Legal Ethics Forum

Lubet on Honesty

Steve Lubet is always worth reading, so I am looking forward to reading his new book The Importance of Being Honest. I'll post a few comments when I have.

DM

Bombs Don't Kill People, Lawyers For Bombers Kill People

Or so, it seems, the Wall Street Journal opines today.  Apparently Abdullah Salih Al Ajmi, who blew himself up in order to murder others, had been detained at Guantanamo Bay.  A Kuwaiti, Al Ajmi had been represented by Shearman & Sterling, which a group of Kuwaiti families retained to represent the Kuwaitis at Guantanamo Bay. 

The Journal seems annoyed that fancy lawyers, part of its readership and economic target market, are willing to represent detainees.  Its annoyance impairs its logic, and leads it to insult, no doubt unintentionally, the military officials it wants to defend.

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Immigration Court Ethics

Judge Posner recently issued a scathing critique of the immigration court system.  He criticized the competence of immigration judges and lamented the dearth of qualified lawyers to handle immigration matters.

For more on these issues, you might want to take a look at this new article by Professor Michele Benedetto on the immigration court system.  It is entitled, "Crisis on the Immigration Bench: An Ethical Perspective."  Here's the abstract:

The troubled status of the immigration court system has garnered much attention from scholars, appellate judges, and even the United States Attorney General. This article suggests a new lens through which to examine the acknowledged crisis in immigration courts: judicial ethics. Because the term judicial ethics encompasses a broad array of principles, the article narrows its focus to bias and incompetence on the part of immigration judges in the courtroom.

Immigration judges operate as a unique judiciary under the Executive Branch of government. An examination of the modern immigration court system, including inadequate disciplinary procedures for immigration judges, reveals that the existing structural crisis has substantial implications for judicial ethics. Evidence of biased and incompetent judicial conduct has been found in statistics showing inconsistent decisions and cases reviewed by circuit courts. Recognizing the breadth and severity of the problem, the Attorney General proposed new ethical Codes of Conduct for immigration judges in June 2007. However, the proposed Codes are weakened by their lack of specificity and enforceability. Accordingly, the article recommends reforms designed to encourage unbiased and competent judicial behavior. Implementation of these reforms will initiate the process of restoring the ethical integrity of the immigration bench.

David Luban's Testimony on the "Torture Memos"

Professor David Luban testified yesterday before the House Judiciary Committee.  You can find his testimony here.

Wrongful Termination and Confidentiality

The San Diego County Bar Association Legal Ethics Committee has posted opinion 2008-01, which discusses what a terminated in-house lawyer may disclose in connection with a wrongful termination claim against a former employer.

New York Times Article on Confidentiality Exceptions

Adam Liptak of the Times has a nice overview of the issues that we have discussed here, here, and here.

Unethical Obedience By Subordinate Attorneys: Lessons from Social Psychology

This article, which I just posted on SSRN, describes in more detail some of the ideas contained in this op-ed.  Here's the abstract:

This Article explores the lessons that we can learn from social psychology regarding a lawyer's willingness to comply with authority figures, such as senior partners or deep-pocketed clients, when they make unlawful or unethical demands. The Article reviews some of the basic literature in social psychology regarding conformity and obedience, much of which emphasizes the importance of context as a primary factor in predicting people's behavior. The Article then contends that lawyers frequently find themselves in the kinds of contexts that produce high levels of conformity and obedience and low levels of resistance to illegal or unethical instructions. The result is that subordinate lawyers will find it difficult to resist a superior's commands in circumstances that should produce forceful dissent. Finally, the Article proposes several changes to existing law in light of these insights, including giving lawyers the benefit of whistleblower protection, strengthening a lawyer's duty to report the misconduct of other lawyers, and enhancing a subordinate lawyer's responsibilities upon receiving arguably unethical instructions from a superiors.

I'd welcome feedback, especially in advance of this month's National Conference on Professional Responsibility, where I'll be presenting a portion of the article.

John Yoo's Torture Memos: Lessons for All of Us

I just published an op-ed in the National Law Journal, where I suggest that John Yoo may have written his torture memos for some of the same reasons that people applied 450 volt electric shocks to a bound older man in Stanley Milgram's famous experiments.  Have a look, and let me know if you agree.

Update: I recently got reprint permission.  Here's the text of the op-ed:

The "Torture Memos": Lessons for all of us

Andrew Perlman / Special to The National Law Journal
May 05, 2008


It is easy to believe that John Yoo wrote his widely discredited "torture memos" because he holds radical views of presidential authority or because he has some unusual moral failing. The reality, however, may be far more ordinary and disturbing: He willfully followed the lead of White House officials who were eager to find a legal justification for torture. The banality of Yoo's compliance shouldn't excuse him in any way, but his mistakes can help us understand why attorneys might offer equally troubling legal advice in much less public settings.

We can draw some valuable insights in this regard from one of the most stunning social psychology experiments ever conducted. More than 40 years ago, Stanley Milgram found that, under the right conditions, an experimenter could successfully order more than 60% of adults to administer what they believed to be painful and dangerous electric shocks to an innocent, bound older man with a heart condition, despite the man's repeated pleas to be let go. In essence, Milgram found that people are surprisingly likely to obey authority figures under certain conditions.

Social psychologists have identified many of the conditions that tend to promote this type of wrongful obedience, including (1) a plausible legitimate reason for the wrongful conduct (Milgram's subjects were told that the experimenters were studying the learning process); (2) positive language to describe the negative behavior (Milgram's subjects were told that the shocks would help the bound person to learn); (3) rules that, on their face, seem benign; (4) the creation of a contractual obligation to help; (5) the assignment of specific roles (Milgram's subjects were "teachers"); (6) the physical separation of the victim from the person carrying out the orders; (7) the proximity of the person issuing the orders to the person following them; (8) the blurring of responsibility for the wrongful conduct; (9) the incremental nature of the requests (Milgram's subjects started shocking the "learner" at a benign 15 volts and increased the shocks by small increments); (10) the social prestige of the setting; and (11) the elimination of dissent (Milgram found that the presence of a dissenter dramatically reduced obedience). For a similar list, see Philip Zimbardo, The Lucifer Effect: Understanding How Good People Turn Evil 273-75 (2007).

Notably, the conditions that produced obedience in Milgram's experiments probably also existed at the Office of Legal Counsel (OLC) when Yoo wrote his infamous memos. The White House gave Yoo a plausible legitimate reason for the wrongful conduct — preventing future terrorist attacks (factor No. 1). Administration officials often referred to "torture" as "enhanced interrogation" (nos. 2 and 3). Yoo probably felt some obligation to help the White House, given the OLC's stated role as adviser to the president and the climate of fear regarding terrorism (No. 4). The lawyering role also insulated Yoo from feeling personally responsible for torture; he was "merely" offering a legal opinion (No. 5). In addition, the detainees were removed from him in time and place, making it easier for him to ignore the consequences of his memos (No. 6).

Yoo had to report directly to top officials at the White House, who were insistent on getting the legal opinions that they wanted (No. 7). Moreover, Yoo could have perceived that he was "simply" giving a legal opinion; he wasn't engaging in torture, nor was he advising as a policy matter that torture should occur (No. 8). And the move toward torture occurred gradually over a period of months, with increasing pressure from top officials to justify "enhanced interrogation" techniques (No. 9). The prestige of the White House (No. 10) would also have contributed to Yoo's willingness to comply, especially given Yoo's relative youth at the time. (He was in his 30s.) Finally, the White House was well-known for quashing dissent on issues of this sort, making it even more difficult for someone to express independent judgment (No. 11).

This op-ed is reprinted from the May, 5, 2008 edition of the National Law Journal © 2008 ALM Properties, Inc. All rights reserved. Further duplication without permission is prohibited

Continue reading "John Yoo's Torture Memos: Lessons for All of Us"

Law Prof Sues Students for Defamation

An ABA article is here. The NYT's coverage, here.  I looked for the complaint, but couldn't find it on the Arkansas judiciary site.

Interesting Twist on File Ownership Issue

Timothy McVeigh's attorney donated his file to the Univerity of Texas at Austin. The file was appraised at $300,000 and he sought a tax deduction. The IRS disallowed it because he didn't own the file.  Jones v. Comm'r of Internal Revenue, 129 T.C. 16 (2007).

On a side note, I presume the file was going to the Ransom Center, which is an amazing place to visit.

Sample Legal Ethics Expert Retainer Letter

A legal ethics listserv recently had some back and forth about retainer letters for legal ethics experts and what should be in them.  During last year's National Conference on Professional Responsibility, there was a great panel on legal ethics experts that included several prominent folks, and one of them (Professor Charles Wolfram) offered a sample retainer letter for people to review.  Professor Wolfram has given me permission to reproduce it here.

"I confess to being a social conservative, but it does not affect my views on cases."

That's a quote from Justice Scalia. 

I'm sure that Justice Scalia believe that his political ideology doesn't affect his decision making, but is this cabining of ideology possible to the extent that he suggests?  Much ink has been spilled on the question of judicial decision making and whether a judge can completely separate her political views from her legal analysis.  Personally, I don't doubt that it's possible in many cases, but I find it hard to believe that Justice Scalia's political conservatism never affects his views on cases.  Does anyone want to take Justice Scalia at his word and argue that Scalia's political ideology never affects his legal opinions?  (For what it's worth, I would be similarly skeptical if Justice Ginsburg said that her political liberalism never affected her views on cases.)

Character and Fitness Testing for Law School Applicants

I frequently get bar admission questions around this time of year. A common one is whether a student’s prior brush with the law will impact her application to the bar. 

Obviously, bar applicants have to report prior convictions and the like.  But I have always been troubled by the idea that law students could get through three years of law school, spend more than $100,000, and then suddenly discover that they can’t get admitted to the bar because of some prior legal trouble.

The reality, I think, is that this would happen in very few cases, because law schools typically ask about previous convictions.  If the past conviction is serious enough, presumably it would keep the student out of law school.  At the very least, the law school should put the student on notice that bar admission might be an issue.

Some states deal with this potential problem by forcing students to go through the character and fitness process while in law school.  But even in these states, students will already have sunk time and treasure into law school before discovering an admission problem.

To address these sorts of problems, I think it would be useful to have a process by which law school applicants could get pre-approved for admission to the bar for any conduct that occurred prior to the application. That is, the prospective law student could pay to go through a preliminary character and fitness process that would reveal whether any past legal trouble will give rise to any concerns from a bar admission perspective. I’m not familiar with character and fitness requirements, though, so perhaps such a procedure for law school applicants (and not simply for law students) already exists in some states. If not, is there any reason not to adopt such a procedure for prospective law school applicants who want to take advantage of it?

60 Minutes Interview of Justice Scalia

You can watch it here.

Galanter and Henderson's "The Elastic Tournament: The Second Transformation of the Big Law Firm"

This article, which will be appearing soon in the Stanford Law Review, sounds fascinating.  And given who the authors are, it's undoubtedly a good one.  Here's the abstract:

In 1991, Galanter and Palay published 'Tournament of Lawyers: The Transformation of the Big Law Firm', which documented the regular and relentless growth of large U.S. law firms. The book advanced several structural and historical factors to explain these patterns, centering on the adoption of the promotion-to-partnership tournament. Systemic changes in the marketplace for corporate legal services in the intervening years suggest the need for an updated account of the modern large law firm.

Using 'Tournament of Lawyers' as a starting point, we propose to fill this void in the literature. Marching through a wide array of empirical evidence covering the last twenty to thirty years, our findings corroborate some of the core theoretical insights of 'Tournament of Lawyers'. For example, the continuous upward growth of the partnership based on the tournament is clearly evidenced by a 'smooth' upward trajectory in the partnership ranks while associate hiring hews more closely to the underlying business cycle. On the other hand, the widening ranks of permanent 'off track' attorneys and non-equity partners, including the prevalence of de-equitizations, suggest the emergence of a more complex and elongated tournament structure that applies to both partners and associates.

Under a new model, which we dub the 'elastic tournament,' the equity core is primarily reserved for partners who control access to key clients. This structure reduces cross-subsidies between lawyers with differential value to the firm, thus reducing the potential for large-scale lateral defections. Yet, this reduced sharing of risks and benefits simultaneously creates an environment in which it becomes more costly - at the individual lawyer level - to faithfully adhere to professional and ethics principles that are in tension with client objectives. Arguably, these dynamics have made zealous advocacy the touchstone of ethical lawyering. The diminution in sharing also reduces the time horizons of individual lawyers and decreases their willingness to invest in firmwide initiatives that do not simultaneously optimize their own practice. Amidst this widening collective action problem, the 'firm' itself has remarkably little autonomy to pursue non-economic objectives, such as racial and gender diversity (particularly efforts directed at retention) or the training and mentoring of the next generation of lawyers. Further, except in some exceptional cases, the influence of firm culture, which may have moderated lawyer self-interest in an earlier era, is weakened by the sheer size and geographic dispersion of the modern big law firm.

Although this model is fundamentally 'stable' in the economic sense, it raises several philosophical and practical issues regarding lawyer independence and the long-term viability of professional self-regulation.

New Trial for Alton Logan

For followers of the Alton Logan story (here and here), a judge has ordered that Mr. Logan receive a new trial.

The Ongoing Push for Screening

    Screening is a fraud on the public and makes a monkey of the idea that law is a profession and that lawyers are their clients’ fiduciaries.
    In order to understand the problems raised by screening, consider a typical case.  Attorney is with firm A&B and is heavily involved in representing Plaintiff.  In the middle of the litigation, Attorney switches to firm Y&Z, which is representing Defendant in the same case.  The traditional rule of ethics has been that both Attorney and firm Y&Z are disqualified from representing Defendant in that case.  The rule relies on presumptions that are based upon common sense and the practicalities of proof.
    The first presumption is that Attorney learned confidences from Plaintiff while serving as its lawyer.  This presumption is justified in part by Attorney's ethical obligation to learn everything that might be relevant to Plaintiff's case.  Moreover, the presumption that Attorney learned confidences from Plaintiff avoids making Plaintiff reveal its confidences in order to protect them.
    The second presumption is that Attorney, having switched sides, might use Plaintiff's confidences on behalf of Defendant.  This presumption is based in part on the fact that Attorney, if he were permitted to represent Defendant, would be ethically required to be loyal to Defendant, to act zealously on its behalf, and to communicate to Defendant all information material to the representation.  Thus, the traditional rule of disqualification recognizes that Plaintiff could reasonably believe that its confidences were being betrayed, and the rule respects this legitimate client concern.
    The imputed disqualification of firm Y&Z is also based upon common sense and practicalities of proof.  Even if Attorney is not personally representing Defendant at his new firm, there is a reasonable possibility that Attorney, having switched allegiances, might disclose Plaintiff's confidences to his new partners.  As observed in the Harvard Law Review, Attorney's new colleagues have a "significant incentive" to elicit the confidences, and Attorney has a similar incentive to prove his allegiance to his new firm by cooperating.  Thus, there is a "distinctive danger" that Attorney will reveal Plaintiff's confidences to Defendant's lawyers.  Moreover, such violations would be virtually impossible to police.  It is extremely unlikely that Plaintiff would ever be able to discover and prove a brief conversation in someone's office, or during a private dinner, or in a phone call to Attorney's home.
    In short, the traditional presumption underlying disqualification in such cases is based upon a high level of temptation, a low level of visibility, and a near-impossible burden if Plaintiff were required to prove a specific breach of its confidences.
    Of course, Plaintiff might consent to Attorney's representation of Defendant, or might consent to Y&Z's continued representation of Defendant with the understanding that Attorney would not be involved in that representation.  Plaintiff might be willing to consent, for example, in order to avoid delaying the case.  And if Plaintiff does consent, there is no need for disqualification.  But what if Plaintiff, understandably, refuses to consent?  The traditional answer is that the firm is disqualified.
    Allowing Y&Z to erect a screen would defeat that result.  That is, the lawyers at Y&Z would write to Plaintiff saying that Attorney will not work on the case or talk about it with the lawyers who represent Defendant.  Nothing else would change.  The temptations to violate Plaintiff's confidences would be just as high, violations would still be virtually impossible to police, and Plaintiff would still be under an impractical burden to uncover and to prove a violation.
    Supporters of screening contend that objections to screening reflect skepticism, even cynicism, about lawyers' ethics.  That may be.  There is, sad to say, some skepticism in that regard among members of the public.  Indeed, a major purpose of the conflict of interest rules is to allay that skepticism, and an unpoliceable assurance of screening by a law firm is not likely to achieve that goal.  As noted in a recent federal case:

        In an age of sagging public confidence in our legal system, maintaining confidence in that system and in the legal profession is of the utmost importance.  In this regard, courts should be reluctant to sacrifice the interests of clients and former clients for the perceived business interests of lawyers.

    Another contention by supporters of screening is that violations of screening have not been reported in those few jurisdictions that permit it, or in cases of former government lawyers.  But, again, a major part of the problem is that violations of screening are so unlikely to be revealed.  We cannot really expect lawyers to admit that they were subject to screening but nevertheless violated client confidences.
    Nevertheless, such cases have on occasion come to light.  In one case, a client, Maritrans, learned that the law firm that had been representing it in labor negotiations, Pepper, Hamilton & Scheetz, had begun to represent four of its competitors.  Pepper, Hamilton & Scheetz is an old and reputable Philadelphia firm.  The law firm had obtained highly sensitive client information from Maritrans that would be extremely valuable to its competitors.  When Maritrans objected to the law firm’s representation of its competitors, the law firm proposed that the lawyers in the firm who represented Maritrans would be screened off from those who were representing the competitors; the law firm also proposed that it would limit its representation of Maritrans’ competitors to the four companies that the firm already represented.  Maritrans agreed to this proposal primarily because it did not want the law firm to represent any additional competitors, and especially not Bouchard.
    The law firm then broke its word in two ways.  First, it violated the screen by passing information from the lawyers who represented Maritrans to the lawyers representing the competitors.  Second, the law firm “parked” Bouchard and a sixth competitor with another labor lawyer.  The other lawyer was then working at a different law firm, but was negotiating to join Pepper, Hamilton & Scheetz, and soon after, he did so, bringing Bouchard and the other competitor with him.  In the meantime, Pepper, Hamilton “for all intents and purposes, was representing Bouchard” as well as the five other competitors.
    The law firm’s scheme in the Maritrans case came to light because of two unusual circumstances.  First, three months after Pepper, Hamilton & Scheetz promised Maritrans that it would not represent Bouchard, the law firm terminated its representation of Maritrans.  Second, the lawyer with whom Bouchard had been parked joined Pepper, Hamilton, and he brought Bouchard with him as a client.  These facts alerted Maritrans and led to a law suit against Pepper, Hamilton & Scheetz, in which discovery uncovered the law firm’s deceitful conduct.
    Another case, with an issue analogous to screening, provides additional compelling evidence that assurances of confidentiality–again, at a large, prestigious law firm--are less than reliable.
    Procter & Gamble sued Bankers Trust Company, alleging in an amended complaint that Bankers Trust is a racketeer-controlled organization.  The court issued a protective order, sealing the amended complaint, in order to protect Bankers Trust’s reputation while the matter was being adjudicated.  Bankers Trust was represented by Sullivan & Cromwell.  The law firm is more than a century old and widely respected.  Sullivan & Cromwell has strict rules and established procedures about safeguarding confidential documents.  Nevertheless, when a Business Week reporter, Linda Himelstein, telephoned a Sullivan & Cromwell partner and asked for a copy of the sealed complaint, he sent it to her by messenger the same day.
    The partner is Steven Holley.  He had not worked on the Bankers Trust case, and he did not know that the amended complaint was under seal.  In response to Himelstein's request, Holley simply asked an associate for a copy, and the associate gave it to him, without asking why Holley wanted it and without telling him about the court's order sealing it.  The amended complaint was not kept in a secure place, nor was the copy stamped on its face that it was under seal.  Nor did Holley follow Sullivan & Cromwell policy by checking first with the partner in charge of the case before giving the complaint to Himelstein.
    It gets even worse.  Himelstein testified that she had learned the following day that the complaint had been sealed and that she immediately called Holley to tell him.  Under oath, Holley several times denied the call (which explained why he had failed for a week thereafter to tell his partners what he had done).  In fact, he testified, at the time Himelstein said she had called him, he had not been at his office, but at home.  Then, on cross-examination, Holley was impeached with telephone records showing a telephone call from Himelstein to his home that day.
    The way Sullivan & Cromwell dealt with a highly sensitive document has to give pause to anyone who considers screening to be an ethical and practical way to avoid conflicts of interest.  But the analogy isn't perfect.  In fact, the case of Sullivan & Cromwell and Bankers Trust is even more compelling than the usual screening case in showing the fallibility of law firms in protecting sensitive documents.  First, Sullivan & Cromwell had requested that the complaint be sealed in order to protect its own client.  Second, Sullivan & Cromwell hadn't simply given assurances to an adversary, it had been ordered by a court to maintain confidentiality; thus, the law firm was subject to contempt of court and to sanctions for releasing the document.  Third, giving the sealed complaint to a reporter was guaranteed to alert the world that there had been a leak somewhere.
    Moreover, the disputed testimony about the telephone call to Holley's home underscores the difficulties of proving a breach of confidentiality.  In the Sullivan & Cromwell case, Himelstein had no incentive to go along with Holley's false denial of their telephone conversation.  In the typical screening case, by contrast, both parties to any conversation about a former client’s confidences will have an incentive to cover it up.
    Another illustration of the unreliability of screens is the case of the New Hampshire Supreme Court.  Judges who are disqualified from participation in a case are not supposed to participate in deciding the matter in any way.  In effect, they are screened from the case.  Ordinarily, we can expect, or hope, that judges will not tolerate violations of screens by their colleagues, if only because there are usually not the same financial incentives as there are in private practice.  Nevertheless, a clerk of court revealed that the chief judge had been allowing colleagues to participate in cases in which they had been disqualified, and even, in one case, to control an important decision.  During an impeachment investigation, the chief judge then lied repeatedly when questioned about the screening violations.
    It appears, therefore, that the skeptics have significant justification for their concerns about the efficacy of screening, and that clients should not be compelled to accept the assurance, “Trust us – we’re lawyers.”  Expressing confidence that the lawyers in a disqualification case would respect a screening arrangement, the Second Circuit nevertheless rejected the scheme, observing:  “However, we cannot impart this same confidence to the public by court order.”

Data about class rank and bar passage

There was interesting news this week at Berkeley. (Follow that link to the Nuts & Boalts website.) In response to a low bar passage rate for the last bar exam, Dean Edley disclosed to 3Ls the bar passage rates by class rank. The top third passed at 100%. The middle third passed at 94%. The bottom third passed at 51%.  Berkeley and Edley should be congratulated for their candor.

Every law school should release that kind of data. They should share it with admittees and all students, so that they can make more intelligent deicisons about classes to take, bar prep, etc. What other information might law schools share with admittees and students?

Bill Henderson & Andrew Morriss put the US News & World rankings in the right context, then provide hard data and common sense

In the past few years, it's been exciting to see the recent empirical work being done on the profession, and it's not surprising that once again Bill Henderson and Andrew Morriss bring us common sense and hard data -- this time about rankings and how to choose law schools.

Metadata Opinion from the New York County Bar

Add this opinion to the growing list of bar opinions on whether a lawyer can look at the metadata contained in an adversary's electronic documents.  In the non-litigation context, the New York County Bar says that the answer should be no, essentially agreeing with the earlier New York State Bar Association opinion on the issue and disagreeing with the more recent ABA opinion.

As I've mentioned before, I think there needs to be a nuanced approach to the subject, and a simple "metadata is off limits" or "you can always look at metadata" approach is too simplistic.  I'm happy that the New York County Bar opinion is explicitly limited to the transactional context, as I think the argument against reviewing metadata is much stronger in that arena.

"Federal Ethics Law" Grows

Long ago in Texas, the federal courts applied the Texas Rules in deciding disqualification motions; then, two disqualification motions were filed in Texas federal courts which resulted in two opinions from the Fifth Circuit holding that "federal law" -- not state disciplinary rules -- control disqualification motions in federal court. That holds true even if, as was the case, the local rules of the district court specifically adopt the Texas Rules as the rules governing ethics. I've always wondered why it is that whether something is ethical, or not, depends on whether a federal court has subject matter jurisdiction, but that has not stopped this body of law from growing, with the latest case to be In re Kennedy, 2008 WL 1052039 (Bankr. D. Neb. Apr. 8, 2008) (case wasn't posted to the court's website, yet)

This funky choice of law issue creates some amazingly complex problems in Texas practice, since sometimes there is no discernable "federal law" on an ethics issue, and, compounding things, the Texas Rules often differ from the Model Rules and Restatement, which are sometimes viewed by Texas federal court as stating the "national standard" that is "federal law."  What do you do if the case is about to be filed, but in state court, but is removable, for example?

To tie it to another thread here, I know that sometimes California's federal courts follow California rules, while sometimes they don't!

Dear Rules Revision Commission: Conflict Waivers

Richard Zitrin's comment on proposed CA Rule 1.7 prompts me to float an idea for revising the rule to adopt more of a presumptive safe harbor approach.  It entails spelling out in some detail what has to be disclosed, in return for a presumption that consent is valid. 

I generally prefer standards to rules, so this is a departure for me, but it seems that sophisticated firms are already doing pretty much what I suggest (see Heller's letters in Zador and Visa/First Data) and lawyers who don't write many waiver letters could use some guidance.  I have some concern that the existing comments may tempt lawyers unfamiliar with waivers to believe that open-ended waivers are easier to get and uphold than is likely to be the case. 

The proposal leaves open the possibility of "open-ended" future waivers, which for me is entailed by the economic structure of fiduciary duties, but makes them hard to do.

Perhaps a vaguer, standards-based approach is better, but this approach seems worth discussing. Proposal below the line; comments welcome

Continue reading "Dear Rules Revision Commission: Conflict Waivers"