Staying Within the Lines: Proposed Rule Changes Could Blur the Lines for Attorneys

December 11th, 2009 by Bruce A. Campbell

photo by Bruce A. Campbell The proposed changes to the Texas Disciplinary Rules of Professional Conduct could make it difficult for attorneys to practice “within the lines.”

One example of blurred boundaries is the definition of an “affiliated lawyer” in Rule 1.00(c)(iii).

A lawyer is “affiliated” with a firm if either the lawyer or the lawyer’s professional entity… has any other relationship with that firm, regardless of the title given to it, that provides the lawyer with access to the confidences of the firm’s clients that is comparable to that typically afforded to lawyers in category (i)…

Category (i) is defined as “a shareholder, partner, member, associate, or employee of that firm.”

How will the definition of affiliated lawyers create conflicts problems? Consider the following scenario.

A law firm brings in a contract lawyer to work on one particular matter but either 1) fails to limit the contract lawyer’s access to other clients’ matters on the firm’s computer or 2) fails to restrict the contract lawyer from hearing conversations related to other clients by firm lawyers within the office. The firm has probably provided “access to the confidences of the firm’s clients,” which is a condition for the contract lawyer to become an affiliated lawyer. By inadvertently making the contract lawyer an “affiliated the lawyer,” the firm now faces the potential of unforeseen conflicts of interest based on the past representations of the contract lawyer.

This is just one possible outcome from the proposed changes to the Disciplinary Rules. I will be posting more discussions about what lies ahead with the proposed amendments to the Disciplinary Rules.

Photo and processing by Bruce A. Campbell.

Sawdust and the 2 X 4

October 30th, 2009 by Bruce A. Campbell

While many Texas lawyers are focused on whether E&O insurance must be disclosed by lawyers to their clients, the Texas Supreme Court recently released for comment, a massive revision of the Texas Disciplinary Rules. The E&O issue is but a speck of sawdust in the eyes of Texas lawyers compared to the 2 X 4 of changes proposed to the D.R.’s.

Based on their depth and breadth, the changes in the Disciplinary Rules proposed on October 20 have a much greater potential for influencing the practice of law.

The changes affect areas such as:

  • who is an affiliated lawyer
  • what obligations are owed to prospective clients
  • conflicts of interest
  • safekeeping of property
  • candor to the tribunal
  • obligations of managerial attorneys
  • many, many more rule additions and changes

During the next months, I will be discussing the consequences of several of the rule changes.

Professional Liability Insurance Disclosure on the State Bar of Texas Website

October 30th, 2009 by Bruce A. Campbell

The State Bar of Texas posted a number of items related to the discussions about Professional Liability Insurance Disclosure, including reports and MP3 audio recordings of public hearings. Go to the State Bar website >>

Talk, Talk, Talk: Background Discussions About the Proposed Requirement for Disclosure of Lawyer E&O Insurance

October 30th, 2009 by Bruce A. Campbell

In November 2007, the State Bar appointed a task force to make a recommendation of whether Texas should require lawyers to disclose the existence or non-existence of professional liability insurance, and, if so, the form of any such disclosure. The Texas task force first surveyed Texas lawyers by e-mail. The survey was reportedly sent via an e-mail blast to Texas attorneys, and then made available on the Bar’s Web site. (See also Memorandum from David J. Beck, Chair, to State Bar of Texas Board of Directors, dated June 11, 2008, regarding Task Force on Insurance Disclosure p. 3.)

According the Task Force, 6,160 lawyers completed the survey, which represented 6.6% of all members of the Texas Bar in 2008. According to the survey, the majority of the lawyers who completed the survey practiced in solo or small law firms, and 77.4% of the lawyers who voted believed lawyers should not be required to disclose whether they have insurance. According to the Task Force, 63.2% of the lawyers who voted in the survey also believed that if disclosure was required, it should be disclosed on the bar’s website instead of disclosed in writing to clients. (See PLI Disclosure – Attorney Survey Findings – February 2008.)

The State Bar also received 138 pages of comments from lawyers in Texas on the final question of the electronic survey. (See “Summary of Findings of Survey Comments” p. 1, available from the State Bar of Texas.) 1605 lawyers (71.9%) who answered the final survey question were against disclosure for reasons including: requiring disclosure would encourage lawsuits against attorneys based on anticipated failure and deep pockets; insurance is too expensive; this will cause insurance rates to go up; lawyers who do not currently carry insurance will have to raise their rates to afford it; other professional are not required to disclose whether they carry insurance; lawyers should be able to choose to be self-insured; and disclosure would hurt small firms and solo practitioners. 118 lawyers (5.3%) who completed the final survey question favored requiring disclosure for reasons including that a client is entitled to know and that disclosure is for public protection. 510 lawyers (22.8%) who answered the final question left comments including that they believed the survey questions were biased; they perceived a lack of suitable coverage especially for solo practitioners or semi-retired lawyers; and practice areas make a difference.

The Task Force also conducted telephone surveys of lawyers and the general public. According to the Task Force, 65% of the 500 lawyers who participated believed that lawyers in private practice should not be required to disclose whether they carry insurance, whereas 70% of the 500 members of the general public who participated believed that lawyers should be required to carry insurance. The Task Force also reported that 75% of the general public also believed that other professions (such as doctors, architects, engineers and accountants) should be required to carry insurance (although none of those professions are required to disclose such information). (See PLI Disclosure Survey of the Public – April 2008.)

Actions after Polling
Based on this information, the 13-member Texas Task Force recommended in June 2008, in a 6-5 vote, that disclosure not be required. The Task Force also voted, 6-4, that if disclosure was required, it should be an administrative rule, not a disciplinary rule, and be reported to the State Bar, not clients directly. (See Memorandum from David J. Beck, Chair, to State Bar of Texas Board of Directors, dated June 11, 2008, regarding Task Force on Insurance Disclosure p. 7.)

In March 2009, House Bill 2825 was introduced by Elliott Naishtat, Representative from Austin in the legislature, which stated the Texas Supreme Court shall: (1) promulgate rules that require an attorney not covered by professional liability insurance to either prominently display a notice in the attorney’s place of business stating he is not covered by professional liability insurance or provide notice in another manner to his clients and prospective clients, and (2) provide for enforcement including disciplinary action for professional misconduct. House Bill 2825 died in the Judiciary and Civil Jurisprudence House Committee.

In June 2009, the Texas Grievance Oversight Committee restudied the reports by the State Bar’s Task Force. The Grievance Oversight Committee recommended that a lawyer in private practice inform his client in writing if he does not have professional liability coverage within limits acceptable to the Bar, and to also notify his client in writing if his insurance lapses or is terminated during his representation of the client. The Committee also recommended that the rule became a disciplinary rule of professional conduct, so that any violation will be handled through the grievance process of the State Bar. (See Excerpt from the Grievance Oversight Committee 2009 Report to the Supreme Court, pp. 1, 2, 4; see also State Bar of Texas Board of Directors Professional Liability Insurance Disclosure Consideration Process 2009-2010.)

For more on this topic, read my articles in Texas Lawyer on disclosure of lawyer E&O insurance: It’s Time to Speak Up: Don’t Miss Out on Debate Over Professional Liability Insurance.

Will Texas Lawyers Be Required To Disclose Whether They Carry Professional Liability Insurance?

October 29th, 2009 by Bruce A. Campbell

Are you aware of the possible impact that could result if you are required to disclose to clients whether you carry professional liability insurance?

Judging by the low attendance at the State Bar of Texas public hearings on the topic, most attorneys are unaware or indifferent: Dallas (50+), El Paso (6), Houston (35), Harlingen (4), Lubbock (9), and San Antonio (60).

The State Bar Board will use this input to assist it in making a recommendation to the Supreme Court. (The Board will vote on this issue at its Jan. 29, 2010, meeting.)

Read Bruce A. Campbell’s article “It’s Time to Speak Up: Don’t Miss Out on Debate Over Professional Liability Insurance” in Texas Lawyer.

Collectability, Deductibility, and Recoverability

June 12th, 2009 by Bruce A. Campbell

chandelierIn Akin, Gump, Strauss, Hauer & Feld, L.L.P. v. National Development and Research Corp., et al., the Texas Supreme Court faces three issues that, if decided, could substantially affect how courts handle legal malpractice cases in Texas: collectability of underlying judgments, deduction of contingent fees from damages and recoverability of attorneys’ fees that were paid in the underlying suit.

The first issue the court could resolve concerns collectability…

Read more of Collectability, Deductibility, and Recoverability.

Going Up: Elevator Clauses, Client Consent and Increased Billing Rates

January 26th, 2009 by Bruce A. Campbell

With 2009 upon us and the cost of operating a firm rising steadily, many lawyers may wonder how to increase billing rates for existing clients. What must a firm do before it increases the billing rate for clients who already have signed a retainer agreement? Can the firm increase its hourly rate without notifying the client? If the firm must give notice of rising rates, can notice be verbal or must it be written? If the client consents to the proposed rate increase can that client still challenge the modification later?

Read my latest article, “Going Up: Elevator Clauses, Client Consent and Increased Billing Rates,” in Legal Ethics in January 26, 2009 edition of Texas Lawyer.

Dangers of Social Networking for Attorneys

November 12th, 2008 by Bruce A. Campbell

Photo by Bruce CampbellCompromising or inappropriate pictures, statements, or other information on social networking sites may hinder an attorney’s opportunity for employment, obtaining a license to practice law, or even result in suspension of a law license. Attorneys must recognize that their portrayal on social networking sites is considered a reflection of personal character. Read more about the dangers of social networking in “Choose Your Friends Wisely” – the next article in the Texas Lawyer legal ethics series, written by Bruce A. Campbell.

Read the article on
Download a PDF of the article.

(Photo © Bruce A. Campbell)

Free Speech for Lawyers?

August 1st, 2008 by Bruce A. Campbell

The court jester often spoke frankly on controversial issues. Photo © Bruce A. Campbell
The Florida Supreme Court appears to be ready to dive into the question of what can a lawyer say about a judge and still avoid being disciplined. A Florida attorney is facing discipline for writing disparaging comments about a Circuit Court Judge on a legal blog. In the blog, the attorney referred to the Judge as an “evil, unfair witch,” “unfit for her position,” and referred to her as “seemingly mentally ill.” The attorney is accused of violating Florida bar rules forbidding attorneys from impugning the qualifications of a judge and making statements about the judge known to be false or in reckless disregard for the truth. Interestingly, the lawyer apparently had cut a deal with the Florida Bar requiring a guilty plea in exchange for a public reprimand, but this deal may have been scuttled by the requests for briefing by the Florida Supreme Court. The Court has directed the attorney, as well as the Florida State Bar, to file briefs on whether the attorney’s comments are protected speech under the First Amendment. The attorney, along with the help of the American Civil Liberties Union, is now defending his comments as permissible hyperbole or figurative speech. It will be interesting to see how the Florida Supreme Court treats the attorney’s comments.

For an expanded discussion of the interaction between the disciplinary rules and the First Amendment, read “What can you say about a judge without losing your law license?” published in the August 4, 2008 edition of the Texas Lawyer.

(Post publication note) This article was picked up by several sites, including:
American Lawyer
The Boston Globe []
Connecticut Bar Association
Corporate Legal Times Magazine
The Counselor, Boston Law College
Hawaii State Bar Association
The Indiana Law Blog
Kansas City Business Journal
Law Net (Greek version)
Law Roundtable
Legal News
Practice Source
The New York Sun
et al. (Google Search for “A Primer on What Lawyers Can Say About Judges”)

What Makes You So Special? Qualcomm Revisited

July 17th, 2008 by admin

Acroterions adorn each corner of Dallas’ historic courthouse “Old Red.” These gargoyle-like figures have a serpent’s body, bat’s wings, and the head and legs of a lion—characteristic of the Romanesque fascination with grotesque and monstrous creatures. (Acroterion is from the Greek word for “summit.”)
The most recent blog focused on Qualcomm Inc. v. Broadcom Corp. In Qualcomm, a Federal Judge for the Southern District of California handed Qualcomm and six of its retained attorneys severe sanctions for “monumental” discovery violations after the attorneys for Qualcomm failed to produce “tens of thousands” of electronic documents until after trial. Only six of the nineteen retained attorneys representing Qualcomm were sanctioned which begs the question, “Why?”

According to the court, one group of sanctioned attorneys were responsible for the initial discovery failure because they handled or supervised Qualcomm’s discovery responses and production of documents. The court specifically noted that had any of these attorneys insisted on reviewing Qualcomm’s records regarding the locations searched and terms utilized, they would have discovered the inadequacy of the search and the suppressed documents.

One attorney tried to avoid responsibility and represented to the court that he had requested a more thorough document search, but that Qualcomm refused to do so. According to the court, “if that attorney was unable to get Qualcomm to conduct the type of search he deemed necessary to verify the adequacy of the document search and production, then he should have obtained the assistance of supervising or senior attorneys.” If the supervising senior attorneys were unable to get Qualcomm to conduct a competent and thorough document search, they should have withdrawn from the case or taken other action to ensure production of the evidence.

The court also found that a second group of attorneys were responsible for the attorney discovery violation because they also did not perform a reasonable inquiry to determine whether Qualcomm had complied with its discovery obligations. The court stated that these attorneys knew or should have known that particular statements in an e-mail received from Qualcomm contradicted Qualcomm’s trial arguments and the attorney had an obligation to verify that it had been produced in discovery or to immediately produce it. The court stated that if the receiver attorney lacked the experience to recognize the significance of the document, then a more senior or knowledgeable attorney should have assisted him. The supervising attorney should have recognized the importance of the document from his involvement in Qualcomm’s motion practice and trial strategy sessions.

The court found that if these two groups of attorneys had conducted a reasonable inquiry, they would have discovered the inadequacy of Qualcomm’s search and the suppressed documents.

The court indicated that a third group of attorneys were responsible for the discovery failure because they did not conduct a reasonable inquiry into Qualcomm’s discovery production before making specific factual and legal arguments to the court.

Yet another lawyer who was the primary liaison with another firm representing Qualcomm, and who was privy to the evolving theories of the case was found to have engaged in sanctionable conduct. This attorney was made aware of the discovery of electronic documents at Qualcomm and was in the best position both to understand their significance and to communicate any concerns.

The court found the remaining thirteen attorneys were less culpable than their sanctioned counterparts because the remaining attorneys did not “significantly participate in the preparation or prosecution of the case” or “participate in aspects of the case [related to the discovery issue].” The court also stated that although it was a close call, it would decline to sanction attorneys that did not begin working on the case until after discovery had closed and those that monitored the case for impact on separate Qualcomm/Broadcom litigation.