A. CONFLICTS – REPRESENTING PLAINTIFF AND THIRD PARTY DEFENDANT
In re Kalla, 2012 WL 204529 (Minn. 2012), brings up several related issues:
1. Rule 1.7(a)(2) - Conflict Representing Plaintiff and Third Party Defendant. What should a lawyer do – or not do -- when he represents plaintiffs A and B, and the defendant names B as a third party defendant? Kalla sought conflicts waivers, but after B declined, Kalla continued to represent A and B for a month or two. The Minnesota Supreme Court found that Kalla violated Rule 1.7(a)(2), because Kalla’s representation was materially limited by conflicts between A and B.
2. Rule 1.9 - Does Withdrawal Cure the Conflict? Withdrawal from representing one party may not cure the conflict, because the lawyer then represents a client against a former client in the same matter in which he represented the former client, in violation of Rule 1.9(a). Kalla withdrew from representing B but continued to represent A. The court also found that Kalla then threatened to use B’s confidential information against B. Kalla was disqualified from continuing to represent A, on the motion of defendant and B, and the disqualification was affirmed by the Court of Appeals. As explained in the chapter of this treatise on Rule 1.9, if the comments to Rule 1.9 are taken into account, as OLPR will do, representation of joint clients, followed by representation of one client against the other in a matter which is not the same, but is related, will not violate Rule 1.9, where there is no confidential information as between the clients. [Editor's note: This paragraph has been edited to correct a misstatement in an earlier draft.]
3. “Materially Adverse”/”Directly Adverse” The Supreme Court’s conflict analysis raises a technical point. The court declined to determine whether Kalla’s representation of A was “directly adverse” to B under Rule 1.7(a)(1). However, the court found that Kalla’s representation of A was “materially adverse” to B, under Rule 1.9. ABA Formal Opinion 99-415 (1999) finds “directly adverse” and “materially adverse” to be essentially the same:“The Committee is of the opinion that only direct adversity of interests meets the threshold ‘material adversity’ sufficient to trigger the prohibitions established in Rule 1.9.” If Kalla’s representation of A vis a vis B was essentially unchanged by his withdrawal from representing B, the “material adversity” of his post-withdrawal representation would seem to imply a “direct adversity” of his pre-withdrawal representation.
4. Why Public Discipline? Kalla received an admonition, but he appealed. As happens rarely in admonition appeals, a Lawyers Board panel directed a petition for public discipline. R. Law. Prof. Resp. 9(i)(1)(ii). The Supreme Court imposed a public reprimand and a two year probation. Another lawyer received a private admonition for representing plaintiff and third party defendant. Marcia A. Johnson, Conflict Admonitions 1995, BENCH & B. OF MINN., Mar. 1996, at 12. However Kalla also violated Rule 1.9, threatened to disclose confidential client information, and repeatedly demonstrated “lack of remorse and insight into his own conduct.” Id. at *6.
B. RULES 1.15, 8.4(i) – HOW NOT TO HANDLE UNEARNED RETAINERS, FEE DISPUTES AND FEE ARBITRATION AWARDS
The following summary of In re Montgomery Montez, 2012 WL 555497 (Minn. 2012), does not describe all of the facts or Rule violations, which were the basis of a two-year suspension:
1. Trust Account. In 2009, the respondent lawyer (“M”) agreed to represent BFAS for a “total fixed fee of $5000 payable in a 20% upfront retainer and equal monthly payments of $1,000 for a period of 4 months.” Id. at *1. However, the BFAS director issued a check for $5,000 at the outset of M’s representation. M did not deposit the check in trust. M thereby violated Rule 1.15, which requires unearned retainers to be held in trust. After the BFAS director who issued the check left BFAS, BFAS told M the $5,000 payment was fraudulent. M disagreed. BFAS fired M and requested she deposit disputed fees in trust. M told BFAS she would do so, but she did not. M thereby violated Rule 1.15(b), which requires that if fees are disputed within a reasonable time after withdrawal from trust, the fees must be placed in trust.
2. Not Paying a Fee Arbitration Award. M and BFAS submitted the fee dispute to binding fee arbitration. The hearing panel awarded BFAS $3,250. M made false and conflicting statements, both to OLPR and to the Supreme Court, about her ability to pay the award. M was found to have violated Rule 8.4(i), which makes it misconduct to “refuse to honor a final and binding fee arbitration award. . ..” If a lawyer could not pay any part of an award, non-payment would seem not to be a refusal, but M did not demonstrate such inability.
C. NOTARIZATION
In re Paul, 2012 WL 386495 (Minn. 2012). Paul had his client, RV, sign some pages in blank. OLPR alleged, and a Supreme Court referee found, that Paul prepared an affidavit, attached one of the pre-signed pages, and had the affidavit notarized without the notary witnessing RV’s signature. However, Paul testified that, although RV did sign some papers in blank, the affidavit in question was signed in Paul’s presence and Paul notarized it. There was no contrary testimony. The court reversed the referee finding and dismissed the charge. Other charges were sustained, resulting in Paul’s suspension.
D. RULE 8.1 – NOT COOPERATING WITH INVESTIGATION, LATE RESPONSES TO OLPR
In re Paul, 2012 WL 386495 (Minn. 2012). Paul had been previously disciplined for failure to cooperate with an ethics investigation. In this matter, Paul was found tardy both in his client representations and in his responses on several matters. He appealed one of these findings, In the A.B. matter. The Office of Lawyers Professional Responsibility (OLPR) mailed a notice of investigation on July 1, 2010, requesting a response and a copy of the file within 14 days. Paul responded and provided the file on July 26, 2010, and supplemented his response on August 6, 2010. The court denied Paul’s appeal, explaining, “We have found that failure to timely respond to requests for information during a disciplinary investigation constitutes a failure to cooperate and a violation of Rule 25, RLPR. In re Ulanowski, 800 N.W.2d 785, 800 (Minn. 2011); In re Grigsby, 764 N.W.2d 54, 62 (Minn. 2009). Although Paul’s failure to cooperate in the A.B. investigation is clearly less serious than his failure to cooperate in, for example, the M.B. matter, the referee did not clearly err when he concluded that Paul failed to cooperate in the A.B. investigation.” Id. at *9.
E. RULE 1.18 – DISCLOSING PROSPECTIVE CLIENT’S INFORMATION
OLPR reports issuing an admonition for a violation of the confidentiality provision of Rule 1.18(b), addressing obligations to prospective clients. Siama Y. Chaudhary, Confidentiality for Prospective Clients, MINN. LAW., Feb. 6, 2012, at 8. A prospective divorce client (C) disclosed to a lawyer (L) that C’s wife (W) was seeing another man. In checking conflicts, L disclosed this information to his partner (P). P disclosed the information to his brother, who he thought might be – and indeed was – the other man. The other man disclosed the disclosure to W. P received an admonition, for breaching his confidentiality duty. Where conflict-checking requires a disclosure that is apt to be embarrassing or detrimental to a prospective client, a lawyer must obtain prospective client consent before disclosing.
F. RULE 1.8(e) – ADMONITION FOR “WELL-INTENTIONED” GIFT TO A LITIGATION CLIENT
Rule 1.8(e) forbids lawyers to provide financial assistance to litigation clients. A lawyer representing an incarcerated defendant put $1,000 of his own funds in the client’s jail spending account, without expecting repayment. The lawyer was admonished, because, “The attorney’s actions appeared well-intentioned, but nevertheless violated the rule.” Martin A. Cole, Summary of Admonitions, BENCH & B. OF MINN., Feb. 2012. OLPR once appeared to suggest that a $200 gift to an impoverished family might warrant, as the Florida Supreme Court found, a “humanitarianism” exemption from discipline. Marcia A. Johnson, Borrowing and Lending With Clients, BENCH & B. OF MINN., Aug. 1995, at 14. The policy purpose of Rule 1.8(e) is based on a concern that a lawyer who lends to a client may come to have too great a financial stake to render objective advice regarding settlement. Rule 1.8 cmt. 10. The policy purpose against gifts is not stated and not apparent. The Rule’s policy purposes was not served by the admonition, but as OLPR has reminded lawyers, some disciplines are purely technical. “In some situations, however, regardless of whether an innocent oversight is to blame, a rule violation is a rule violation regardless of how technical it may seem.” Siama Chaudhary, An Overview of the Disciplinary Process, MINN. LAW., March 7, 2011.