A trendy development in ethics opinions is the dissent. Four were recently spotted in Minnesota Supreme Court opinions. Martin A. Cole, New and Noteworthy, BENCH & B. OF MINN., Apr. 2015. Last week, the total reached five.
The court held, “The referee's determination that respondent attorney engaged in professional misconduct by offering to have his client, a complainant in a criminal sexual conduct case, act more favorably for the defendant as a witness in the defendant's criminal case if the defendant paid respondent's client to settle his civil claims against her, is not clearly erroneous.” In re Kennedy, 2015 WL 3609263 (Minn. June 10, 2015). Three justices dissented, vigorously.
Although I am not in the league of The Great Dissenter (Holmes), I claim affinity with The Old Dissenter (Patrick Henry). This blog will note my dissents to several opinions of a worthy and eminent CLE faculty.
The CLE program, “Ethics FAQs: Answers to Frequently Encountered Ethics Questions,” is being presented in connection with MSBA’s annual meetings, June 12-26. The faculty poses 30 questions involving common ethics issues. In my opinion, 26 of the answers meet the ethics standard of clear and convincing correctness. My three dissents and one concurrence are below.
But first, let’s inquire into the reasons for ethics dissents. One factor is that the Court is increasingly attentive to getting these important and numerous cases right and consistent. In addition to the dissents, the Court has also returned many proposed disciplinary stipulations, requesting briefing on why the proposed discipline fits precedent.
Another factor is that legal ethics issues are often debatable. Issues involving such matters as the existence and nature of the attorney-client relationship, conflicts of interest, whether a lawyer is remorseful, and limitations on zeal do not always lend themselves to precise resolution. Many of the cases are close calls. The dissent acknowledged that Kennedy’s conduct was, “problematic at best and could be read as tip-toeing toward the ethical line, [but] Kennedy did not clearly and convincingly cross the line.”
At this point, a favorite ethics maxim bears citation. “Just because there is twilight does not mean there is not night and day.” Many ethics issues can be and are resolved by clear and convincing analysis, as well as evidence. The CLE materials provide such resolution for 26 or 27 of 30 issues, an impressive batting average.
I will introduce each of the remaining four opinions with (A) a hypothetical of my own posing, (B) the text of the governing rule(s) or comment(s), (C) the CLE Q&A, and (D) my dissent, with citation to rules, comments, case law and Minnesota Legal Ethics.
I. ADVISING ADVERSE PARTY TO OBTAIN COUNSEL EVEN IF TO CLIENT’S DISADVANTAGE?
A. Hypothetical. Suppose that you represent a tenant (T) in a dispute with a landlord (L). L is habitually oppressive to tenants. You are negotiating what you expect to be a favorable resolution. L is pro se and, despite L’s considerable experience in rental matters, you expect to secure some advantage for T, because of your greater knowledge of the law. You believe that L’s retention of counsel would be to T’s disadvantage. Is it a “best practice” or required by rule to advise such retention? Or do the rules normally forbid such advice, except with T’s informed consent?
B. Rule 4.3(d). “In dealing on behalf of a client with a person who is not represented by counsel: . . . (d) a lawyer shall not give legal advice to the unrepresented person, other than the advice to secure counsel, if the lawyer knows or reasonably should know that the interests of the unrepresented person are or have a reasonable possibility of being in conflict with the interests of the client.”
C. CLE Q & A.
Q. Must I advise an unrepresented party to consult counsel? What if that would disadvantage my own client?
A. Best practices require an attorney to advise an unrepresented party to consult counsel, even if doing so would disadvantage the attorney's own client. Minnesota Rule of Professional Conduct 4.3 states that "[i]n dealing on behalf of a client with a person who is not represented by counsel ... a lawyer shall not give legal advice to the unrepresented person, other than the advice to secure counsel, if the lawyer knows or reasonably should know that the interests of the unrepresented person are or have a reasonable possibility of being in conflict with the interests of the client." Minn. R. Prof. Conduct 4.3(d) (emphasis added). The Eighth Circuit has found that when approached by an unrepresented party, under Rule 4.3, an attorney is "permitted — and arguably obligated — to advise [the unrepresented party] to seek [his or] her own counsel."
D. Dissent, Wernz W. My opinion is that, ordinarily, a lawyer may not advise L to retain counsel, except with T’s informed consent. When T is informed that such advice would be to T’s disadvantage, T may be expected to decline consent.
My opinion is based both on the text of Rule 4.3(d) and on basic principles of lawyering. Rule 4.3(d) prescribes what a lawyer “shall not” do, viz. give legal advice to an unrepresented adverse person. Rule 4.3(d) creates an exception to this proscription – a lawyer may, without violating Rule 4.3(d), advise the person to secure counsel. However, this “may” is subject to other principles, e.g. the lawyer’s duties to diligently and competently seek the client’s objectives. Rule 1.1, 1.2, 1.3.
In 1997, I represented a client in appealing an admonition. In re: Panel File No. 97-2. The admonition alleged a Rule 4.3(d) violation, because the lawyer had not advised an unrepresented non-party deponent, with interests adverse to those of the lawyer’s client, that the deponent should secure independent counsel. I argued that Rule 4.3(d) had no such requirement. The hearing panel dismissed the 4.3(d) charge. The case is described in more detail in § IX.E. of the chapter on Rule 4.3 in Minnesota Legal Ethics.
I acknowledge the CLE answer has the support of a case decided by a divided three-member panel, U.S. v. Gutierrez, 351 F.3d 897 (8th Cir. 2003). Gutierrez is alluded to in the CLE Answer and is described and analyzed in § X.D. of the chapter on Rule 4.3 in Minnesota Legal Ethics. The treatise states my reasons for siding with the dissent, “First, the majority fails to consider whether the permission in Rule 4.3, to advise retention of counsel, may be exercised to the detriment of a lawyer’s own client. Second, the majority’s statement that [the lawyer in question] was “arguably obligated” by Rule 4.3 to advise V “to seek her own counsel” is not supported by Rule 4.3. Rule 4.3(d) does not obligate lawyers to do anything.”
The treatise’s Rule 4.3 chapter, § XI, also discusses a special application, in the organizational setting, of the issue of advice to retain independent counsel.
II. JOINT REPRESENTATION OF DEFENDANTS IN HARASSMENT CLAIM?
A. Hypothetical. Megalomania, Inc. (MI) and its Vice-President, Victor Peerless (VP) have been sued by a former employee, Pat Patterson (PP), for sexual harassment. The claim is based on several e-mails from VP to PP, containing slightly off-color jokes. After leaving MI, PP found a better job, with a salary increase. PP has demanded $10,000. VP has acknowledged to MI his imprudence and vowed not to repeat the behavior. VP is one of MI’s most valued employees. MI fully indemnifies VP.
B. Rules 1.7(a)(2) and 1.7(b). “Except as provided in paragraph (b), a lawyer shall not represent a client if the representation involves a concurrent conflict of interest. A concurrent conflict of interest exists if: . . .(2) there is a significant risk that the representation of one or more clients will be materially limited by the lawyer’s responsibilities to another client, a former client, or a third person or by a personal interest of the lawyer.” Rule 1.7(a)(2).
Notwithstanding a conflict, a lawyer may represent clients if: (1) “the lawyer reasonably believes that the lawyer will be able to provide competent and diligent representation to each affected client; (2) the representation is not prohibited by law; (3) the representation does not involve the assertion of a claim by one client against another client represented by the lawyer in the same litigation or other proceeding before a tribunal; and (4) each affected client gives informed consent, confirmed in writing.” Rule 1.7(b)
CLE Q & A.
Q. I represent Megalomania, Inc. They have been sued for sexual harassment. One of their vice-presidents has also been named as a defendant. May I represent both of them?
A. NO. Rule 1.7(a) provides in part: ". . . a lawyer shall not represent a client if the representation involves a concurrent conflict of interest. A concurrent conflict of interest exists if: (1) the representation of one client will be directly adverse to another client". Further, Rule 1.7(b)(3) prohibits concurrent representation if the representation would involve assertion of a claim by one client against another client in the same litigation. Here that risk is extremely high.
In this case, the clients' interests are likely aligned directly against each other and a conflict cannot be avoided or waived, particularly in litigation.
Dissent, Wernz W. The conflict rule that bears most directly on joint representations is Rule 1.7(a)(2) (materially limited conflicts), not (as the CLE Answer has it), the “directly adverse” conflict rule, and certainly not the claim-against-another-client rule.. The lawyer is not being engaged to represent one defendant “directly adverse” to the other.
The correct answer to the joint representation question is, “It depends on all the facts and circumstances.” Before explaining why this is so, let us observe that in fact good lawyers not infrequently provide joint representation to clients like Megalomania and its vice-president. What good lawyers do is important, because Rule 1.7, like many rules, is based in part on what is “reasonable.” “Reasonable,” in turn, means “the conduct of a reasonably prudent and competent lawyer.” Rule 1.0(i).
We can also note that a lawyer was found to be without conflicts in jointly representing a city and a police officer accused of using excessive force. Minneapolis Police Officers Federation v. Minneapolis, 488 N.W.2d 817 (Minn. Ct. App. 1992). The court analyzed the factors that were conducive or antagonistic to joint representation. The city indemnified Chaplin. The city admitted Chaplin acted within scope of duties. Chaplin’s testimony was not questioned by the city. Positions vis a vis Baker were the same. Settlement possibilities were not adversely affected by joint representation. Any categorical opinion that employer and employee may not be jointly represented in defending a sexual harassment claim should explain how such a representation differs, for conflicts purposes, from defending the excessive force claim.
The rules pose this question: how likely is it that a lawyer’s representation of one client will be materially limited by representation of the other client? Several factors help answer the question. These factors focus on the defendants’ interests, because “conflicts” are conflicts of interest. The CLE Answer states, “the clients' interests are likely aligned directly against each other,” but the alignment is not determined by the accusations.
Does the employer fully indemnify the employee? If not, a conflict is much more likely. If there is indemnification, does the employee have non-financial interests, e.g. reputational interests? Often a sexual harassment claim could create reputational interests, but the claim may be likely to settle privately or may be obviously without merit.
How serious is the alleged misconduct and the evidence thereof? A minor, weak or frivolous claim is much more amenable to joint representation. A likelihood of settlement also conduces toward joint representation.
Do the potential joint clients have a strong ongoing relationship? If the value to the employer of continuing employment of the employee-defendant is great, joint representation is more apt to be suitable. In short, the Minneapolis Police Officers Federation approach fits the rules better than the categorical approach of the CLE materials.
Jointly representing defendants, such as employer and employee, is sometimes a risky undertaking. Factors unknown at the outset, especially where the accusations turn out to be meritorious, can lead to withdrawal from one or both representations. Such withdrawals are often disruptive and expensive. Risk-assessment is, however, possible if the right questions are posed. And if the right answers are given, joint representation may well best serve the clients’ interests. The hypothetical above is one such situation, but there are many others.
III. ESTATE PLANNING FOR SPOUSES, THEN REPRESENTING ONE SPOUSE IN A DIVORCE?
A. Hypothetical. In 2005, an attorney (A) drafted an estate plan for spouses (H and W). H and W each operate a successful business. Because H and W were joint clients and spouses, they shared all material information related to their businesses and assets with each other and with A. In 2015, H requests A to represent H in dissolving his marriage to W.
B. Rules and Comments.
“A lawyer who has formerly represented a client in a matter shall not thereafter represent another person in the same or a substantially related matter in which that person’s interests are materially adverse to the interests of the former client unless the former client gives informed consent, confirmed in writing.” Rule 1.9(a).
“Matters are “substantially related” for purposes of this rule if they involve the same transaction or legal dispute or if there otherwise is a substantial risk that confidential factual information as would normally have been obtained in the prior representation would materially advance the client’s position in the subsequent matter. . .Information that has been disclosed to . . .other parties adverse to the former client ordinarily will not be disqualifying.” Rule 1.9 cmt. 3.
CLE Q & A.
Q. I did an estate plan for a husband and wife ten years ago. They both are successful business people running their own businesses. I just got a call from the husband who wants me to represent him in a marriage dissolution. May I do that?
A. It depends. Rule 1.9(a) states that "A lawyer who has formerly represented a client in a matter shall not thereafter represent another person in the same or a substantially related matter in which that person's interests are materially adverse to the interests of the former client unless the former client gives informed consent, confirmed in writing." Arguably, a divorce that divides the parties' estate is a substantially related matter to their estate planning. Both parties may have disclosed information to you that could be used against the other spouse in the divorce and which may be "substantially related" to this matter. Rule 1.9(a) would permit the representation if the wife gave her informed, written consent.
Dissent, Wernz W. The CLE answer appears to be that Rule 1.9(a) does not permit the representation unless the wife gives informed consent, confirmed in writing. In my opinion, this answer would have been correct before the 2005 amendments of the comments to Rule 1.9, but those amendments made the divorce-after-joint-estate-planning representation permissible in most circumstances.
Would the divorce be “substantially related” to the estate planning? Although 10 years have passed in the CLE scenario, some of the same or similar assets would be involved. That similarity sounds “substantially related.” However, in 2005 “substantially related” was given a new, narrow definition, by Rule 1.9 cmt. 3, above.
Joint clients normally share all information material to the representation. In the estate planning representation, there was no information that was confidential as between H and W. Therefore, under comment 3, above, there is no risk that confidential information will be mis-used by H against W.
This point may be put in general contexts. If H retained a lawyer (L) who had not been involved in the estate planning, that lawyer would be in the same informational position as A because H and A have the same information, H and L can have the same information. The importance of confidentiality to Rule 1.9 conflicts has been recognized in State of Minnesota v. 3M Company, 845 N.W.2d 808 (Minn. 2014).
Information-protection is the central value of Rule 1.9, but not the only value. A lawyer may not switch sides in the “same” matter, without consents. Rule 1.9(a). The lawyer who represents joint clients on a matter may not drop client #1, and then represent client #2 against #1 in the same matter. However, estate planning and divorce are not the same matter.
The Office of Lawyers Professional Responsibility (OLPR) has provided mixed messages regarding this analysis. OLPR dismissed two complaints involving the hypothetical facts above. I represented both respondent attorneys and argued that the 2005 amendment to Rule 1.9 cmt. 3 had narrowed the “substantial relationship” test. In a 2007dismissal, OLPR found no conflict “although complainant may feel personally betrayed by respondent’s representation of his ex-wife.” This position showed that OLPR has taken account of the 2005 amendments.
A pre-2005 OLPR article had taken the position that a lawyer should ask if the former client, “would reasonably feel a breach of loyalty due to the lawyer now representing one spouse in the dissolution. If so, decline the representation or risk a motion for disqualification or a complaint to this Office.” Candace M. Hojan, If it Looks and Smells Like a Conflict, It’s Probably a Conflict, Minn. Law., May 8, 1998, at 2. A more recent article takes the position that “more often” than not, Rule 1.9(a) will preclude the divorce-after-estate planning representation. Martin A. Cole, Summary of Admonitions, Bench & B. of Minn., Feb. 2010. Mr. Cole’s position differs both from mine and from the categorical position of the CLE answer, but Mr. Cole does not explain his position.
IV. MUST ALL INFORMATION BE SHARED WITH JOINT CLIENTS?
A. Hypothetical. Several competitive businesses have been sued by the same plaintiff, on a patent infringement claim. They regard the suit to be without merit. They believe their interests would be best served by a joint representation. Although they will disclose information necessary to defend the suit, they wish to protect their own trade secrets from disclosure to one another.
B. Rule and Comment. The relevant rule is 1.7. See II.B. above.
“As to the duty of confidentiality, continued common representation will almost certainly be inadequate if one client asks the lawyer not to disclose to the other client information relevant to the common representation. * * * In limited circumstances, it may be appropriate for the lawyer to proceed with the representation when the clients have agreed, after being properly informed, that the lawyer will keep certain information confidential. For example, the lawyer may reasonably conclude that failure to disclose one client’s trade secrets to another client will not adversely affect representation involving a joint venture between the clients and agree to keep that information confidential with the informed consent of both clients.” Rule 1.7 cmt. 31.
CLE Q & A.
Q. I am representing two parties in the same matter. Do I have to reveal everything one of those clients tells me to the other?
A. Yes. You have the same duty of loyalty to each party, so each party has the right to be informed of all pertinent information. However, your duty of confidentiality to either client would be violated by informing each client of all of the facts. This highlights the extreme difficulty in dual representation with two clients who have different approaches to the litigation and problem. You must inform each party at the beginning of the representation that information you receive from each will be shared with the other.
Concurrence, Wernz W. In general, I do not disagree with any of the statements in the CLE Answer, except insofar as there are narrow exceptions. Above all, I agree that one of the best indicators of whether a joint representation should be undertaken is whether the potential clients are willing to share all information and communications.
However, there are a few situations, such as the trade secret situation contemplated in Rule 1.7 cmt. 31, in which information-limitation agreements can be made. Another example could be a joint representation involving an employer defendant, who is a regular and substantial client of a lawyer, and a fully-indemnified low-level employee, whose alleged role in the matter was very minor. The lawyer representing both parties should be required to disclose to the employee all information the employee needs for decision-making (if any), but not all information the employer may wish to disclose only to the lawyer, regarding other claims, financial considerations in funding settlement, etc.