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9815784.1
American Bar Association Committee on Consumer Financial Services
Pro Bono Directors Winter Meeting – Park City, Utah
January 7-10, 2012
CONSUMER FINANCIAL SERVICES COMMITTEE DIRECTORS OF THE PRO BONO COMMITTEE Co-Director: John L. Ropiequet, Arnstein & Lehr LLP, Chicago, Illinois Co-Director: R. Scott Johnson, Select Management Resources LLC, Alpharetta, Georgia Presentation: Professional Ethical Challenges Presented by the Robo-Signing Crisis The robo-signing crisis has presented more than just the challenge of how to repair the damage it has caused to the foreclosure process. It has also highlighted serious and widespread lapses in professional ethics. The program will explore what the ethical problems are, what the resulting risks to legal professionals are, and what can and should be done about them. Moderator: John L. Ropiequet, Arnstein & Lehr LLP, Chicago, Illinois Speakers: Abraham Chandler Bates, Wasatch Advocates, LLC, Salt Lake City, Utah Jerrold Jensen, Assistant Attorney General, Salt Lake City, Utah John A. Snow, Van Cott, Bagley, Cornwall & McCarthy, P.C., Salt Lake City, Utah and Chair, Utah State Bar Ethics Advisory Opinion Committee
American Bar AssociationCommittee on Consumer Financial ServicesWinter Meeting – Park City, Utah
Professional Ethical Challenges Presented
by the Robo-Signing Crisis
John A. Snow
Van Cott, Bagley, Cornwall & McCarthy, P.C.
Salt Lake City, Utah
Abraham Chandler Bates
Wasatch Associates, LLC
Salt Lake City, Utah
Jerrold Jensen
Assistant Attorney General
Salt Lake City, Utah
What is “Robo-Signature Fraud?”
Congress Asks for Information
from Florida Law Firms
The “Robo-Signature” Process
What is a robo-signer?
Robo-signers are mortgage lending company employees who prepared and signed off on foreclosures without reviewing them, as the law requires. Jeffrey Stephan, the GMAC employee who was the first identified as a robo-signer, has acknowledged in sworn deposition that he prepared 400 such foreclosures a day.
The “Robo-Signature” Process
What’s the significance?
The “robo-signing” of affidavits and Assignments of Mortgage and all other mortgage foreclosure documents suggests that loan servicers cannot demonstrate the facts required to conduct a lawful foreclosure. If it turns out that robo-signers did indeed sign off on loans without review, they may have committed fraud by claiming knowledge of a financial matter of which they had no personal knowledge. It could also mean that some people are wrongly being evicted from their houses. Investors brought mortgage-linked securities with the promise that the underlying mortgages conformed to basic underwriting standards, and that proper procedures were followed in the chain of securitization and a tax-exempt status. Steep losses on those investments and the discovery of potentially fraudulent activity are pushing investors to force banks to buy them back.
The “Robo-Signature” Process
Effect on Non-Judicial Foreclosures
Lien Theory v. Title Theory (Judicial v. Non-Judicial Foreclosure) States
Sample “Robo-Signed” Conveyance
Sample Bar Complaint
The Model Rules: The Advocate
Rule 3.3 Candor Toward The Tribunal
(a) A lawyer shall not knowingly:(1) make a false statement of fact or law to a tribunal or fail to correct a false statement of material fact or law previously made to the tribunal by the lawyer;(2) fail to disclose to the tribunal legal authority in the controlling jurisdiction known to the lawyer to be directly adverse to the position of the client and not disclosed by opposing counsel; or(3) offer evidence that the lawyer knows to be false. If a lawyer, the lawyer’s client, or a witness called by the lawyer, has offered material evidence and the lawyer comes to know of its falsity, the lawyer shall take reasonable remedial measures, including, if necessary, disclosure to the tribunal. A lawyer may refuse to offer evidence, other than the testimony of a defendant in a criminal matter, that the lawyer reasonably believes is false.(b) A lawyer who represents a client in an adjudicative proceeding and who knows that a person intends to engage, is engaging or has engaged in criminal or fraudulent conduct related to the proceeding shall take reasonable remedial measures, including, if necessary, disclosure to the tribunal.(c) The duties stated in paragraphs (a) and (b) continue to the conclusion of theproceeding, and apply even if compliance requires disclosure of information otherwise protected by Rule 1.6.
The Model Rules: The Advocate
Rule 3.4 Fairness To Opposing Party And Counsel
A lawyer shall not:
(a) unlawfully obstruct another party' s access to evidence or unlawfully alter, destroy or conceal a document or other material having potential evidentiary value. A lawyer shall not counsel or assist another person to do any such act;
(b) falsify evidence, counsel or assist a witness to testify falsely, or offer an inducement to a witness that is prohibited by law;
The Model Rules: Transactions with Non-Clients
Rule 4.1 Truthfulness In Statements To Others
In the course of representing a client a lawyer shall not knowingly:
(a) make a false statement of material fact or law to a third person; or
(b) fail to disclose a material fact to a third person when disclosure is necessary to avoid assisting a criminal or fraudulent act by a client, unless disclosure is prohibited by Rule 1.6.
The Model Rules: The Hierarchy of Responsibility
Rule 5.1 Responsibilities Of Partners, Managers, And Supervisory Lawyers
(a) A partner in a law firm, and a lawyer who individually or together with other lawyers possesses comparable managerial authority in a law firm, shall make reasonable efforts to ensure that the firm has in effect measures giving reasonable assurance that all lawyers in the firm conform to the Rules of Professional Conduct.(b) A lawyer having direct supervisory authority over another lawyer shall make reasonable efforts to ensure that the other lawyer conforms to the Rules of Professional Conduct.(c) A lawyer shall be responsible for another lawyer's violation of the Rules of Professional Conduct if:(1) the lawyer orders or, with knowledge of the specific conduct, ratifies the conduct involved; or(2) the lawyer is a partner or has comparable managerial authority in the law firm in which the other lawyer practices, or has direct supervisory authority over the other lawyer, and knows of the conduct at a time when its consequences can be avoided or mitigated but fails to take reasonable remedial action.
The Model Rules: The Hierarchy of Responsibility
Rule 5.2 Responsibilities Of A Subordinate Lawyer
(a) A lawyer is bound by the Rules of Professional Conduct notwithstanding that the
lawyer acted at the direction of another person.
(b) A subordinate lawyer does not violate the Rules of Professional Conduct if that lawyer acts in accordance with a supervisory lawyer's reasonable resolution of an arguable question of professional duty.
The Model Rules: The Hierarchy of Responsibility
Rule 5.3 Responsibilities Regarding Nonlawyer Assistants
With respect to a nonlawyer employed or retained by or associated with a lawyer:(a) a partner, and a lawyer who individually or together with other lawyers possesses comparable managerial authority in a law firm shall make reasonable efforts to ensure that the firm has in effect measures giving reasonable assurance that the person's conduct is compatible with the professional obligations of the lawyer;(b) a lawyer having direct supervisory authority over the nonlawyer shall make reasonable efforts to ensure that the person's conduct is compatible with the professional obligations of the lawyer; and(c) a lawyer shall be responsible for conduct of such a person that would be a violation of the Rules of Professional Conduct if engaged in by a lawyer if:(1) the lawyer orders or, with the knowledge of the specific conduct, ratifies the conduct involved; or(2) the lawyer is a partner or has comparable managerial authority in the law firm in which the person is employed, or has direct supervisory authority over the person, andknows of the conduct at a time when its consequences can be avoided or mitigated but fails to take reasonable remedial action.
The Model Rules: The Client-Lawyer Relationship
Rule 1.6 Confidentiality Of Information
(a) A lawyer shall not reveal information relating to the representation of a client
unless the client gives informed consent, the disclosure is impliedly authorized in order to carry out the representation or the disclosure is permitted by paragraph (b).
(b) A lawyer may reveal information relating to the representation of a client to the extent the lawyer reasonably believes necessary:
(2) to prevent the client from committing a crime or fraud that is reasonably certain to result in substantial injury to the financial interests or property of another and in furtherance of which the client has used or is using the lawyer's services;
(3) to prevent, mitigate or rectify substantial injury to the financial interests or property of another that is reasonably certain to result or has resulted from the client's commission of a crime or fraud in furtherance of which the client has used the lawyer's services;
The Model Rules: Maintaining TheProfession’s Integrity
Rule 8.4 Misconduct
It is professional misconduct for a lawyer to:
(a) violate or attempt to violate the Rules of Professional Conduct, knowingly assist or induce another to do so, or do so through the acts of another;(b) commit a criminal act that reflects adversely on the lawyer's honesty, trustworthiness or fitness as a lawyer in other respects;(c) engage in conduct involving dishonesty, fraud, deceit or misrepresentation;(d) engage in conduct that is prejudicial to the administration of justice;(e) state or imply an ability to influence improperly a government agency or official or to achieve results by means that violate the Rules of Professional Conduct or other law; or(f) knowingly assist a judge or judicial officer in conduct that is a violation of applicable rules of judicial conduct or other law.
The Model Rules: Maintaining TheProfession’s Integrity
Rule 8.5 Disciplinary Authority; Choice Of Law
(a) Disciplinary Authority. A lawyer admitted to practice in this jurisdiction is subject to the disciplinary authority of this jurisdiction, regardless of where the lawyer's conduct occurs. A lawyer not admitted in this jurisdiction is also subject to the disciplinary authority of this jurisdiction if the lawyer provides or offers to provide any legal services in this jurisdiction. A lawyer may be subject to the disciplinary authority of both this jurisdiction and another jurisdiction for the same conduct.(b) Choice of Law. In any exercise of the disciplinary authority of this jurisdiction, the rules of professional conduct to be applied shall be as follows:(1) for conduct in connection with a matter pending before a tribunal, the rules of the jurisdiction in which the tribunal sits, unless the rules of the tribunal provide otherwise; and(2) for any other conduct, the rules of the jurisdiction in which the lawyer’s conduct occurred, or, if the predominant effect of the conduct is in a different. A lawyer shall not be subject to discipline if the lawyer’s conduct conforms to the rules of a jurisdiction in which the lawyer reasonably believes the predominant effect of the lawyer’s conduct will occur.
QUESTIONS?
Speakers’ Contact Information
Abraham Chandler Bates
Wasatch Associates, LLC
Salt Lake City, Utah
(801) 662-0077
Jerrold Jensen
Assistant Attorney General
Salt Lake City, Utah
(801) 366-0350
John A. Snow
Van Cott, Bagley, Cornwall & McCarthy, P.C.
Salt Lake City, Utah
(801) 237-0204
LEGAL ETHICS: Robo-Signing:
All States, except California, have adopted rules of professional conduct
based upon and, for the most part, substantially the same as the American Bar
Association’s Model Rules of Professional Conduct (the “Model Rules”). See
generally Geoffrey C. Hazard, Jr. and W. William Hodes, The Law of Lawyering
(3rd Ed. 2000) (“Hazard & Hodes”) § 1.15. California is apparently in the process
of adopting its own version of the Model Rules.
The rules of professional conduct adopted by the States provide baseline
guidance regarding the professional relationship between the lawyer and the
client, third parties and tribunals, and identify law firm responsibilities. The rules
also provide procedures for maintaining the integrity of the profession, among
other things. The failure to comply with a rule of conduct may result in discipline
against the attorney, but not a per se basis for civil liability. See Schmitz v. Davis,
2010 U.S. Dist. Lexis 101913 (D. Kan. Sept. 23, 2010) (“The court agrees that a
violation of disciplinary rules does not per se constitute tort liability.”).
This presentation addresses those rules of professional conduct that may
be encountered with the “Robo-Signing” crisis, which is generically described as
the fraudulent execution and use of foreclosure documents. Robo-Signing has
lead to criminal charges and indictments against those who have engaged in the
practice. For example, in November of 2011, a Nevada grand jury returned a
606-count indictment against two title officers on allegations they falsified
foreclosure documents. See Hubble Smith, “Two Title Officers Indicted, Accused
of Falsifying Documents,” Las Vegas Review-Journal, posted Nov. 17, 2011.
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The title officers were accused of directing and supervising a robo-signing
scheme that resulted in tens of thousands of fraudulent foreclosure related
documents being filed with the Clark County Recorder's Office between 2005 and
2008. Id. The specific charges including offering false instruments for recording;
false certification on certain instruments; and notarization of the signature of a
person not in the presence of a notary public. Id.
A. Misconduct and Enforcement:
An attorney involved in the practice of Robo-Signing can be subject to
discipline under the rules of professional conduct in which the attorney practices
or any state his or her misconduct occurs. The Model Rule 8.4, Misconduct, sets
for the conduct that can subject an attorney to discipline. Model Rule 8.4 states:
It is professional misconduct for a lawyer to: (a) violate or attempt to violate the Rules of Professional Conduct, knowingly assist or induce another to do so, or do so through the acts of another; (b) commit a criminal act that reflects adversely on the lawyer's honesty, trustworthiness or fitness as a lawyer in other respects; (c) engage in conduct involving dishonesty, fraud, deceit or misrepresentation; (d) engage in conduct that is prejudicial to the administration of justice; (e) state or imply an ability to influence improperly a government agency or official or to achieve results by means that violate the Rules of Professional Conduct or other law; or (f) knowingly assist a judge or judicial officer in conduct that is a violation of applicable rules of judicial conduct or other law. Rule 8.4 includes as sanctionable misconduct acts or omissions that are
not otherwise specifically proscribed in the specific rules of professional conduct.
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In fact, only subpart (a) of Model Rule 8.4 directly concerns violations of the
Rules of Professional Conduct. See Comment 1 to Model Rule 8.4. The breadth
of application of Rule 8.4 is demonstrated by subparts (b) and (c). Furthermore,
the conduct subject to those Rules can be totally unrelated to the actual practice
of law. If the act will reflect adversely on the attorney’s ability to practice law, the
act may be deemed “misconduct.” See Comment 2, Rule 8.4 (“[A] lawyer should
be professionally answerable … for offenses that indicate lack of those
characteristics relevant to law practice.”). See also In re Brewster, 587 A.2d
1067 (Del. 1991) (Attorney disbarred for violations of Rule 8.4(b) & (c) based
upon a conviction for bank fraud that did not involve the practice of law or his
clients.); In re Behrmann, 664 N.E.2d 730, 732 (Ind. 1996) (Discipline based
upon a violation of Prof. Cond. R. 8.4(c) only for engaging in conduct involving
dishonesty and deceit as a result of involvement with a fraudulent tax return, but
not Rule 8.4(b) because there was no actual violation of the criminal tax laws); In
re Harrington, 710 So. 2d 243, 244 (La. May 8, 1998) (disciplined under Rule
8.4(b) and (c) for transporting illegal aliens).1
1 Although it would seem that Rule 8.4 is broad enough to cover essentially all attorney misconduct, some States have included a significant list of prohibitions in their versions of Rule 8.4. For example, Illinois Rule 8.4 states:
(a) A lawyer shall not: (1) violate or attempt to violate these Rules; (2) induce another to engage in conduct, or give assistance to another's conduct,
when the lawyer knows that conduct will violate these Rules; (3) commit a criminal act that reflects adversely on the lawyer's honesty,
trustworthiness or fitness as a lawyer in other respects; (4) engage in conduct involving dishonesty, fraud, deceit or misrepresentation; (5) engage in conduct that is prejudicial to the administration of justice. In relation
thereto, a lawyer shall not engage in adverse discriminatory treatment of litigants, jurors, witnesses, lawyers, and others, based on race, sex, religion, or national origin. This subsection does not preclude legitimate advocacy when these or similar factors are issues in the proceeding;
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When an attorney engages in misconduct proscribed by Rule 8.4, the
attorney is then subject to discipline under Rule 8.5, Discipline Authority; Choice
of Laws. Rule 8.5 states:
(a) Disciplinary Authority. A lawyer admitted to practice in this jurisdiction is subject to the disciplinary authority of this jurisdiction, regardless of where the lawyer's conduct occurs. A lawyer not admitted in this jurisdiction is also subject to the disciplinary authority of this jurisdiction if the lawyer provides or offers to provide any legal services in this jurisdiction. A lawyer may be subject to the disciplinary authority of both this jurisdiction and another jurisdiction for the same conduct.
(6) state or imply an ability to influence improperly any tribunal, legislative body,
government agency or official; (7) assist a judge or judicial officer in conduct that the lawyer knows is a violation
of the Code of Judicial Conduct; (8) avoid in bad faith the repayment of an education loan guaranteed by the
Illinois Student Assistance Commission or other governmental entity. The lawful discharge of an educational loan in a bankruptcy proceeding shall not constitute bad faith under this rule, but the discharge shall not preclude a review of the attorney's conduct to determine if it constitutes bad faith; or
(9)(A) violate a Federal, State or local statute or ordinances that prohibits discrimination based on race, sex, religion, national origin, disability, age, sexual orientation or socioeconomic status by conduct that reflects adversely on the lawyer's fitness as a lawyer. Whether a discriminatory act reflects adversely on a lawyer's fitness as a lawyer shall be determined after consideration of all the circumstances, including
(1) the seriousness of the act, (2) whether the lawyer knew that it was prohibited by statute or ordinance, (3) whether it was part of a pattern of prohibited conduct, and (4) whether it was committed in connection with the lawyer's professional activities. (B) No complaint of professional misconduct based on an unlawfully
discriminatory act, pursuant to paragraph (9)(A) of this rule, may be brought until a court or administrative agency of competent jurisdiction has found that the lawyer has engaged in an unlawfully discriminatory act, and that the determination of the court or administrative agency has become final and enforceable and the right of judicial review of the determination has been exhausted.
(b) A lawyer who holds public office shall not:
(1) use that office to obtain, or attempt to obtain, a special advantage in a legislative matter for a client under circumstances where the lawyer knows or reasonably should know that such action is not in the public interest;
(2) use that office to influence, or attempt to influence, a tribunal to act in favor of a client; or
(3) represent any client, including a municipal corporation or other public body, in the promotion or defeat of legislative or other proposals pending before the public body of which such lawyer is a member or by which such lawyer is employed.
(c) A lawyer who holds public office may accept political campaign contributions as permitted by law.
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(b) Choice of Law. In any exercise of the disciplinary authority of this jurisdiction, the rules of professional conduct to be applied shall be as follows:
(1) for conduct in connection with a matter pending before a tribunal, the rules of the jurisdiction in which the tribunal sits, unless the rules of the tribunal provide otherwise; and
(2) for any other conduct, the rules of the jurisdiction in which the
lawyer's conduct occurred, or, if the predominant effect of the conduct is in a different jurisdiction, the rules of that jurisdiction shall be applied to the conduct. A lawyer shall not be subject to discipline if the lawyer's conduct conforms to the rules of a jurisdiction in which the lawyer reasonably believes the predominant effect of the lawyer's conduct will occur.
There is no question that under Rule 8.5, the attorney is subject to
discipline in the State she or he is licensed even if the misconduct occurs in
another State or the federal courts. See In re Ponds, 876 A.2d 636 (D.C. 2005)
(“Under Rule 8.5 (a) of the District of Columbia Rules of Professional Conduct, ‘A
lawyer admitted to practice in this jurisdiction is subject to the disciplinary
authority of this jurisdiction, regardless of where the lawyer's conduct occurs.’);
Atty. Griev. Comm'n v. Ruffin, 798 A.2d 1139, 1142 (Md. 2002) (“The
Respondent is … subject to the disciplinary authority of this State pursuant to
Maryland Rule of Professional Conduct 8.5 (a) for any violation of the Maryland
Rules of Professional Conduct 'in this or any other jurisdiction.'”); Office of
Disciplinary Counsel v. Krosby, 2005 Pa. LEXIS 2445 (Pa. 2005) “[A] lawyer
admitted to practice in this jurisdiction is subject to the disciplinary action of this
jurisdiction, regardless of where the lawyer's conduct occurs.”); Matter of Kimmel,
59 A.D.3d 923 (N.Y. App. Div. 3d Dep't 2009) (‘ Although respondents are not
admitted in Maryland, Maryland Rule of Professional Conduct 8.5 provides
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jurisdiction over attorneys not admitted to the Maryland bar who provide legal
services in Maryland or who supervise an attorney in Maryland who commits
professional misconduct.”).
B. Rules Applicable to Robo-Signing:
1. Truthfulness with Third Parties: Perhaps the most fundament
Rule applicable to Robo-Signing is Rule 4.1, Truthfulness is Statements to
Others. This Rule provides that an attorney shall not knowingly make a false
statement of fact or law to a third person. Model Rule 4.1 states:
In the course of representing a client a lawyer shall not knowingly:
(a) Make a false statement of material fact or law to a third person; or
(b) Fail to disclose a material fact to a third person when disclosure
is necessary to avoid assisting a criminal or fraudulent act by a client, unless disclosure is prohibited by Rule 1.6.2
Under Rule 4.1 only misstatements of material fact or law are proscribed.
Of course, not all “facts” are not deemed material. The comment to Model Rule
4.1 states:
This rule refers to statements of fact. Whether a particular statement should be regarded as one of fact can depend on circumstances. Under generally accepted conventions in negotiation, certain types of statements ordinarily are not taken as statements of material fact. Estimates of price or value placed on the subject of a transaction and a party's intentions as to an acceptable settlement of a claim are in this category, and so is the
2 See also Ariz. R. Prof. Cond. 4.1 (same); Colo. R. Prof. Cond. 4.1 (same); D.C. R. Prof. Cond. 4.1 (same); Iowa R. Prof. Cond. 4.1 (same); Ill R. Prof. Cond. 4.1 (essentially the same, except expands the rule to apply to statements that reasonably should be known to be false); Mass. R. Prof. Cond. 4.1 (same); Mich. R. Prof. Cond. 4.1 (shortened version from that in text); Tex R. Prof. Cond. 4.1 (same); Utah R. Prof. Cond. 4.1 (same). N.Y. R. Prof. Cond. 4.1 does not contain subpart (b).
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existence of an undisclosed principal except where nondisclosure of the principal would constitute fraud.3
The meaning and effect of Rule 4.1, and the exceptions for confidentiality
contained in the Rule, is discussed in Paul Rosenberger, Laissez-"Fair": An
Argument for the Status Quo Ethical Constraints on Lawyers as Negotiators, 13
Ohio St. J. on Disp. Resol. 611, 615-616 (1998) as follows:
Thus, by custom, attorneys are permitted (and even expected) to misrepresent to some extent not only what their clients would find acceptable, but also the extent of their own authority to settle. This issue lies at the heart of the dichotomy facing attorneys when entering negotiations with the highest "utopian" views of their ethical duties--that "to mislead an opponent about one's true settling point, is the essence of negotiation." Thus, interpreting the rule, one may say that his client will not accept or authorize less than a certain figure while knowing the statement is not true. But one may not say falsely that the loss to his client exceeds a certain figure. A leading text on negotiation gives these simple words of advice: "When in doubt . . . either tell the truth, decline to give a value, or generalize. But do not lie." While this distinction may seem to contravene the underlying attempt to promote ethical behavior, it also promotes one of the most important ideals in professional responsibility--confidentiality. At the heart of this controversy over a lawyer's duty of truthfulness is the tension between the duty to maintain client confidences, and the obligation to refrain from assisting fraudulent or dishonest conduct of a client. Both the Model Code and the Model Rules make a policy judgment and resolve this conflict in favor of protecting privileged communications. "Thus, any duty
3 Rule 4.1 also applies to litigation and representations made in connection with litigation. For example, in the case of McClelland v. Blazin' Wings, Inc., 675 F. Supp. 2d 1074, 1079 (D. Colo. 2009) the court excluded a statement of a witness that was obtained under false pretenses. The court observed:
Cinquanta's statement at the beginning of the Mehas' interview identifying himself as "Daril Cinquanta the investigator" is a partially true but misleading statement which is the equivalent of a false statement condemned by Rule 4.1(a). In particular, Cinquanta failed to identify himself as an investigator engaged by plaintiff's counsel in connection with a lawsuit against Mehas' employer.
Id. at 1079.
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of candor or truthfulness that may exist in the negotiation context clearly yields to the duties of loyalty and zealous representation owed the client."4
2. Truthfulness with the Courts: Another arena where Robo-
Signing can be a violation of the rules of professional conduct is the courts. The
applicable rules are Rule 3.3, Candor towards the Tribunal, and 3.4, Fairness to
Opposing Party and Counsel. Rule 3.3 requires that the lawyer use candor when
dealing with a tribunal. The Rule directs:
(a) A lawyer shall not knowingly:
(1) make a false statement of fact or law to a tribunal or fail to correct a false statement of material fact or law previously made to the tribunal by the lawyer;
(2) fail to disclose to the tribunal legal authority in the
controlling jurisdiction known to the lawyer to be directly adverse to the position of the client and not disclosed by opposing counsel; or
(3) offer evidence that the lawyer knows to be false. If a
lawyer, the lawyer’s client, or a witness called by the lawyer, has offered material evidence and the lawyer comes to know of its falsity, the lawyer shall take reasonable remedial measures, including, if necessary, disclosure to the tribunal. A lawyer may refuse to offer evidence, other than the testimony of a defendant in a criminal matter, that the lawyer reasonably believes is false.
(b) A lawyer who represents a client in an adjudicative
proceeding and who knows that a person intends to engage, is engaging or has engaged in criminal or fraudulent conduct related to the proceeding shall take reasonable remedial measures, including, if necessary, disclosure to the tribunal.
4 There have been various articles written that argue for essentially absolute truthfulness in negotiations. In Van M. Pounds, Promoting Truthfulness in Negotiations: A Mindful Approach, 40 Willamette L. Rev. 181, 205 (Winter 2004), the author suggests the use of “mindfulness,” a principal concept of ancient Buddhist mediation practices. See also Jonathan R. Cohen, When People are the Means: Negotiating with Respect, 14 Geo. J. Legal Ethics 739 (Summer 2001).
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(c) The duties stated in paragraphs (a) and (b) continue to the conclusion of the proceeding, and apply even if compliance requires disclosure of information otherwise protected by Rule 1.6.5
(d) In an ex parte proceeding, a lawyer shall inform the tribunal of all material facts known to the lawyer which will enable the tribunal to make an informed decision, whether or not the facts are adverse.6
5 See In re Potts, 158 P.3d 418, 424 (Mont. 2007) (“Once Potts made representations to the court in the signed stipulation, the duty of candor to the tribunal as stated in Rule 3.3(a)(2), M.R.P.C., trumped any duty of confidentiality that he owed to his clients.”). 6 Ariz. R. Prof. Cond. 3.3; Colo. R. Prof. Cond. 3.3; Iowa R. Prof. Cond. 3.3; Utah R. Prof. Cond. 3.3. D.C.R. Prof. Cond. 3.3, Mass. R. Prof. Cond. 3.3 and Mich. R. Prof. Cond. 3.3 contain the same provisions of the Rule cited in the text, but also contain additional provisions. For purposes of contrast, Ill. R. Prof. Cond. 3.3 provides:
(a) In appearing in a professional capacity before a tribunal, a lawyer shall not:
(1) make a statement of material fact or law to a tribunal which the lawyer knows or reasonably should know is false; (2) fail to disclose to a tribunal a material fact known to the lawyer when disclosure is necessary to avoid assisting a criminal or fraudulent act by the client; (3) fail to disclose to the tribunal legal authority in the controlling jurisdiction known to the lawyer to be directly adverse to the position of the client and not disclosed by opposing counsel; (4) offer evidence that the lawyer knows to be false. If a lawyer has offered material evidence and comes to know of its falsity, the lawyer shall take reasonable remedial measures; (5) participate in the creation or preservation of evidence when the lawyer knows or reasonably should know the evidence is false; (6) counsel or assist the client in conduct the lawyer knows to be illegal or fraudulent; (7) engage in other illegal conduct or conduct in violation of these Rules; (8) fail to disclose the identities of the clients represented and of the persons who employed the lawyer unless such information is privileged or irrelevant; (9) intentionally degrade a witness or other person by stating or alluding to personal facts concerning that person which are not relevant to the case; (10) in trial, allude to any matter that the lawyer does not reasonably believe is relevant or that will not be supported by admissible evidence, assert personal knowledge of facts in issue except when testifying as a witness, or 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, but a lawyer may argue, on analysis of evidence, for any position or conclusion with respect to the matter stated herein; (11) refuse to accede to reasonable requests of opposing counsel that do not prejudice the rights of the client; (12) fail to use reasonable efforts to restrain and to prevent clients from doing those things that the lawyer ought not to do; (13) suppress any evidence that the lawyer or client has a legal obligation to reveal or produce; (14) advise or cause a person to become unavailable as a witness by leaving the jurisdiction or making secret their whereabouts within the jurisdiction; or (15) pay, offer to pay, or acquiesce in the payment of compensation to a witness contingent upon the content of the witness' testimony or the outcome of the case, but a
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The Rules set a minimum standard of fairness towards the opposing party
and counsel. Rule 3.4 states:
A lawyer shall not:
(a) unlawfully obstruct another party's access to evidence or unlawfully alter, destroy or conceal a document or other material having potential evidentiary value.7 A lawyer shall not counsel or assist another person to do any such act;
(b) Falsify evidence, counsel or assist a witness to testify falsely, or offer an inducement to a witness that is prohibited by law;
(c) Knowingly disobey an obligation under the rules of a tribunal except for an open refusal based on an assertion that no valid obligation exists;8
…. 3. Rule of Confidentiality: As noted above, Rule 4.1 concerning
truthfulness with third parties is subject to the duty of confidentiality contained in
Rule 1.6, Confidentiality of Information. However, Rule 3.1 regarding candor
lawyer may advance, guarantee, or acquiesce in the payment of expenses reasonably incurred in attending or testifying, and a reasonable fee for the professional services of an expert witness. (b) The duties stated in paragraph (a) are continuing duties and apply even if compliance requires disclosure of information otherwise protected by Rule 1.6. (c) A lawyer may refuse to offer evidence that the lawyer reasonably believes is false. (d) In an ex parte proceeding, a lawyer shall inform the tribunal of all material facts known to the lawyer which will enable the tribunal to make an informed decision, whether or not the facts are adverse.
7 One Court has held that obstructive tactics at a deposition can be a violation of Rule 3.4. See Faile v. Zarich, 2009 Conn. Super. Lexis 2406 (Conn. Super. Ct. Sept. 10, 2009) (“Thus, while Subdivision (1), in part, concerns the preservation of and destruction of evidence, the Commentary makes it clear that Rule 3.4(1) also concerns obstructive tactics in discovery procedure, such as at a deposition, by which an attorney improperly seeks to hamper a party in its effort to obtain evidence.”). 8 Ariz. R. Prof. Cond. 3.4; Colo. R. Prof. Cond. 3.4; Iowa R. Prof. Cond. 3.4; Utah R. Prof. Cond. 3.4; Mich. R. Prof. Cond. 3.4; see also Ill. R. Prof. Cond. 3.4 (a shortened version from that contained in the text); Mass. R. Prof. Cond. 3.4 (contains the same rule as in the text, with additional prohibitions). D.C. R. Prof. Cond. 3.4 contains a provision prohibiting the striking of a prospective jury for a reason prohibited by law.
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towards tribunal is not. There are actually two principles of confidentiality created
by the attorney-client relationship: the ethical rule of confidentiality and the
evidentiary rule of attorney-client privilege. These two rules are not the same.
The ethical rule contained in Model Rule 1.6 states:
(a) A lawyer shall not reveal information relating to the representation of a client unless the client gives informed consent, the disclosure is impliedly authorized in order to carry out the representation or the disclosure is permitted by paragraph (b).
(b) A lawyer may reveal information relating to the representation of a client to the extent the lawyer reasonably believes necessary:
(1) to prevent reasonably certain death or substantial bodily harm; (2) to prevent the client from committing a crime or fraud that is reasonably certain to result in substantial injury to the financial interests or property of another and in furtherance of which the client has used or is using the lawyer's services; (3) to prevent, mitigate or rectify substantial injury to the financial interests or property of another that is reasonably certain to result or has resulted from the client's commission of a crime or fraud in furtherance of which the client has used the lawyer's services; (4) to secure legal advice about the lawyer's compliance with these Rules; (5) to establish a claim or defense on behalf of the lawyer in a controversy between the lawyer and the client, to establish a defense to a criminal charge or civil claim against the lawyer based upon conduct in which the client was involved, or to respond to allegations in any proceeding concerning the lawyer's representation of the client; or (6) to comply with other law or a court order.9
9 See Colo. R. Prof. Cond. 1.6; Iowa R. Prof. Cond. 1.6 (which includes a paragraph (c) that provides: “A lawyer shall reveal information relating to the representation of a client to the extent the lawyer reasonably believes necessary to prevent imminent death or substantial bodily harm.”); Ariz. R. Prof. Cond. 1.6, Utah R. Prof. Cond. 1.6.(substantially the same); Mass R. Prof. Cond. 1.6 (the exceptions are substantive similar); Tex. R. Prof. Cond. 1.5 (the concepts are similar to the Model Rule). There is a divergence between the states on what information must be kept confidential. In Alaska R. Prof. Cond. Rule 1.6(a) states:
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The duty of confidentiality is a fundamental principle in the attorney-client
relationship that, in the absence of informed consent, requires that the attorney
not reveal information relating to the representation. This contributes to the trust
For purposes of this rule, "confidence" means information protected by the attorney-client privilege under applicable law, and "secret" means other information gained in the professional relationship if the client has requested it be held confidential or if it is reasonably foreseeable that disclosure of the information would be embarrassing or detrimental to the client. In determining whether information relating to representation of a client is protected from disclosure under this rule, the lawyer shall resolve any uncertainty about whether such information can be revealed against revealing the information.
In Illinois, only a “confidence or secret of the client known to the lawyer” must not be disclosed. Ill R. Prof. Cond. 1.6. A “confidence” is information protected by the attorney-client privilege. Id. at 1.0. A secret is “information gained in the professional relationship, that the client has requested be held inviolate or the revelation of which would be embarrassing to or would likely be detrimental to the client.” Id. New York in its Rule 1.6 defines the information that must be maintained as confidential as follows:
“Confidential information” consists of information gained during or relating to the representation of a client, whatever its source, that is (a) protected by the attorney-client privilege, (b) likely to be embarrassing or detrimental to the client if disclosed, or (c) information that the client has requested be kept confidential. “Confidential information” does not ordinarily include (i) a lawyer’s legal knowledge or legal research or (ii) information that is generally known in the local community or in the trade, field or profession to which the information relates.
Likewise, in the D.C. R. Prof. Cond. 1.6 confidential information is defined as:
“Confidence” refers to information protected by the attorney-client privilege under applicable law, and “secret” refers to other information gained in the professional relationship that the client has requested be held inviolate, or the disclosure of which would be embarrassing, or would be likely to be detrimental, to the client.
See also Mich. R. Prof. Cond. 1.6 (“(a) ‘Confidence’ refers to information protected by the client-lawyer privilege under applicable law, and ‘secret’ refers to other information gained in the professional relationship that the client has requested be held inviolate or the disclosure of which would be embarrassing or would be likely to be detrimental to the client.”); N.Y.R. Prof. Cond. 1.6 defines “Confidential information” which may not be revealed as: “information gained during or relating to the representation of a client, whatever its source, that is (a) protected by the attorney-client privilege, (b) likely to be embarrassing or detrimental to the client if disclosed, or (c) information that the client has requested be kept confidential. “Confidential information” does not ordinarily include (i) a lawyer’s legal knowledge or legal research or (ii) information that is generally known in the local community or in the trade, field or profession to which the information relates.
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between the attorney and client, and encourages clients to seek legal assistance
and to communicate freely, fully and frankly.
Although the Rule cited in text is entitled “confidentiality,” all information,
regardless of the source, is subject to the rule of confidentiality, if it relates to the
representation.10 Comment 3 of Ariz. R. Prof. Cond. 1.6 states:
The confidentiality rule, for example, applies not only to information communicated in confidence by the client but also to all information relating to the representation, whatever its source.
See also Comment 3, Colo. R. Prof. Cond. 1.6; but see Comment 5B, Mass. R.
Prof. Cond. 1.6 (“The exclusion of generally known or widely available
information from the information protected by this rule explains the addition of the
word "confidential" before the word "information" in Rule 1.6(a) as compared to
the comparable ABA Model Rule.”). Of course, an attorney is permitted to make
disclosures when appropriate in discharging the representation.
Rule 1.6(b)(2) and (3) require that the lawyer’s services have been used
by the client to commit the fraud or crime before the attorney is permitted to
make any disclosure. If the lawyer discovers the crime or fraud of a client, but
his or her services were not used in connection with the wrongful conduct, the
lawyer is not permitted to make a disclosure.
10 See H20 Plus, LLC v. Arch Pers. Care Prods., L.P., 2010 U.S. Dist. LEXIS 124055, 33-34 (D.N.J. 2010) (“The reference to Rule 1.6 is noteworthy because that Rule addresses basic confidentiality and has been interpreted broadly to encompass the full scope of an attorney-client relationship. See e.g., In re Adv. Op. No. 544 of New Jersey Supreme Court Adv. Comm. on Prof'l Ethics, 103 N.J. 399, 406-07, 511 A.2d 609 ("this Rule [1.6] expands the scope of protected information to include all information relating to the representation, regardless of the source or whether the client has requested it be kept confidential or whether disclosure of the information would be embarrassing or detrimental to the client.").
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Rule 1.6(b)(2) and (3) contemplate a “noisy withdrawal” when necessary,
which could be used if a client has engaged in Robo-Signing. See Hazard &
Hodes. § 9.31; see also Nancy A. Welsh, Funding Justice: What Is "(Im)Partial
Enough" in a World of Embedded Neutrals?, 52 Ariz. L. Rev. 395, 471 (Summer
2010) (“A lawyer's "noisy withdrawal" from the representation of a client has long
been understood as ethical, under certain conditions.”). When a lawyer learns
that his or her client has engaged in fraudulent activity, such as Robo-Signing,
and the services of the attorney have been used in connection with the fraud,
there are personal risks now being imposed on the attorney. To avoid this
personal risk, the lawyer should immediately withdraw, but the rule of
confidentiality is still applicable. As opposed to disclosing the fraud under the
permissible exceptions contained in part (b) of rule 1.6, an attorney may engage
in a “noisy” withdrawal, i.e. disclaimer of all prior acts and representations, which
should alert the opposition that there is something wrong, but without disclosing
the specific wrong.
4. Law Firm Responsibilities: There are three basic rules regarding
the supervision and regulation of law firms and associations for assurance of
compliance with the applicable conduct rules.
Rule 5.1, Responsibilities of Partners, Mangers and Supervisory Lawyers,
states:
(a) A partner in a law firm, and a lawyer who individually or together with other lawyers possesses comparable managerial authority in a law firm, shall make reasonable efforts to ensure that the firm has in effect measures giving reasonable assurance that all lawyers in the firm conform to the Rules of Professional Conduct.
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(b) A lawyer having direct supervisory authority over another lawyer shall make reasonable efforts to ensure that the other lawyer conforms to the Rules of Professional Conduct.
(c) A lawyer shall be responsible for another lawyer's violation of the Rules of Professional Conduct if:
(1) the lawyer orders or, with knowledge of the specific conduct, ratifies the conduct involved; or
(2) the lawyer is a partner or has comparable managerial authority in the law firm in which the other lawyer practices, or has direct supervisory authority over the other lawyer, and knows of the conduct at a time when its consequences can be avoided or mitigated but fails to take reasonable remedial action.11
Rule 5.2, Responsibilities of a Subordinate Lawyers, states:
(a) A lawyer is bound by the Rules of Professional Conduct notwithstanding that the lawyer acted at the direction of another person.
11 Ariz. R. Prof. Cond. 5.1; Colo. R. Prof. Cond. 5.1; D.C. R. Prof. Cond. 5.1; Iowa R. Prof. Cond. 5.1; Ill R. Prof. Cond. 5.1; Mass. R. Prof. Cond. 5.1; Mich. R. Prof. Cond. 5.1. Known unethical behavior by an attorney’s partner or subordinate must be addressed to avoid sanctions. See e.g. Statewide Grievance Comm. v. Spirer, 1996 Conn. Super. LEXIS 720 (Conn. Super. Ct. Mar. 12, 1996) (“A lawyer's duty, as a partner in a law firm, to prevent unethical behavior by other lawyers in the firm, cannot be minimized. It is simply not enough to disavow the offending behavior of which he has become aware, or look the other way. If he cannot prevent these practices and the firm refuses to terminate the unethical conduct, his duty is to remove himself from that firm.”); In re Bailey, 821 A.2d 851, 865 (Del. 2003) (“The record reflects that Bailey knowingly failed to exercise even a modicum of diligence in supervising the maintenance of the Firm's books and records and that his indifference and inattention endured without correction until the Lawyers' Fund audit. Had Bailey attempted to exercise any controls over the maintenance of the Firm's books and records, the invasion of client trust funds could easily have been avoided or, at the very least, timely rectified.”); In re Cohen, 847 A.2d 1162, 1166 (D.C. 2004) (“Respondent conceded before the Hearing Committee and the Board that there was no system in place to impart rudimentary ethics training to lawyers in the firm, particularly the less experienced ones. Equally troubling was the lack of a review mechanism which allowed an associate's work to be reviewed and guided by a supervisory attorney.”); In re Galloway, 729 N.E.2d 574, 575 (Ind. 2000) (“[A] lawyer is responsible for another lawyer's violation of the Rules of Professional Conduct if the lawyer is a partner in the law firm in which the other lawyer practices (or has direct supervisory authority over the other lawyer) and knows of the conduct at a time when its consequences can be avoided or mitigated but fails to take reasonable remedial action.”).
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(b) A subordinate lawyer does not violate the Rules of Professional Conduct if that lawyer acts in accordance with a supervisory lawyer's reasonable resolution of an arguable question of professional duty.12 Rule 5.3, Responsibilities for Nonlawyer Assistants, states:
With respect to a nonlawyer employed or retained by or associated with a lawyer:
(a) a partner, and a lawyer who individually or together with other lawyers possesses comparable managerial authority in a law firm shall make reasonable efforts to ensure that the firm has in effect measures giving reasonable assurance that the person's conduct is compatible with the professional obligations of the lawyer;
(b) a lawyer having direct supervisory authority over the nonlawyer shall make reasonable efforts to ensure that the person's conduct is compatible with the professional obligations of the lawyer; and
(c) a lawyer shall be responsible for conduct of such a person that would be a violation of the Rules of Professional Conduct if engaged in by a lawyer if:
(1) the lawyer orders or, with the knowledge of the specific conduct, ratifies the conduct involved; or
(2) the lawyer is a partner or has comparable managerial authority in the law firm in which the person is employed, or has direct supervisory authority over the person, and knows of the conduct at a time when its consequences can be avoided or mitigated but fails to take reasonable remedial action.13
4815-2917-6846, v. 1
12 Ariz. R. Prof. Cond. 5.2; Colo. R. Prof. Cond. 5.2; Iowa R. Prof. Cond. 5.2; Ill R. Prof. Cond. 5.2; Mass. R. Prof. Cond. 5.2; Mich. R. Prof. Cond. 5.2. See e.g. Kelley's Case, 627 A.2d 597, 600 (N.H. 1993) (“Under the facts of this case, however, even if Cahalin was subordinate to Kelley, there could have been no "reasonable" resolution of an "arguable" question of duty. The potential conflict in this case would be so clearly fundamental to a disinterested attorney that undertaking the joint representation was per se unreasonable.”). 13 Ariz. R. Prof. Cond. 5.3; Colo. R. Prof. Cond. 5.3; Iowa R. Prof. Cond. 5.3; Ill R. Prof. Cond. 5.3; Mass. R. Prof. Cond. 5.3; Mich. R. Prof. Cond. 5.3.
