sunEthics

“MJP, the ABA, and Recent Developments in Florida Ethics”

Florida Bar Out-of-State Practitioners Division

New York, New York

December 13, 2003

  by Timothy P. Chinaris

I.                    Topics covered

A.                 Some recent rule changes to Florida’s Rules of Professional Conduct (“RPC”) and other rules affect lawyers’ ethical obligations

B.                 Some possible future rule changes may impact Florida Bar member

C.                 Some cases and ethics opinions promulgated over the past year or so give guidance and, in some situations, warnings for lawyers as they face ethical decisions 

II.                 The Future is Now:  Recent Rule Changes

A.                 Changes to the Florida Rules of Professional Conduct

1.                  New Rule 4-1.8(j), “Statement of Insured Clients Rights”

a.                   Applies when lawyer is paid by insurer to “undertake[] the defense of an insured other than a governmental entity . . . in regard to an action or claim for personal injury or for property damages . . . based upon tortious conduct” 

b.                  Does it apply when hired by insurer to defend employment discrimination claim against insured?  See Florida Bar Professional Ethics Committee Opinion 02-7.

c.                   Lawyer and client must sign statement; lawyer must keep copy for 6 years

2.                  New Rule 4-1.7(e), Conflict of Interest in Insurance Representations

a.                   First time a conflict rule specifically addresses insurance defense situations

b.                  Unlike “Statement of Insured Clients Rights,” this rule applies to any situation where lawyer is paid by insurer to represent insured 

c.                   Imposes 2 requirements:  (1) lawyer has “a duty to ascertain whether the lawyer will be representing both the insurer and the insured as clients, or only the insured;” and (2) lawyer must “inform both the insured and the insurer regarding the scope of the representation”

d.                  Principle is simple:  lawyer should make sure his or her role is clear to those involved

e.                   But, is this rule likely to be read as endorsement of Florida as a “dual representation” state?  And, due to unusual language in rule (“duty to ascertain” client identity), is it likely to be read as authority for broader reading of consent provided in insurance contract?

f.                    All disclosures under this rule should be in writing, although a writing is not required

B.                 Changes proposed by “Unbundled Legal Services Committee” and adopted by the Florida Supreme Court (Amendments to the Rules Regulating The Florida Bar and the Family Law Rules of Procedure (Unbundled Legal Services), ___ So.2d ___, 29 Fla.L.Weekly S819 (Fla., No. SC02-2035, 11/13/2003)

1.                  Amending Florida Rule 4-1.2 to more explicitly recognize and approve concept of “limited representation”

2.                  Proposed amendment states that lawyer and client may agree to limit “objectives or scope of the representation if . . . ”

a.                   the limited representation if “reasonable under the circumstances,”

b.                  the client consents “in writing,” and

c.                   the lawyer advises the client “regarding the applicability of the rule prohibiting communication with a represented person”

3.                  NOTE:  Although the Court's opinion focuses on how these rule changes apply in family law matters, they are NOT limited to family law

4.        Regarding how this approach of limited representation squares with traditional notions of a lawyer's ethical duties, the Court stated in its opinion:  "The attorney does not have an ethical obligation to the client on other discrete portions of the litigant's case."

5.        Is a client receiving limited representation considered represented or unrepresented for purposes of Florida Rule 4-4.2?  Proposed rule gives opposing counsel the benefit of the doubt by considered client unrepresented unless opposing counsel “knows” or is given “written notice” of the limited representation and its duration.

4.                  In moving toward limited representation, Florida seems to be in step with national trend.  See, e.g., Lerner v. Laufer, 819 A.2d 471 (N.J.App. 2003).

C.        Changes as a Result of the Sarbanes/Oxley Act of 2002

1.                  Act passed in response to corporate financial scandals; designed to impose new duties on corporate players such as directors, officers, accountants, and attorneys

2.                  Act directs federal agencies like the Securities and Exchanges Commission (“SEC”) to adopt rules of conduct for attorneys who practice before the agency; goal is to make attorney part of the misconduct prevention process

3.                  SEC has adopted some rules, with others pending 

4.                  One rule adopted by SEC (17 C.F.R. Part 205):

a.                   Requires lawyers who represent securities issuers to report “up the corporate ladder” when they have “evidence of a material violation” of SEC regulations – sequence is chief legal officer (or both CLO and CEO) then, if unsatisfactory response, full Board or Board audit committee)

b.                  Permits (but does not require) disclosure of confidential information to prevent or rectify substantial financial injury to others caused by corporate client’s violation

5.                  Another pending rule, regarding “noisy withdrawal,” would go further and require lawyer who withdraws from representation due to corporation’s failure to respond to lawyer’s advice to disclose client confidences outside of the corporation in order to prevent or rectify harm in which lawyer’s services was involved

6.                  What does a lawyer do if, for example, the SEC rules clash with his or her ethical obligations under the state’s Rules of Professional Conduct?  See Washington State Bar Association Interim Formal Ethics Opinion (approved July 26, 2003).

D.        Changes to the ABA Model Rules of Professional Conduct

1.                  House of Delegates on August 12, 2003, approved changes to 2 key rules in apparent response to pressure applied by Sarbanes/Oxley Act:  1.6, client confidentiality; and 1.13, organization as client

2.                  Amended ABA Model Rule 1.6 contains 2 new exceptions to the duty of confidentiality:

a.                   Lawyer may (but is not required to) disclose confidential information to prevent “client from committing a crime or fraud that is reasonably certain to result in substantial injury to the financial interests or property of another and in furtherance of which the client has used or is using the lawyer’s services”

b.                  Lawyer may (but is not required to) disclose confidential information to “prevent, mitigate or rectify substantial injury to the financial interests or property of another” that has resulted from the client’s use of the lawyer’s services in committing a crime or fraud

c.                   A number of states already have versions of 1.6 that permit, or even require, some or all of these disclosures.  For example, Florida Rule 4-1.6 requires lawyers to disclose confidential information “to prevent a client from committing a crime”

3.                  Amended ABA Model Rule 1.13 now requires a lawyer to go “up the corporate ladder” to protect the interests of an organizational client and permits a lawyer to disclose confidential information outside of the corporation “only if and to the extent the lawyer reasonably believes necessary to prevent substantial injury to the organization” 

4.                  How does this affect Florida attorneys? 

III.               The Crystal Ball, Part I:  Pending Rule Change Proposals

A.                  Proposed changes to Rule 4-1.5, concerning fees and costs

1.                  Would add requirement that “costs” be “reasonable” and list factors to be used in making this determination

2.                  Pro-lawyer safe harbor provision creates favorable presumption – if there is a written attorney-client contract setting out method for charging costs, “the costs charged thereunder shall be presumed reasonable”

B.                 Proposed changes to lawyer advertising rules

1.                  Effects will make it easier for lawyer to advertise, especially on television

2.                  Under present rule, all illustrations in ads must be “objectively relevant to the selection of a lawyer” – that requirement would be eliminated

3.                  Under present rule, visuals in TV ads are limited to the advertising lawyer in front of bland backdrop or in office – that requirement would be eliminated

C.                 Updates on the status of these pending rule changes are available via the comprehensive legal ethics web site, sunEthics.com

IV.              The Crystal Ball, Part II:  Rule Changes in the Planning Stages

A.                 MJP (multijurisdictional practice)

1.                  Florida Bar Commission on MJP published a report that includes proposed rule changes, the Florida Bar Board of Governors has approved the report and the proposed rule changes – approval from the Supreme Court of Florida will be sought in early 2004

2.                  Commission recommendations are similar to, but not as expansive as, the actions taken by the ABA

3.                  Proposed changes would allow non-Florida lawyers (who are licensed in another state in the USA) to perform legal services in Florida on a temporary basis under certain conditions:

a.                   In association with a Florida lawyer

b.                  Relating to a pending or contemplated proceeding in which the non-Florida lawyer is or is expected to be admitted pro hac vice (unlike ABA rule, this exception would only to the individual lawyer and would not extend to others in his or her firm) – and only 3 such pro hac vice admissions would be permitted per year

c.                   In connection with mediation, arbitration, or other ADR proceeding, if client resides in state where lawyer is licensed or services are “reasonably related” to lawyer’s practice in jurisdiction where licensed

d.                  For transactional work, if  client resides in state where lawyer is licensed or services are “reasonably related” to lawyer’s practice in jurisdiction where licensed

4.                  Disciplinary rules would be changed to expressly make non-Florida attorneys who take advantage of the new MJP provisions subject to disciplinary action by the Florida Supreme Court

5.                 Initially, the Commission chose not to follow the ABA’s lead in 2 notable areas:

a.                   Rejection of ABA’s call for adoption of its “Model Rule for Admission on Motion”

b.                  Rejection of ABA’s call for adoption of its “Model Rule for Temporary Practice by Foreign [i.e., out-of-country] Lawyers” in favor of retaining Florida’s existing Foreign Legal Consultancy Rule, which contemplates a more permanent presence – after vigorous objections from several quarter, tthis recommendation was reviewed

6.        Proposed changes would allow non-Florida lawyers (who are licensed only in another country, not another state) to perform legal services in Florida on a temporary basis under certain conditions:

a.                 Basically the same conditions that apply to out-of-state lawyers, PLUS

b.        Services in Florida that are governed "primarily by international law or the law of a non-United States jurisdiction in which" the lawyer is licensed to practice law

B.                 E2K (“Ethics 2000”)

1.                  In 2002 the ABA Model Rules of Professional Conduct were significantly revised as a result of study by the ABA Ethics 2000 commission

2.                  Florida has a committee reviewing these changes and preparing recommendations to the Board of Governors

3.                  Some likely recommendations to the Board of Governors will include these changes to the rules:

a.                   No provisions allowing “screening” to avoid conflicts in private firms

b.                  Relaxation of the rule that imputes one lawyer’s purely “personal interest” conflict to other lawyers in the same firm 

c.                   Making it a disciplinary offense for a lawyer to fail to “promptly notify the sender” upon receiving a document that was not intended for that lawyer

4.                  For the progress of these possible rule changes, and opportunities for Bar member input on them, watch sunethics.com

V.                 Recent Ethical Developments:   Cases and Ethics Opinions of Interest

A.                 Client Identity

1.                  Many ethics problems can be traced to lawyer’s failure to have clear understanding of who the client is and is not

2.                  Often arises in the business law context (e.g., forming corporations for individuals; representing unincorporated associations; representing partnerships; representing affiliates of client corporations; representing government agencies)

3.                  Florida Rule 4-1.13 expresses underlying principle that a lawyer who represents an organization thereby represents the entity, not its individual constituents (e.g., directors, officers, employees, shareholders)

4.                  Comment to Florida Rule 4-1.13 addresses issue of affiliated corporations, specifying that a lawyer or law firm who represents an organization “ordinarily is not presumed to also represent, solely by virtue of representing or having represented the client, an organization (such as a corporate parent or subsidiary) that is affiliated with the client”

5.                  The above principles apply to partnerships, Chaiken v. Lewis, 754 So.2d 118 (Fla. 3d DCA 2000)

6.                  But beware – in the litigation context, a lawyer who files a pleading on behalf of someone represents that person, JLF Enterprises, Inc. v. Malinski, 800 So.2d 334 (Fla. 3d DCA 2001)

7.                  A interesting ethics opinion from Arizona specifically permits a lawyer, with appropriate disclose and consent, to form an entity for several individuals and to be deemed to represent only the entity, Arizona Ethics Opinion 02-06

B.                 Communication

1.                  Is Florida Rule 4-4.2 violated when one lawyer meets with another lawyer’s client for purposes of giving a “second opinion” or discussing changing lawyers?  See Florida Bar Professional Ethics Committee Opinion 02‑5.

2.                  Regarding contact with current employees of represented corporations, see Comment to Rule 4-4.2 (“persons having a managerial responsibility on behalf of the organization and with any other person whose act or omission in connection with that matter may be imputed to the organization for purposes of civil or criminal liability or whose statement may constitute an admission on the part of the organization”)

3.                  Contact with former employees of represented corporations is generally permissible.  See H.B.A. Management, Inc. v. Estate of Schwartz, 693 So.2d 541 (Fla. 1997).

4.                  If a lawyer violates Rule 4-4.2, is disqualification the likely sanction?  See Allstate Insurance Co. v. Bowne, 817 So.2d 994 (Fla. 4^th DCA 2002).

5.                  Communication with a party’s treating physician is barred by Fla.Stat. sec. 455.667(5) [now numbered as Fla.Stat. sec. 456.057].  See Bradley v. Brotman, 836 So.2d 1129 (Fla. 4^th DCA 2003).

6.                  Judges have duties to refrain from ex parte contacts with parties or others.  See Florida Code of Judicial Conduct Canon 3.B.(7); Randolph v. State, ___ So.2d ___, 28 FLW (S)360 (Fla. 2003); In re Baker, 813 So.2d 36 (Fla. 2002).

7.                  The duty of communication with clients (see Florida Rule 4-1.4) can also create concerns for lawyers.  See The Florida Bar v. Batista, 846 So.2d 479 (Fla. 2003).

C.                 Conflicts of Interest

1.                  “Hot potato doctrine” does not permit lawyer to drop one current client for another in order to avoid a conflict problem.  See generally, Florida Ins. Guaranty Ass'n Inc. v. Carey Canada Inc., 749 F.Supp. 255 (S.D.Fla. 1990).   But client consent can resolve this problem; see, e.g., Legion Ins. Co. v. Bank of America, N.A., 807 So.2d 690 (Fla. 2d DCA 2002).

2.                  Trend in Florida disqualification cases if to focus on whether the alleged misconduct has resulted in an “unfair informational advantage.”

a.                   See, e.g., Tobkin v. Tobkin, 843 So.2d 961 (Fla. 4^th DCA 2003);  Billings v. Martinez, 821 So.2d 1161 (Fla. 4^th DCA 2002); Cunningham v. Appel, 831 So.2d 214 (Fla. 5^th DCA 2002).

b.                  Regarding more lenient rules that govern when lawyers move between firms, see Scott v. Higginbotham, 834 So.2d 221 (Fla. 2d DCA 2002).

3.                  Screening in private firms is not a viable defense under Florida Rules of Professional Conduct to avoid a conflict problem from being imputed to all lawyers within a law firm.  See Matluck v. Matluck, 825 So.2d 1071 (Fla. 4^th DCA 2002) (screening could not prevent firm’s disqualification because mediator/lawyer had confidential information concerning the case at issue).  See also Edward J. DeBartolo Corp. v. Petrin, 516 So.2d 6 (Fla. 5th DCA 1987).

4.                  Florida Rule 4-3.7 concerns the specific issue of a lawyer being disqualified from representation due to the lawyer’s role as a witness in the matter.  In order to disqualify another lawyer on this basis, the movant must introduce evidence of the lawyer’s necessity as a witness.  Hiatt v. Estate of Hiatt, 837 So.2d 1132 (Fla. 4^th DCA 2003).  A disqualification under Rule 4-3.7 does not necessarily extend to pre-trial matters.  See, e.g.,  Graves v. Lapi, 834 So.2d 359 (Fla. 4^th DCA 2003).

5.                  Note:  cross-examining a client is considered “adversity” for conflicts purposes.  See Valdez v. State, 847 So.2d 602 (Fla. 5^th DCA 2003).

6.                  A very recent trend:  courts are concerned about the potential conflict between attorney and client created by the sanctions provision of Fla.Stat. sec. 57.105.  See Kerzner v. Lerman, ___ So.2d ___, 28 Fla.L.Weekly D1707 (Fla. 4th DCA 2003); Mullins v. Kennelly, 847 So.2d 1151 (Fla. 5th DCA 2003).

D.                 Confidentiality and Privilege

1.                  When one 50% shareholder sued the corporation and filed a derivative action against the other 50% shareholder, the corporation asserted attorney-client privilege and declined to produce some requested corporate emails.  Both the trial court and the Fourth DCA rejected privilege claim.  The Omega Consulting Group, Inc. v. Templeton, 805 So.2d 1058 (Fla. 4^th DCA 2002).

2.                  There are situations in which privilege can be asserted by an insured to prevent the insurer from obtaining certain communications between the insured and a lawyer hired by the insurer to represent the insured.  Springer v. United Services Automobile Ass’n, 846 So.2d 1234 (Fla. 5th DCA 2003).

3.                  A party’s failure to comply with Fla.R.Civ.P. by withholding documents without filing a privilege log waived attorney-client and work product privileges.  General Motors Corp. v. McGee, 837 So.2d 1010 (Fla. 4^th DCA 2002).

E.                  Fees

1.                  Starting off at the beginning – a lawyer was disciplined for, inter alia, charging clearly excessive fee that included a $500 “administrative” file-opening fee, The Florida Bar v. Carlon, 820 So.2d 891 (Fla. 2002)

2.                  Using a disqualification motion as a litigation tactic can backfire.  See Freedom Commerce Centre Venture v. Ranson, 823 So.2d 817 (Fla. 1^st DCA 2002) (fees assessed against him under Fla.Stat. sec. 57.105).

3.                  Trial courts have inherent authority to impose attorneys’ fees against an a lawyer for bad faith conduct.  Moakley v. Smallwood, 826 So.2d 221 (Fla. 2002).

4.                  Continent fees

a.                   WHAT is a “contingent fee”?  See, e.g., Seminole County v. Chandrinos, 816 So.2d 1241 (Fla. 5^th DCA 2002) (fee is contingent “if the obligation to pay depends on a particular result being obtained”).  A fee is not rendered “contingent” simply because the lawyer expects to have difficulty collecting from the client.  Superior Ins. Co. v. Cordle, ___ So.2d ___, 28 Fla.L.Weekly D1488 (Fla. 1st  2003).

b.                  Lawyer is not entitled to a fee when he or she withdraws from a contingent case because of a “problem client.”  Steven J. Kirschner, P.A. v. Biritz, 843 So.2d 349 (Fla. 5th DCA 2003).

5.                  Charging liens

a.                   Requirements are:  (1) express or implied contract between lawyer and client; (2) express or implied  understanding that lawyer’s fee would be paid from recovery in case; (3) attempt to avoid paying the fees; and (4) timely notice of assertion of charging lien.  See, e.g.,  Sinclair, Louis, Siegel, Heath, Nussbaum & Zavertnik, P.A. v. Baucom, 428 So.2d 1383 (Fla.1983).

b.                  The key often is giving timely notice.  See, e.g., Gordon C. Brydger, P.A. v. Wolfe, 847 So.2d 1074 (Fla. 4^th DCA 2003).  The charging lien should be filed before entry of final judgment.  Weiland v. Weiland, 814 So.2d 1252 (Fla. 2d DCA 2002).

6.                  Retaining liens

a.                   A possessory, passive lien.  See Daniel Mones, P.A. v. Smith, 486 So.2d 559 (Fla. 1986).

b.                  Suing client for fees can be considered an abandonment of the retaining lien.  Michael J. Fingar, P.A. v. Braun and May Realty, Inc., 807 So.2d 202 (Fla. 4^th DCA 2002).

F.                  The Florida Bar Grievance System

1.                  “It’ll go easier on you if you cooperate”

a.                   Lawyer’s failure to timely respond to Bar’s inquiry netted one-year suspension.  The Florida Bar v. Bryant, 813 So.2d 38 (Fla. 2002).

b.                  Cooperating with disciplinary authorities is smiled upon by the Supreme Court.  See The Florida Bar v. Hochman, 815 So.2d 624 (Fla. 2002).

2.                  “Don’t try to cover it up”

a.                   Agreement with client not to file Bar complaint is unenforeable and can result in greater discipline being imposed.  See The Florida Bar v. Arcia, 848 So.2d 296 (Fla. 2003).

b.                  In real estate deal where lawyer represents seller and holds escrow deposit, conflict rules are violated if lawyer requires client to sign agreement indemnifying lawyer from suit by buyer before releasing escrow funds to client/seller.  Florida Bar Professional Ethics Committee Advisory Opinion 02-6. 

3.                  Lawyers practicing in law firms owe duties to clients, but also owe duties to their firms.  See The Florida Bar v. Arcia, 848 So.2d 296 (Fla. 2003) (lawyer who “moonlighted” in violation of employment agreement and thereby diverted funds from firm suspended for 3 years).  

4.                  Noteworthy unlicensed practice of law developments included:  

a.                   UPL for out-of-state lawyer not licensed in Florida to regularly represent parties in securities arbitrations in Florida.  The Florida Bar v. Rapoport, 845 So.2d 874 (Fla. 2003).  

b.                  A “paralegal” who actually was conducting settlement negotiations was engaging in UPL.  The Florida Bar v. Neiman, 816 So.2d 587 (Fla. 2002).  

5.                  Finally, the Supreme Court emphasized that it is improper to pay a fact witness, regardless of whether he or she will testify.  The Florida Bar v. Wohl, 842 So.2d 811 (Fla. 2003) (“[P]aying an individual who has personal knowledge of the facts is to pay a witness, whether or not that person is expected to testify.”).  

VI.              Keep abreast of developments in Florida legal ethics, judicial ethics, and bar admissions by regularly visiting sunEthics.com

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