Ethical Issues With Remote Work During COVID-19

In March of 2020, international and national events triggered an immediate and emergent need for employers to transition their entire work force to working remotely. The World Health Organization officially declared the novel coronavirus outbreak a pandemic on March 11 and President Donald Trump declared a national emergency on March 13. Federal, state and local regulations were in a state of flux and by May, 29 states implemented shut down orders halting in- person business operations. In Pennsylvania, Governor Tom Wolf dodged a constitutional challenge to his shut down Order of “non-essential” businesses by modifying it to permit law offices to stay open on a restricted basis. Per the Pennsylvania Office of General Counsel’s guidance, lawyers and their staff have been able to access their offices to the degree necessary to participate in essential court functions. The guidance reiterated that all other businesses must continue to operate remotely. Businesses in regions where shut down orders were not issued took measures to protect the health and safety of their employees, customers and operations. As widely recognized, “[o]ne of the key measures to reduce the spread of Coronavirus COVID-19 is social distancing, which for many organisations means encouraging – or instructing – staff to work from home.” Steve Ranger, “Working from home: Cybersecurity tips for remote workers” (March 16, 2020).

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ABA Issues New Guidance on Lawyers’ Ethical Duties to Prospective Clients

The ABA Standing Committee on Ethics and Professional Responsibility (the “Committee”) recently issued Formal Opinion 492 (the “Opinion”), in which the Committee offers helpful guidance on navigating the duties to prospective clients under Model Rule 1.18. Attorneys and conflict-avoidance software alike tend to focus on conflicts of interest with current and former clients, and may disregard the risks associated with prospective clients with whom an attorney-client relationship is ultimately never formed. The Opinion serves as an important reminder to attorneys that prospective clients are indeed owed certain duties – and that even a short consultation that does not lead to a retention could disqualify the lawyer – and even the lawyer’s entire firm – from undertaking a future representation of a different person or entity.

The duties described in Rule 1.18 apply to prospective clients. A prospective client is a “person who consults with a lawyer about the possibility of forming a client-lawyer relationship with respect to a matter.” The comments clarify what does – and what does not – constitute a consultation. Comment [2] explains that “a consultation is likely to have occurred if a lawyer … specifically requests or invites the submission of information about a potential representation without clear and reasonably understandable warnings and cautionary statements that limit the lawyer’s obligations, and a person provides information in response.” On the other hand, a consultation has not occurred within the meaning of the Rule if a person unilaterally provides information to an attorney, such as through an unsolicited email seeking legal help.1 To be accorded prospective client status, a person must have consulted with the attorney in good faith about the possibility of forming an attorney-client relationship.2 So under the current Model Rule, Tony Soprano’s efforts to conflict out every high-powered divorce attorney in the community by disclosing information during multiple consultations would have fallen short. Tony was not consulting with the attorneys in good faith.3

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ABA Issues New Ethics Guidance on Conflicts Arising Out of a Lawyer’s Personal Relationship With Opposing Counsel

Many lawyers are married to lawyers, socialize with other lawyers, and count lawyers they have interacted with on a professional level for years as friends. When do these relationships create conflicts of interest that require lawyers to take steps to address the conflict?

The American Bar Association’s Model Rule of Professional Conduct 1.7(a)(2) prohibits a lawyer from representing a client without informed consent where there is a significant risk that the lawyer’s personal interest will materially limit the lawyer’s ability to represent the client.

Comment [11] to Model Rule 1.7(a)(2) discusses how the Model Rule relates to personal interest conflicts based on blood or marriage:

When lawyers representing different clients in the same matter or in substantially related matters are closely related by blood or marriage, there may be a significant risk that client confidences will be revealed and that the lawyer’s family relationship will interfere with both loyalty and independent professional judgment…Thus, a lawyer related to another lawyer, e.g., as parent, child, sibling or spouse, ordinarily may not represent a client in a matter where that lawyer is representing another party, unless each client gives informed consent.

The practical implications of a personal interest conflict are easy enough to identify where the lawyers on opposite sides of a case are related by blood or marriage. For example, there would be a significant risk of a disabling personal interest conflict where a plaintiffs’ personal injury lawyer handling a matter on a contingency fee basis appeared at a settlement conference or mediation where his or her spouse was on the other side of the case. The test is whether the lawyer “reasonably believes” that he or she can continue to provide competent and diligent representation to the client notwithstanding the personal interest conflict. If so, then both clients should provide informed consent, in writing, to permit the lawyer to proceed with the representation notwithstanding the personal interest conflict.

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Division of Fees Between Discharged Counsel and Successor Counsel in Contingent Fee Cases

When a client terminates, without cause, its legal representation in a contingent fee matter and subsequently retains new counsel from a different firm, the Rules of Professional Conduct related to the division and disbursement of fees impose certain requirements on the successor attorney. The American Bar Association recently issued Formal Opinion 4871 (the “Opinion”) to identify the applicable rules, and to clarify the duties owed to the client by the successor attorney.

The Opinion explains that Model Rule 1.5(e) (or its state equivalent) has no application to the division of fees in cases of successive representation.2 Such situations are governed by Rule 1.5(b)- (c), which according to the Opinion, require the successor counsel to “notify the client, in writing, that a portion of any contingent fee earned may be paid to the predecessor attorney.”

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Ethical Implications When Acting as Local Counsel

Many litigators have either retained or served as “local counsel” in state or federal courts.  Litigators with national practices may work with local counsel more often than not.  Those with niche practices handling cases in specialized courts, such as the Delaware Chancery Court, also frequently serve as local counsel to those who are admitted to practice outside the jurisdiction.  However, when that out-of-state lawyer calls and wants you to serve as local counsel in a major case, it is important to establish the ground rules before entering your appearance for the new client.   

Typically, the out-of-state lead counsel (“lead counsel”), relies on local counsel for compliance with local rules, filing and service responsibilities, and other seemingly mundane tasks, but maintains primary authority over strategic decisions and direct contact with the client.  In fact, more often than not, lead counsel will not want local counsel to have any contact with their client.  Lead counsel will assume responsibility for all substantive matters in the case, including written discovery, drafting and responding to motions, all depositions, and trial if necessary.  Local counsel is generally responsible for reviewing pleadings to ensure that procedural requirements are satisfied, advising on the applicability of local rules or the personal policies of the assigned judge, and moving for the pro hac vice admission of lead counsel.  In a perfect world, the matter eventually concludes through settlement or a trial and the client is pleased with the result.  But what if the client is dissatisfied with the quality or result of the representation?  The short answer is that both lead and local counsel could face a legal malpractice claim, regardless of which counsel truly controlled the matter, or even committed any alleged errors.  There are steps attorneys should take to protect themselves when acting as local counsel.

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Ethical Implications When Outsourcing Legal Work

Outsourcing on the Upswing

In an era where lawyers and law firms seek to run “lean” as a way of keeping costs down, outsourcing legal and nonlegal services once performed in-house by law firms can be a wise financial move. The advent of COVID-19 has accelerated consideration of outsourcing various administrative services so as to streamline back office functions.

‘‘Outsourcing’’ generally refers to ‘‘the practice of taking a specific task or function previously performed within a firm or entity and, for reasons including cost and efficiency, having it performed by an outside service provider.’’ See ABA Commission on Ethics 20/20, Revised Proposal – Outsourcing (Sept. 19, 2001). Due to the COVID-19 pandemic, additional reasons for outsourcing include the need for social distancing and the necessity of firms working remotely.

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Failure to Adjudicate Conflict of Interest Issue Leads New Jersey Appellate Division to Reinstate Ex-Client’s Malpractice Case

Plaintiff, Engine Distributors, Inc. (“EDI”), appealed an order from the Superior Court of New Jersey, Law Division, denying its motion for summary judgment and granting defendant Archer & Greiner’s motion for summary judgment and dismissal of EDI’s malpractice complaint against Archer.  On July 1, 2020, the Appellate Division reversed and remanded the case to the trial court for further proceedings.

EDI was represented by an attorney in various legal matters beginning in the late 1970s.  Floyd Glenn Cummins was EDI’s president and majority shareholder during that timeframe.  In 2003, EDI’s attorney defended it in an age discrimination lawsuit.  That attorney later joined Archer as a partner in 2005.  Afterward, another Archer partner assisted him on the discrimination case.  During that representation, Archer received confidential information from EDI including various financial records.  

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