"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!

Comments

[Monroe Freedman]

There is a good reason for a federal (or any court) to apply different standards in disqualification cases than are applied in state disciplinary proceedings relating to conflicts of interest.

There are four importantly different contexts in which conflict-of-interest issues arise. Because these contexts involve different policies and results, different standards are applied in each.

One context is professional discipline, which determines whether the lawyer has demonstrated unfitness to practice law, thereby posing a threat to members of the public. In that context, it is not important whether there has in fact been harm to a particular client.

In malpractice, by contrast, the issue is whether the lawyer’s lack of skill and care has in fact caused injury to the particular plaintiff. If so, the lawyer will be liable for compensatory damages and, particularly if the lawyer has engaged in a conflict of interest, the lawyer might also have to forfeit fees and pay punitive damages.

A third context is disqualification. There, what the court is concerned with is whether there is a significant risk that a conflict of interest might impair the integrity of the legal proceeding by giving an advantage to one party. If so, there is what the Second Circuit and some other courts have called “trial taint,” and disqualification is justified to maintain the appearance of justice.

The fourth context in which different standards apply is criminal cases. There, courts require what they call an “actual conflict of interest.” This is a misnomer that means (unlike in the civil context) that a criminal defendant will have to show that the conflict of interest has resulted in a substantive violation of the lawyer’s professional responsibility, thereby causing serious prejudice. What this comes down to is a harmless error rule in criminal cases. Ironically, therefore, the solicitude that courts show regarding conflicts of interest in civil cases does not apply in criminal cases.

[David Hricik]

Interesting - I don't know much about criminal ethics, but that doesn't surprise me.

Related thoughts: Ever since I served on the Texas Disciplinary Rules Committee, I always found it odd that DR's had any impact outside discipline. There's a corrosive effect that I saw: e.g., because we knew that the DR's we were writing would be applied in civil DQ matters, we'd argue about what the DISCIPLINARY rule should be in light of that fact. This seemed to then cause the disciplinary standard to be different because of what the rule ought to be in the DQ context, even though the preamble to the rules said they werent' for DQ...

Sigh.