sunEthics

Words, Words, Words . . .

It often is said that words are the lawyer’s stock in trade. But where do lawyers get the words that they use? We write some of them ourselves, of course, but many of the words we use are the words of others – words that appear in statutes, court opinions, scholarly works, and even Internet web sites.

How do we know that the words we use are the right words, rather than words that are irrelevant, incomplete, out-of-date, superseded, or misleading? Are there consequences to using the wrong words in our law practice?

Effective legal research helps lawyers find the right words. In today’s law practice environment, more and more legal research is being conducted using electronic databases and other online tools. How do our established ethical principles apply in this developing arena of electronic legal research?

Our discussion in today’s program will focus on some of the ethical issues that can arise from the use, mis-use, or non-use of electronic legal research. We will explore these issues in the context of the three (3) "not-so-hypothetical" situations outlined below. As we consider these problems we will review some of the Virginia Rules of Professional Conduct that may be relevant to electronic legal research and look at some legal malpractice liability issues can be implicated as well.

It is useful to remember that often there is no one "right" answer to a given legal ethics problem. Usually, however, there are some clearly "wrong" answers that will land an attorney in disciplinary hot water. We will try to identify and eliminate the wrong answers, and focus our attention on possible answers that are ethically permissible and liability-free.

The overriding goal is to stimulate thought about ethics and professionalism in this important area of service to our clients.

Not-So-Hypothetical #1

Your friend is a lawyer in a mid-size law firm that practices almost exclusively in the area of insurance defense. One day he was telling you about the "case defense guidelines" used by many of the insurance companies that send cases to his firm. One such guideline concerns the use of electronic research (e.g., Westlaw, Lexis). The insurer will not pay a law firm for electronic research charges unless the use of electronic research is absolutely necessary and has been approved by the insurer’s claims management office in advance. The person in the office who makes this determination is not a licensed attorney. Because of the "red tape" involved and the fact that some previous requests were denied, your friend is reluctant to even request approval any more.

Your friend confides that not long ago he lost a motion for summary judgment that he almost certainly would have won if he had used an electronic research database to update his manual research. His failure to do so meant that the case had to be tried, resulting in a verdict against the client/insured (a medical professional). Ultimately, the trial court’s judgment was reversed on appeal and judgment was rendered in favor of the client/insured.

Unfortunately for your friend, the client/insured talked to another lawyer about the case and decided to file a complaint with the Virginia State Bar alleging generally that your friend’s incompetence forced her to go through a needless trial and appeal. Should your friend worry about this bar complaint? Does he have any potential malpractice liability?

Not-So-Hypothetical #2

You are a partner in a small law firm. Your firm has a Lexis account but uses it sparingly due to the cost. One of your clients, a company that owns several nursing homes in the state, has a dispute with a federal agency over Medicaid payments. To give your client proper advice, you (and your associate) do a considerable amount of online research and run up quite a tab. Your firm’s custom when billing expenses (such as photocopies and long distance telephone charges) to clients is to invoice the client for the firm’s actual cost plus a 25% "administrative surcharge." The invoice shows only the total amount (e.g., a telephone call that cost the firm $4.00 would be billed to the client as "long distance call to Joe Smith – $5.00").

Your bill to the nursing home client at the conclusion of the matter includes: (1) as attorneys’ fees, the time that you and your associate spent doing online research, billed at your usual hourly rates; and (2) as a cost, the actual online database search and time charges that you and your associate incurred in your research, increased by your firm’s additional 25% "administrative surcharge." Have you done anything unethical in your billing?

Sometime later, another extended care facility that your firm represents has a dispute with the same agency over a very similar issue. Your associate pulls out the file with the results of the electronic research that you performed for the prior client, and updates it. Your bill to this client reflects not only the cost of the updating, but the full cost of the original search – after all, you used it in advising the second client. Have you done anything unethical in your billing?

Not-So-Hypothetical #3

Your law firm partner has long touted the value of electronic research. The affinity for electronic research must run in her family, because her sister opened a legal research service, "ReadySearch," a couple of years ago. Your partner owns a small percentage of the business, which relies primarily on electronic research and advertises itself as "the cyberspace legal research alternative for Virginia lawyers." Your partner’s sister is not a lawyer, and the service’s research employees are either law students, recent law school graduates who have not taken the bar exam, or lawyers who are licensed in states other than Virginia.

You and others in the firm have used ReadySearch on occasion. Recently, in fact, you called the service and ordered research performed and a memorandum of law prepared for a motion hearing. Due to time demands and based on your excellent past experience with the work product of ReadySearch, you simply attached a signature page, signed it, and filed the memo.

Have you done anything unethical or otherwise improper?

RELEVANT VIRGINIA RULES OF PROFESSIONAL CONDUCT

Rule 1.1, "Competence"

Virginia Rule 1.1 provides:

Comment [5], "Thoroughness and Preparation," to Rule 1.1, explains:

In order to provide competent representation, a lawyer must have the ability to research the law. Massey v. Prince George’s County, 907 F.Supp. 138, 142 (D.Md. 1995). As the Comment to Rule 1.1 indicates, the precise actions required by the duty of competence can depend on the specific circumstances. Some cases require more detailed and elaborate research than others. Computerized research may be needed in order to satisfy the duty of competent representation.

The ease of posting information to the Internet creates a special area of concern for lawyers who perform electronic research through Internet sites (e.g., VSB Ethics Opinion page), as opposed to proprietary databases (e.g., Westlaw, VersusLaw). Currency, comprehensiveness, and general reliability can be huge issues here. As noted by the New York State Bar Association Committee on Professional Ethics in its Opinion 709, an attorney who depends on information located by searching Internet sites has a duty of competence to "take care to assure that the information obtained is reliable."

Related to the ethical issue of competence is the Constitutional mandate that criminal defendants have the right to assistance of counsel and that such assistance not be ineffective. See McNamara v. United States, 867 F.Supp. 369 (E.D.Va. 1994), reversed 74 F.3d 514 (4^th Cir. 1996). Concerning effective legal research, the lower court’s opinion recognized:

Rule 1.3, "Diligence"

Virginia Rule 1.3 provides in pertinent part:

The duty of diligence "includes pursuing applicable legal authority in timely fashion. Case reports are available in hard cover and on-line from computers." Massey v. Prince George’s County, 981 F.Supp. 905, 908 (D.Md. 1996).

Rule 1.4, "Communication"

Virginia Rule 1.4 provides in pertinent part:

In modern law practice lawyers regularly use electronic means to communicate with clients (and prospective clients). Research-related communication issues can arise for lawyers who use the Internet to communicate with clients and who use the Internet to locate information that clients need to know.

Some have suggested that a law firm that sponsors a sophisticated firm web site thereby implies that its lawyers possess the expertise necessary to effectively use the Internet for legal research purposes. See MacLachlan, "Gandy Dancers on the Web: How the Internet Has Raised the Bar on Lawyers’ Professional Responsibility to Research and Know the Law," 13 Geo. J. Legal Ethics 607, 631-35 (2000).

The ease of obtaining public information via the Internet may mean that citizens are deemed to have constructive knowledge of certain information. When these citizens become lawyers’ clients, the lawyers need to be certain to actually locate and use this information for their clients’ benefit. In Whirlpool Financial Corp. v. GN Holdings, Inc., 67 F.3d 605 (7^th Cir. 1995), an investor brought securities fraud claims. One disputed issue concerned applicability of the statute of limitations. Rejecting the contention that the limitations period had been tolled, the court noted:

Rule 1.5, "Fees"

Virginia Rule 1.5 provides in pertinent part:

How, and in what manner, can lawyers charge their clients for the expenses of computer assisted legal research ("CALR")? The extant authorities offer varying suggestions and prohibitions.

The American Bar Association’s view of the general rule for charging for CALR is expressed in ABA Formal Ethics Opinion 93-379. A lawyer may not charge clients for general overhead expenses, such as maintaining a library; these expenses are subsumed in the attorney’s fee charges. A lawyer, however, may charge the client the actual cost of online research time as a "cost" or expense of the case.

Of course, the attorney should not charge more than one client for the same work. "If the legal research done online benefits more than one client, each client cannot be charged for the full cost of research." Connecticut Ethics Opinion 96-3. This opinion also points out that charging the expense of computer equipment to clients as a "cost" is improper because this is part of the lawyer’s overhead. Similarly, charging clients as a "cost" the expense related to maintaining a CD-ROM research tool is improper "where there is no additional online expense once the disc has been purchased, and is the equivalent to maintaining a library of books."

Whether CALR expenses are recoverable from an opposing party as part of attorney’s fees (rather than costs) under a fee-shifting statute depends on the individual jurisdiction. See, e.g., O’Bryhim v. Reliance Standard Life Ins. Co., 997 F.Supp. 728, 737 (E.D.Va. 1998) ("The majority of federal courts subscribe to the view that costs of computer legal research are properly reflected as part of the law firm's overhead and, as such, are a factor to be included in the setting of attorneys fees as opposed to ordinary costs."). Accord, In the matter of Azstar Casualty Corp., 938 P.2d 76 (Ariz.App. 1996) (court awarded attorneys’ fees under state statute can include computerized research charges); Key v. Chrysler Motors Corp., 998 P.2d 575 (N.M. 2000).

Do the rules applicable to CALR charges change in contingent fee cases? Again, one must consult the relevant jurisdiction. For example, Connecticut Opinion 96-3 concludes that, when handling a case on a contingent fee basis, it is permissible to charge a client the actual cost of the online research time charges. It is not permissible, however to charge for an attorney’s time "in formulating, modifying and conducting the legal research requests, or for analyzing the results." An Illinois court, however, in an attorney-client dispute over a specific contingent fee agreement, held that "computer-assisted legal research expenses are a form of attorney fees and are not separately recoverable as a cost or expense pursuant to the parties’ contingent fee agreement." Guerrant v. Roth, 777 N.E.2d 499 (Ill.App. 2002). The court’s rationale was that the added cost of computerized legal research is normally matched with a corresponding reduction in the amount of time a lawyer must spend researching.

Virginia lawyers who intend to collect CALR charges from the client as a "cost" are well advised to list and clearly explain those charges in the fee agreement. See Virginia Rule 1.5(c) (a "contingent fee agreement shall state in writing . . . other expenses to be deducted from the recovery"). See also Louisiana State Bar Ass’n v. Edwins, 540 So.2d 294, 303 (La. 1989) ("[a] client who has retained a lawyer on a contingent fee basis may be billed for computer-aided research only when the fee agreement explicitly provides such costs will be billed, the agreement includes a detailed and complete explanation of the nature of the computerized research, and the client consents").

Rule 1.6, "Confidentiality of Information"

Virginia Rule 1.6 provides in pertinent part:

Ethics committees of the ABA and various states have addressed issues relating to confidentiality in email communications. Their opinions generally conclude that it is ethically permissible for lawyers to use unencrypted email for most client-related email communications, but typically caution that special circumstances may warrant extra protective measures such as encryption, or the use of another means of communication, in order to satisfy the lawyer’s duty of confidentiality. See, e.g., ABA Formal Ethics Opinion 99-413; Alaska Ethics Opinion 98-2; Connecticut Ethics Opinion 99-52; Florida Ethics Opinion 00-4; Minnesota Ethics Opinion 19; South Carolina Ethics Opinion 97-08; Utah Ethics Opinion 00-01. No opinion has yet addressed the question of whether similar principles govern the transmission of client-identifying information over the Internet for legal research purposes.

Rule 3.1, "Meritorious Claims and Contentions"

Virginia Rule 3.1 provides:

Effective legal research is crucial to an advocate seeking to ensure that the issues raised in litigation are not frivolous. In addition to this ethics rule, many courts and jurisdictions place further requirements on lawyers in an effort to avoid the bringing of baseless claims or the interposition of meritless defenses. See, e.g., Fed.R.Civ.P. 11. Violators may be subject to an assessment of attorney’s fees and costs in favor of their opponents. See, e.g., Va. Code Ann. § 8.01-266 (attorney’s fees and costs may be awarded against party making frivolous venue claims); Fla.Stat. § 57.105 (attorney’s fees may be awarded against party raising unsupported claims or defenses).

Rule 5.5, "Unauthorized Practice of Law"

Virginia Rule 5.5 provides in pertinent part:

Some individuals or companies perform legal research relating to specific problems or cases for a fee, acting as independent contractors. If the person actually performing the research is not licensed to practice law in the relevant jurisdiction, has that person engaged in the unauthorized practice of law? (Of course, unauthorized practice of law is a crime in many jurisdictions, including Virginia. Va. Code Ann. § 54.1-3904.) Is a lawyer assisting the unauthorized practice of law by using the work product of such a person?

Virginia UPL Opinion 127 addressed some of these issues. The opinion concluded that it was not the unauthorized practice of a law for someone (in the opinion, it was a lawyer) to establish a business in which non-lawyers perform legal research for licensed Virginia attorneys "who retained an attorney-client relationship with the ultimate beneficiary of the research materials" and would "assess the legal case and select it from among the materials provided by the non-lawyer researcher." In contrast, it would be the unauthorized practice of law for the business to provide this service to members of the general public.

New York State Bar Ass’n Ethics Opinion 721 addressed the question of a whether a lawyer using such a service’s work product assisted in the unauthorized practice of law. The opinion stated that a New York lawyer hired by an insurer to defend an insured does not assist in UPL by using, at the insurer’s request, a certain legal research that employs out-of-state lawyers or non-lawyers to perform the research, provided that the New York lawyer supervises or reviews the research firm’s work. In this context, "proper supervision involves considering in advance the work that will be done and reviewing after the fact what in fact occurred, assuring its soundness."

Most uses of computers in law practice, including CALR, simply automate tasks that previously were performed manually. The increasing speed at which these functions are performed create more room for error and less time to catch error. This results in a greater risk of making mistakes that will lead to malpractice liability.

A lawyer is liable to a client in a legal malpractice action if the lawyer’s conduct falls below the "standard of care" (this has been referred to as "a reasonable degree of care, skill, and dispatch") and is the proximate cause of the client’s damages. See, e.g., Heyward & Lee Construction Co. v. Sands, Anderson, Marks & Miller, 453 S.E.2d 270 (Va. 1995), quoting Ortiz v. Barrett, 278 S.E.2d 833, 837 (Va. 1981). Of course, before there can be a breach of the standard of care the lawyer must have a duty to use that care. Do lawyers have a duty to use electronic research? Although case law has not yet specifically articulated such a duty, it is easy to argue that this duty exists. Consider the implications of the following:

Remember, the key issue in a "standard of care" analysis is what a reasonably prudent practitioner would do in similar circumstances.

As computer assisted legal research becomes the norm in law practice, this means that a lawyer risks falling below the standard of care if he or she under-relies or over-relies on CALR. A lawyer under-relies by not using CALR at all, or by not using it when it should be used. An example of under-reliance would be using the print version of Shepards Citations to check the validity of a case, when the most recent paper copy of Shepards in the law firm library is a month old. A lawyer over-relies by using CALR exclusively (i.e., to the exclusion of other appropriate research methods) or by failing to appreciate the differences between electronic research tools and employ them appropriately. An example of over-reliance would be using a CD-ROM version of Shepards, believing it is "up to the minute" when it is 3 weeks old. Another example would be using the "natural language" search feature of an online database exclusively, without trying key-word searching or using West’s Key Numbers in conjunction with natural language or key-word methods.

If there is a duty to use electronic research, there are some troublesome potential extensions of such a duty. If a lawyer does all the manual research possible but fails to use computerized research, has that lawyer acted negligently? If a lawyer does perform computerized research but only uses one electronic tool (e.g., LoisLaw), and a search on another tool (e.g., Lexis) would have located the necessary information, has the lawyer acted negligently? See Chester, "Electronic Malpractice: Does Reasonable Competence Require Computer Research?," 17 Law Practice Management 23 (Nov./Dec. 1991).

Many of these considerations relating to the reasonableness of legal research methods and the results obtained in particular circumstances also may apply to the Fed.R.Civ.P. 11 requirement that a lawyer represent to the court that "the claims, defenses, and other legal contentions [in the lawyer’s written filings] are warranted by existing law or by a nonfrivolous argument for the extension, modification, or reversal of existing law or the establishment of new law." Many state courts have similar requirements. See generally Note, "Computerized Research in the Legal Arena: Developing a Standard of Research Sufficiency in Legal Malpractice and Rule 11 Actions," 39 Wayne L. Rev. 1683 (1993).

There can be no doubt that, ready or not, lawyers now practice in an electronic world. When the right case comes along, a court undoubtedly will hold that a lawyer had a duty to use electronic research in a particular situation. Giving careful thought now to these facts and their implications in view of our ethical and legal duties to our clients will prepare us for the developing frontiers of professional responsibility in cyberspace.

sunEthics is produced by Tim Chinaris, and hosted by Faulkner University's Jones School of Law.  Please read our disclaimers.  Search our site, or view previously posted summaries using our SUBJECT INDEX.  © 2008