particular area of law or law practice by a private organization approved for that purpose by the American Bar Association may state the fact of certification if, in conjunction therewith, the certifying organization is identified and the following statement is prominently made:

“[1] The [name of the private certifying organization] is not affiliated with any governmental authority

[2] Certification is not a requirement for the practice of law in the State of New York and

[3] does not necessarily indicate greater competence than other attorneys experienced in this field of law.”¹

The Second Circuit did uphold the first part of the rule, requiring attorneys who advertise that they are certified in a particular field to indicate that the certifying agency is not affiliated with the government. But they struck down the second portion of the rule, that the disclaimer include a statement that certification is not a requirement for the practice of law, holding that it was unlikely that the general public would be misled into thinking that only attorneys with a certified specialty were lawfully practicing law in New York. 

Finally, the Second Circuit addressed the third requirement, that the disclaimer state that certification "does not necessarily indicate greater competence than other attorneys experienced in this field of law." The Court found this statement to be "problematic," stating:

In fact, the qualifications of an attorney certified as a civil trial specialist by the NBTA include having been lead counsel in at least 5 trials and having “actively participated” in at least 100 contested matters involving the taking of testimony, passing an extensive examination, participating in at least 45 hours of CLE, and devoting at least 30 percent of the lawyer’s practice to the specialized field. See http://www.nblsc.us/certification_standards_civil/. These qualifications may reasonably be considered by the certifying body to provide some assurance of “competence” greater than that of lawyers meeting only the criterion of having some experience in the field, and a contrary assertion has a clear potential to mislead.

The Court did note that the prominence requirement lacked specificity, but also acknowledged the difficulty of specifying standards when there are so many potential avenues for attorney advertising.The Court opined that there were some circumstances in which any attorney of reasonable intelligence could determine that the advertisement was in violation of the rule (putting the disclaimer in the same color as the background, etc.), and that under those circumstances, the rule would be facially sufficient.

In this case, the Court found that the rule was unconstitutionally applied to Hayes and his billboard advertisement. The fact that representatives from the Grievance Committee were unable to articulate an objective standard for the rule played into the Court's decision.  

The Second Circuit did not address the question of Hayes' letterhead, since he had previously advised the Grievance Committee that he would modify it according to the rule, and that issue did not reach the Court.

You can find the opinion at: J. Michael Hayes v. State of New York Attorney Grievance Committee of the Eighth Judicial District et al, U.S. Court of Appeals for the 2nd Circuit, No. 10-1587. 

1. It has been noted in previous decisions that where a Rule of Professional Conduct includes quotation marks, the exact language quoted must be used. 

Are Spring Bonuses a Waste of Money?

A recent article by Amy Kolz of The American Lawyer reports on this year's "spring bonus" system for associates. This past January, a firm-wide email went out at Sullivan & Cromwell announcing spring bonuses to be given based upon an associate's class year, as a result of the firm's improved associate activity and profits per partner in 2010. 

When other firms learned of the spring bonus plan, many jumped on board and paid their associates a spring bonus, too.

Does law firm management need an overhaul? Is "management" even an appropriate term, when associates are given little guidance, their compensation structure is based solely upon the year they graduated from law school or what other big law firms are paying their associates?

According to the article, law firm managers think newly minted lawyers and young associates cannot tell the difference between firms, so they need to keep in step with other firms in terms of 'top compensation' in order to attract the best candidates or retain associates.

But what about training, job satisfaction, interesting work? And what does placing emphasis on bonuses and 'top compensation' do for the future of the practice?

I'm not against firms sharing the windfall of a good year with associates and staff, and I think it sets a good precedent and can help build loyalty, particularly where those bonuses are unexpected, although I think in many instances providing a bonus based purely on the year an associate graduated from law school can be problematic.

In my consulting practice, partners and law firm leaders and managers often complain about the lack of motivation and drive of their young associates. They complain that associates are more focused on compensation and benefits than on learning the practice and doing a good job for clients. But what are these firm leaders doing to develop, train and support their associates? Is it any wonder that associates cannot tell the difference between firms when they play 'follow the leader' in this way?

When firms place their emphasis on billable hours and reward only in dollars, it isn't hard to understand why associates become disenchanted and put in less effort on the job. If firms want associates to see differences and to value being a part of their practice, they have to make some effort to distinguish the experience of working there without relying solely on compensation.

Missed the ILTA Conference 2011? Want the Latest Tech Info? Download Materials!

I wasn't able to attend the ILTA Conference this year in Nashville, but they have generously provided presentation materials to download for free at the ILTA Conference download site.

ILTA is the International Legal Technology Association, and this year's 34th annual conference was built "around the Rev-Elation concept, offering attendees knowledge to develop new strategies for success in their own organizations" and "focusing on the ways in which law firms will have to adapt in order to thrive over the next decade." 

One of the sessions that intrigued me was about skills assessments in law firms, particularly since I met with a law firm partner yesterday who was lamenting the lack of quality work from his associates. I hear this complaint often enough from law firm partners. Sadly, when we talk about how the associates are being trained, supported and evaluated, or how the firm is helping the attorneys acquire the skills and experience they need to succeed, more often than not, I discover that it's an ad hoc process, with little individual attention given. More on this topic in another post, but for now, suffice it to say that I think the ideas presented in this session deserve more attention from attorneys.

 The presentation: "Technology Coaching for Attorneys: What Works?" is also worth a look - but be sure to check out the handouts, and not just the presentation. Since so many lawyers are resistant to technology, there are some great ideas here for how to get your lawyers on board with using technology, and the examples and case studies show why it's important and what kinds of training might be available for you or your firm to get the most out of the software and hardware you already have.

There's a ton of information available on the ILTA download page, from what lawyers need to know about social media to information on effectively implementing alternative fee arrangements, successful IT management in small and mid-sized firms and workflow management, and more. There is something here for every size firm, every technology budget and every level of technological know-how.

(Hat tip to +Stephanie Kimbro on Google+ for pointing this out!)

Are Law School Rankings Driving Fudged Law School Numbers?

The news recently has been filled with stories about law schools misrepresenting statistics, possibly to improve their rankings to compete for more and better students to come to their schools and increase their revenue.

Last week, the National Law Journal reported that New York Law School was the second school to be sued for fraud for allegedly misrepresenting job placement statistics. According to the lawyer representing the plaintiffs, the actions of the school are akin to false advertising and do not reflect on the quality of education at the school.

The class action against New York Law School alleges that the school misrepresents the number of graduates obtaining employment within 9 months after graduation. The complaint states, in part, 

Plaintiffs want to bring an element of “sunlight” or transparency to the way law schools report post-graduate employment data and salary information, by requiring that they make critical, material disclosures that will give both prospective and current students a more accurate picture of their post-graduate financial situation, as opposed to the status quo where law schools are incentivized to engage in all sorts of legerdemain when tabulating employment statistics.  

The complaint goes on to state that although the school's marketing materials claim that 90-95% of graduates obtain employment within 9 months of graduation, these statistics include any type of employment, whether full or part-time or merely temporary, and whether they require a law degree or not. Plaintiffs allege that if the school were to disclose the number of graduates obtaining full-time, permanent employment, the number could be as low as 50% or lower.

It is further alleged that the school inflates its reported salary statistics by not taking a statisically relevant sample, including those students who have failed to secure full-time, permanant employment.

The plaintiffs claim that while the economy is in recession and the legal industry is suffering, the school is enrolling increasingly larger classes for its own selfish financial reasons and enticing students with the inflated statistics, taking approximately $150,000 in tuition from each student, most of which is financed by non-dischargeable loans from students with grim prospects for post-graduate employment.

A similar class-action lawsuit has been filed by the same attorneys against Thomas M. Cooley Law School in Michigan. And in May, a suit brought on behalf of a 2008 graduate alleging fraud in misrepresenting employment statistics was brought against Thomas Jefferson School of Law in San Diego.

But law schools are not only getting in trouble over employment statistics. The ABA Journal is reporting that the American Bar Association has sanctioned Villanoval Law School for misrepresenting admissions data. Villanova reported the misrepresentations to the ABA itself and the responsible parties, including a former dean and other law school officials, are no longer employed by the school.

What ethical messages are these kinds of misrepresentations sending to law students and young lawyers?

NY State Bar Asks ABA to Support "Practice Ready" Law School Education

ALBANY - Arguing that in addition to knowing the law attorneys must "know how to do useful things with the law to help solve client problems," New York bar leaders are pressing for a greater emphasis on making law school graduates and young attorneys "practice ready."

via www.law.com

I certainly hope that law schools do continue the trend toward more practical legal education, and not just practical legal education in the form of clinical programs that allow students to work on cases with clients, but also practical education that allows students to learn about the business aspects of running a law practice.

This would include learning how to communicate with clients, how to screen clients, set client expectations, evaluate cases and clients to determine whether the client should be accepted or rejected by the firm, how to evaluate performance on a case and discuss it with the client, how to manage and supervise others, how to develop business, etc.

All law school curricula should include courses on practice management, client relations and business development. This kind of education would not only serve our law students well, but it would serve the public as well.

U.S. Court of Appeals Rules on NY Lawyer Advertising Rules

On March 12, the Second Circuit issued its decision in Alexander v. Cahill, the case that challenged the changes to the New York ethics rules with respect to lawyer advertising. The Court largely affirmed the decision of the District Court, striking down many of the restrictions contained in the new rules. The only change from the District Court opinion was the reversal of their decision with respect to the ban on "the portrayal of a fictitious law firm, the use of a fictitious name to refer to lawyers not associated together in a law firm, or otherwise imply[ing] that lawyers are associated in a law firm if that is not the case."

You can see my post about the District Court's decision in Alexander v. Cahill here. Both decisions relied upon the Supreme Court's analysis of the First Amendment protection accorded to commercial speech in Central Hudson Gas & Elec. Corp. v. Pub. Serv. Comm’n of N.Y. 447 U.S. 557, 566 (1980). This test applied to regulations restricting commercial speech is as follows:

1. Does the speech concern lawful activity and is it not misleading?
2. Is the asserted government interest substantial?
3. If the answers to #1 and #2 are both yes, does the regulation directly advance the governmental interest asserted?
4. Is the regulation more extensive than necessary to serve that interest?

Both courts found that the speech was subject to First Amendment protection by answering #1 in the affirmative, and both found that the asserted government interests (here, the interest of the State in prohibiting attorney advertising that contains deceptive or misleading content and protecting the reputation of the legal profession) were substantial.

Where the regulations fall short, according to the Court, is the question of whether the regulations directly support the government's stated interest. It is the State's burden to demonstrate that the harms are real and that the regulations will alleviate that harm "to a substantial degree."

But the State's justification for these regulations falls short here according to the Court, since they are based not on any evidence of actual harm or of any complaints by the public that they were misled by these lawyer advertisements; rather the State merely claimed that these kinds of attorney advertisements were potentially misleading.

The Court found that the State could regulate only advertisements that were inherently or actually --not merely potentially-- misleading. Since the State did not proffer sufficient evidence that the kinds of advertisements they were seeking to regulate were actually misleading, the regulations were struck down. But the Court was quick to point out that similar regulations could be enacted in the future if the State could provide evidentiary support for their claims.

The Court also found that the existing regulations failed the fourth prong of the Central Hudson test because, in most cases, the regulations constituted an outright prohibition on information that would only be potentially misleading, even if the same information could be provided in a manner which was not misleading, and therefore, the restrictions were not narrowly tailored enough.

According to the Court, in most instances, the State's interests could have been advanced simply by requiring disclaimers on certain kinds of advertisements, rather than an outright ban. In fact, the New York State Task Force that studied these issues and made recommendations prior to the enactment of these rules suggested just such an alternative.

The Court upheld the restrictions placed upon solicitation of specific individuals or groups following an event (such as an automobile accident) for a specific period of time following the accident or event (30 days, or 15 days if there is a 30 day deadling for a filing, such as the filing of a notice of claim). This ban does not prevent lawyers from advertising generally - it just prevents them from directly contacting known victims/participants. And the rule certainly does not curtail the client's right to reach out to a lawyer during that 30 day period.

As a practical matter, what does the decision mean for lawyers in New York?

Based upon the decision, lawyers will be permitted to:

• Use testimonials or endorsements, even of current clients, as long as those testimonials or endorsements are accompanied by a disclaimer indicating that past results are not an indicator of future performance.
• Use an actor or spokesperson in advertisements, provided that there is disclosure of that fact in the advertisement.
• Portray judges in advertisements, as long as those advertisements do not imply an ability to influence the court.
• Use 'attention-getting' techniques in their advertisements (such as the gimmicks used in the advertisements in the case at hand, including special effects), particularly where these techniques serve to impart information in a form which makes it easy for the general public to understand.

Lawyers may not portray a fictitious law firm, or use a fictitious name to refer to lawyers not associated together in a law firm, or otherwise imply that lawyers are associated in a law firm if that is not the case. The Court specifically discussed this provision in its decision, and noted that the parties agreed to narrowly construe this regulation to refer only to situations in which lawyers from different firms give the misleading impression that they are from the same firm.

One area in which I think there still may be some confusion is in the restriction of the use of trade names. The Court addressed 22 NYCRR 1200.5(c)(7), which prohibits the use of a nickname, moniker or trade name that implies results, and found that the regulation was unconstitutional because the restriction was too broad and prohibited these names even when they were not misleading. Presumably, this analysis would also apply to the even broader rule which says, in part:

A lawyer in private practice shall not practice under a trade name, a name that is misleading as to the identity of the lawyer or lawyers practicing under such name, or a firm name containing names other than those of one or more of the lawyers in the firm...

However, this separate rule was not directly discussed in the Court's opinion, most likely because the case at hand involved only 'nicknames' and not the actual law firm name.

In all circumstances, the overarching test must be applied to lawyer ads to ensure that they are not deceptive or misleading in any way.

ABA National Solo and Small Firm Conference 2009 Recap-Social Media for Lawyers

As I noted in my previous post, I attended the American Bar Association's National Solo and Small Firm Conference, presented by the General Practice, Solo and Small Firm Division in L.A. last week. In addition to speaking about good billing practices for lawyers, I had the opportunity to attend several of the other sessions presented at the conference. I 'live tweeted' many of these sessions during the conference, and I've composed a series of posts based on those tweets for my blog readers.

Kicking off the conference was a session on Social Media for lawyers, presented by Lisa Solomon and Niki Black.Lisa noted that social media provides "ambient awareness;' it keeps you on people's radar. She recommended that you 'be your authentic self' on social media and 'take off your lawyer hat' so that people can get to know you. At the same time, she cautioned against 'over-sharing' and reminded the audience that you should assume that everything you put online will stay out there - forever.

Lisa also noted something that I have experienced since having become more involved in social media over the past year - social media makes conferences more fun because many of the preliminaries are already out of the way. It removes some of the awkwardness because you already know one another through your online interactions. She likened online networking to a 'small town' feel where everyone knows each other - only now the network of contacts is national (or even international) rather than merely local. As Niki Black pointed out, social and professional networking are not mutually exclusive.

The presenters mentioned a number of popular social media outlets, and Niki Black noted that profiles on sites such as LinkedIn and Avvo rank high on the search engines and will help you get found. Lisa reminded the audience about one of my favorites, JD Supra, which allows you not only to create an online profile, but to upload documents that can be shared. JD Supra does a great job of pushing out the content that's posted on their site, which means additional exposure for you if you participate. Niki reported several contacts and inquiries received weekly as a result of her online profiles.

Niki recommended Feedly.com as a great RSS reader for keeping current on blogs and other online content. An author and contributor to numerous blogs, she cautioned that although blogging is a great way to get to the top of the search engines, in order to be successful, you must like to write and to interact with others online.

Niki also advised that time spent on social media has tripled over the past year. Because it is so popular, even if you choose not to participate in social media, you must need to understand it and how others are using it.

Both presenters encouraged lawyers to try social media. Niki says, "Don't let the naysayers keep you away from social media. Ignore your fears." Lisa advises that you set up profiles on sites like Twitter even if you don't participate so that others can't use your name first. But Niki notes that, "social media is useless without goals." I couldn't agree more, as with any business building endeavor, you must first determine what you want to accomplish before you can develop an effective strategy for reaching your goals.

If one of those goals is to get known and to build your practice, social media may be a good tool to use. As Lisa Solomon stated in her presentation, social media allows you to communicate and collaborate online. To do so effectively, she recommends that you monitor the online conversation so that you don't need to guess what your target audience is concerned about.

Social media seems to be one of "the" hot topics this year, although there are still relatively few lawyers using social media on a regular basis, and even fewer who are using it in a targeted way. It was interesting to note how few attendees at this conference - including the session on social media - were using laptops at the conference. And, compared to other recent conferences I've attended, even fewer of those were using their laptops to engage in social media, as opposed to merely taking notes in a word processing program.

I look forward to following the progression of social media in the practice of law. In the interim, if you'd like to get started using social media as part of your strategic law firm marketing plan, please feel free to contact me to see how I can help.