2017 klemchuk llp ethics cle presentation materials

© 2016 Klemchuk LLP

13th Annual Ethics CLE Event

1© 2017 Klemchuk LLP


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The Top 10 1/2 Ethics Tips for Lawyers and ClientsPresented by:Kelli Hinson Chris SchwegmannCarrington Coleman Lynn Pinker Cox & Hurst



Even good lawyers are not immune from allegations of malpractice.

Ugly Truth



Malpractice

Frequent and meaningful communication between lawyer and client can help prevent misunderstandings and malpractice.



Create thorough and accurate engagement letters and termination letters.

Lesson Number One



Lesson Number One

The basis for a great number of malpractice cases is created at the beginning of the relationship because of a lack of clarity as to the scope of the engagement.

Both lawyers and clients are protected when the lawyer’s role is spelled out.



Lesson Number One

BOTTOM LINE: Who, what, for whom, how, when, and for how much?›❯ Who is the client?›❯ Privilege issues for multiple clients›❯ Address potential conflicts›❯ Identify attorneys’ roles and responsibilities›❯ Spell out fee arrangement›❯ Narrowly tailor scope of engagement›❯ Client-imposed “guidelines”



Lesson Number One

Termination letters help determine when a “current client” became a “former client” for conflicts purposes and when fiduciary duties end.

Clarify what, if any, continuing duties the firm has.

Understand and communicate the firm’s document destruction policy.



Clarify your role and send “I am not your lawyer” letters when appropriate.

Lesson Number Two



Rule 4.03 Dealing With Unrepresented PersonIn dealing on behalf of a client with a person who is not represented by counsel, a lawyer shall not state or imply that the lawyer is disinterested. When the lawyer knows or reasonably should know that the unrepresented person misunderstands the lawyer’s role in the matter, the lawyer shall make reasonable efforts to correct the misunderstanding.

Parker v. Carnahan, 772 S.W.2d 151, 157 (Tex. App.—Texarkana 1989, writ denied).An attorney can be held negligent where he fails to advise a party that he is not representing them on a case where the circumstances lead the party to believe that the attorney is representing him.

Lesson Number Two



Being the lawyer for both sides is fraught with peril.

Lesson Number Three



Rule 1.06 Conflict of Interest: General Rule(a) A lawyer shall not represent opposing parties to the same litigation.(b) In other situations and except to the extent permitted by paragraph (c), a lawyer shall not represent a person if the representation of that person:

(1) involves a substantially related matter in which that person’s interests are materially and directly adverse to the interests of another client of the lawyer or the lawyers firm; or(2) reasonably appears to be or become adversely limited by the lawyers or law firm's responsibilities to another client or to a third person or by the lawyers or law firm’s own interests.

(c) A lawyer may represent a client in the circumstances described in (b) if:(1) the lawyer reasonably believes the representation of each client will not be materially affected; and(2) each affected or potentially affected client consents to such representation after full disclosure of the existence, nature, implications, and possible adverse consequences of the common representation and the advantages involved, if any.

Lesson Number Three



Comment to Rule 1.06 -- Non-litigation Conflict Situations

13. Conflicts of interest in contexts other than litigation sometimes may be difficult to assess. Relevant factors in determining whether there is potential for adverse effect include the duration and intimacy of the lawyer’s relationship with the client or clients involved, the functions being performed by the lawyer, the likelihood that actual conflict will arise and the likely prejudice to the client from the conflict if it does arise. The question is often one of proximity and degree.

14. For example, a lawyer may not represent multiple parties to a negotiation whose interests are fundamentally antagonistic to each other, but common representation may be permissible where the clients are generally aligned in interest even though there is some difference of interest among them.

Lesson Number Three



0

The dangers of business deals between lawyers and clients.

Lesson Number Four



Rule 1.08 Conflict of Interest: Prohibited Transactions

(a) A lawyer shall not enter into a business transaction with a client unless:

(1) the transaction and terms on which the lawyer acquires the interest are fair andreasonable to the client and are fully disclosed (Note: ABA Model Rule adds “and transmitted in writing”) in a manner which can be reasonably understood by the client;(2) the client is given a reasonable opportunity to seek the advice of independentcounsel in the transaction (Note: ABA Model Rule adds that client is “advised in writing of the desirability of seeking” independent counsel); and(3) the client consents in writing thereto (Note: ABA Model Rule includes specific disclosures and informed consent).

Lesson Number Four



Lesson Number Four

BOTTOM LINE: If a lawyer enters a business transaction with a client, the lawyer must:›❯ Make full, clear and understandable disclosure›❯ Give the client the opportunity to consult other counsel;

and›❯ Obtain the client’s consent in writing.



Lesson Number Four

Pitfalls if lawyer is “too close” to client›❯ Potential claims of aiding and abetting›❯ Potential claims of conspiracy›❯ Defense of “lack of scienter” may be hard for jury to

accept›❯ Closer business connections = shorter distance between

lawyer and client



Lesson Number Four

BOTTOM LINE: Investment in client or deal by lawyers makes defense of case more difficult.



Beware of the unworthy client.

Lesson Number Five



Lesson Number Five

Yellow Flags›❯ Has the client gone through multiple lawyers?›❯ Is the client proposing a business venture that seems

outside of its expertise and/or abilities?›❯ Is the client seeking to use your reputation to give

credence to a marginal transaction?›❯ Is the client seeking to raise and/or spend other

people’s money?›❯ Is the client’s business structure unnecessarily

complex?



Perils of outside counsel serving on a corporate client’s board

Lesson Number Six



Lesson Number Six

Ambiguous ethical issues –

Texas Rule 1.06 cmt. 16: If there is a material risk that the dual role will compromise the lawyer’s independence of professional judgment, the lawyer should not serve as a director.



Lesson Number Six

Practical problems:›❯ Inadequate D&O insurance– Legal malpractice policy likely will not cover D&O liability– D&O policy might not cover “professional services”

›❯ Vicarious liability of law firm›❯ Increases chance of “knew or should have known”›❯ Subverts defense of “board didn’t follow my advice”



Lesson Number Six

Practical problems:›❯ Increased risk of malpractice claim/disqualification›❯ Proving attorney-client privilege becomes harder›❯ Perceived “lack of independence”›❯ Hard to draw line between business advice and legal

advice



Document major strategy decisions so everyone is on the same page.

Lesson Number Seven



Lesson Number Seven



Rule 1.03 Communication

(a) A lawyer shall keep a client reasonably informed about the status of a matter and promptly comply with reasonable requests for information.

(b) A lawyer shall explain a matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation.

Lesson Number Seven



Don’t make mistakes!But if you do, don’t sit on them.

Lesson Number Eight



Causes of Increased Mistakes by Lawyers:

• Working “on the fly”

• Expectation for immediate response

• Reviewing documents on computer screen

• Increased work load

• Smaller teams

• Fee pressures

Lesson Number Eight



Beware of dabbling in areas you are not familiar with.

Lesson Number Nine



Be vigilant in thinking about how changed circumstances affect your representation.

Lesson Number Ten



Lesson Number Ten

Think of conflicts as a movie, not a snap shot

In-house counsel—Give your lawyer the information she needs

Outside counsel – Keep your conflicts system updated



Unfortunate emails can mean the difference between a tough case and an impossible one.

Lesson Number 10 ½



Lesson Number 10 ½

Email Don’ts ›❯ Avoid the mea culpa ›❯ Avoid disparaging remarks about colleagues, clients,

judges, etc.›❯ Angry emails never help ESPECIALLY IN ALL CAPS!!!!!›❯ Humor and sarcasm don’t age well›❯ Avoid off-the-cuff responses



Lesson Number 10 ½

Email Dos ›❯ Be careful with word choice and language›❯ Re-read your email (preferably in hard copy) before

hitting send›❯ Check your “To” line for autofill errors›❯ Consider a phone call or in-person conversation



Thank You!Questions & Discussion



Navigating the ABA/Texas Ethics Rules regarding Trial Publicity and Crisis Management

Presented By: Amy Power, The Power Group



Discussion of ABA Rule 3.6 “Trial Publicity”



Rule 3.6 Trial Publicity

(a) A lawyer who is participating or has participated in the investigation or litigation of a matter shall not make an extrajudicial statement that the lawyer knows or reasonably should know will be disseminated by means of public communication and will have a substantial likelihood of materially prejudicing an adjudicative proceeding in the matter.




(b) Notwithstanding paragraph (a), a lawyer may state: (1) the claim, offense or defense involved and, except

when prohibited by law, the identity of the persons involved;

(2) information contained in a public record; (3) that an investigation of a matter is in progress; (4) the scheduling or result of any step in litigation; (5) a request for assistance in obtaining evidence and

information necessary thereto; (6) a warning of danger concerning the behavior of a

person involved, when there is reason to believe that there exists the likelihood of substantial harm to an individual or to the public interest; and




(7) in a criminal case, in addition to subparagraphs (1) through (6):

(i) the identity, residence, occupation and family status of the accused;

(ii) if the accused has not been apprehended, information necessary to aid in apprehension of that person;

(iii) the fact, time and place of arrest; and(iv) the identity of investigating and arresting

officers or agencies and the length of the investigation.




(c) Notwithstanding paragraph (a), a lawyer may make a statement that a reasonable lawyer would believe is required to protect a client from the substantial undue prejudicial effect of recent publicity not initiated by the lawyer or the lawyer's client. A statement made pursuant to this paragraph shall be limited to such information as is necessary to mitigate the recent adverse publicity.




(d) No lawyer associated in a firm or government agency with a lawyer subject to paragraph (a) shall make a statement prohibited by paragraph (a).



Discussion of Texas Disciplinary Rule of Professional Conduct 3.07 “Trial Publicity”



Rule 3.07. Trial Publicity

(a) In the course of representing a client, a lawyer shall not make an extrajudicial statement that a reasonable person would expect to be disseminated by means of public communication if the lawyer knows or reasonably should know that it will have a substantial likelihood of materially prejudicing an adjudicatory proceeding.

A lawyer shall not counsel or assist another person to make such a statement.




(b) A lawyer ordinarily will violate paragraph (a), and the likelihood of a violation increases if the adjudication is ongoing or imminent, by making an extrajudicial statement of the type referred to in that paragraph when the statement refers to:

(1) the character, credibility, reputation or criminal record of a party, suspect in a criminal investigation or witness; or the expected testimony of a party or witness;

(2) in a criminal case or proceeding that could result in incarceration, the possibility of a plea of guilty to the offense; the existence or contents of any confession, admission, or statement given by a defendant or suspect; or that person's refusal or failure to make a statement;

(3) the performance, refusal to perform, or results of any examination or test; the refusal or failure of a person to allow or submit to an examination or test; or the identity or nature of physical evidence expected to be presented;

(4) any opinion as to the guilt or innocence of a defendant or suspect in a criminal case or proceeding that could result in incarceration; or

(5) information the lawyer knows or reasonably should know is likely to be inadmissible as evidence in a trial and would if disclosed create a substantial risk of prejudicing an impartial trial.




(c) A lawyer ordinarily will not violate paragraph (a) by making an extrajudicial statement of the type referred to in that paragraph when the lawyer merely states:

(1) the general nature of the claim or defense; (2) the information contained in a public record;(3) that an investigation of the matter is in progress, including the

general scope of the investigation, the offense, claim or defense involved;

(4) except when prohibited by law, the identity of the persons involved in the matter;

(5) the scheduling or result of any step in litigation;(6) a request for assistance in obtaining evidence, and

information necessary thereto; (7) a warning of danger concerning the behavior of a person

involved, when there is a reason to believe that there exists the likelihood of substantial harm to an individual or to the public interest; and




(8) if a criminal case:(i) the identity, residence, occupation and family

status of the accused; (ii) if the accused has not been apprehended,

information necessary to aid in apprehension of that person;

(iii) the fact, time and place of arrest; and (iv) the identity of investigating and arresting

officers or agencies and the length of the investigation.



Discussion on Privilege Issues Associated with Trial Publicity and Crisis Management



Crisis: A Powerful Opportunity



In Every Crisis There is An Opportunity



A Crisis Changes Every 15 Min



Engage PR Before You Have A Crisis



Does Your Client Have a Game Plan?



Crisis Creates Comedy

Wait for it … wait for it … the memes.



Some Best Practices

Don’t create your own.

Don’t sit on it. Sometimes you only have 15 minutes.

Remember … strike a balance with the needs of the media, the public, with those of your client.

Put the PR firm in your toolbox.

Digital is here to stay. Be familiar with the platforms. If it started on Instagram, respond on Instagram.

Good crisis management is good common sense.



Q&A
