SSM Health Cardinal Glennon Children's Foundation - Ethics Tips … · 2018. 6. 11. · Ethics Tips...
Transcript of SSM Health Cardinal Glennon Children's Foundation - Ethics Tips … · 2018. 6. 11. · Ethics Tips...
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Ethics Tips to Protect your Practice:For the Estate Planning Attorney
Michael DowneyDowney Law Group LLC
June 2018
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Ethics and CompliancePrograms
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Corporate Scandals Are Expensive
• Wells Fargo opening fake accounts – $185M in fines
• Volkswagen emission scandal – $20B in market capitalization
• Martin Shkreli – convicted of two counts of conspiracy . . .
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Military Procurement Fraud
• JP Morgan and civil war rifles – obsolete carbines purchased for $3.50 sold for $22
• 1983-90 – one-quarter of 100 largest DOD contractors guilty of procurement fraud
• 1988-90 – 16 cases involving 14 largest US weapons makers
• Today US DOD spends $100B on weapons and $60B on R&D
Major General Robert Latiff, Ph.D. (retired), “Ethical Issues in Defense System Acquisitions,” Routledge Handbook of Military Ethics (Oxford 2015)
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Federal Sentencing Guidelinesfor Corporations
• Seek to provide just punishment, adequate deterrence, and incentives to maintain internal mechanisms for preventing, detecting and reporting criminal conduct
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Fines under FSGO
• Size of organization
• Involvement of top officials
• Recidivism
• Obstruction of justice
• Mitigating factors
– Implementation of program that detects and prevents ethics violations and demonstrates a good-faith effort to avoid such violations
– Cooperation with investigation
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Basic Requirements – FSGO Ethics and Compliance Programs
• Established compliance standards and procedures that are reasonably capable of reducing criminal conduct
• Specific high-level persons assigned responsibility
• Standards communicated to employees and other agents
• Exercise due care when delegating discretionary authority to individuals who had propensity to engage in illegal conduct
• Established monitoring and audit system – is the corporation complying with its standards, and can auditors change/improve the system?
• Establish (publicized) reporting system – how does entity learn of problems?
• System to enforce standards – with case-specific discipline
• Appropriate response to remedy offense and prevent similar conduct in future
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Ethics and Compliance Programs Encourage Reporting
• Basic program consists of:
– Written standards of conduct
– Ethics training
– Ethics advice line/offices
– System for anonymous reporting
• Employees in entities with all four program elements report misconduct 78 percent of time
– Those in organization with no elements report only 39 percent of the time
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Compliance Strategy
• Tries to prevent unlawful and criminal conduct
• Tries to prevent self-interested employee behavior (conflicts of interest)
• Relies on lawyers and compliance officers
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Integrity Strategy
• Seeks to create conditions to cultivate proper conduct
• Attempts to align ethical interests of employees and organization
• Relies on whole management team, not just compliance personnel
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“Tone at the Top”
• 60 percent of workplace misconduct involves someone with managerial authority – 2013 National Business Ethics Survey of US Workforce
– 25 percent involved senior managers
• 40 percent of employees observed on-the-job misconduct
– 26 percent said it was “on-going” and 12 percent said it was “company wide”
– 63 percent reported it – and 1/5 faced retaliation
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Client-Lawyer Relationship
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Fiduciary Relationship
Principal (Client)
Agent
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Fiduciary Duties Owed to ClientsLoyalty
Confidentiality
Safekeeping PropertyIndependent Judgment
Communication
Candor
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Estate Planning
• Ann and Bill approach Lawyer to establish mutual estate plans
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Who Is the Client?
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Estate Planning
• Ann and Bill approach Lawyer to establish mutual estate plans
• Who is the Client?
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Forming Lawyer-Client Relationship
• Whether “a prospective client seeks and receives legal advice and assistance from an attorney who intends to provide legal advice and assistance to the prospective client”
– “[L]ook to the substantive nature of the contacts within the relationship”
St. Stanislaus (Mo. App. E.D. 2010)
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Confidentiality
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Question about Trust
• You are contacted by Chris requesting information Ann and Bill’s Trust
• What information do you voluntarily disclose
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Lawyer Confidentiality – Missouri Rule 4-1.6(a)
A lawyer shall not reveal information relating to the representation of a client unless the client gives informed consent, the disclosure is impliedly authorized in order to carry out the representation, or the disclosure is permitted by Rule 4-1.6(b).
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“Information relating to the representation of a client . . .” Rule 4-1.6
Client
Court Filings
Real Estate Records
Newspaper
Depositions
Pleadings
Opposing Party
Lawyer
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Lawyer “Use” of Information – Rule 4-1.8(b)
A lawyer shall not use information relating to representation of a client to the disadvantage of the client unless the client gives informed consent, except as permitted or required by these Rules.
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Exceptions in Rule 4-1.6(b)
A lawyer may reveal information relating to the representation of a client to the extent the
lawyer reasonably believes necessary:
(1) to prevent death or substantial bodily harm that is reasonably certain to occur;
(2) to secure legal advice about the lawyer's compliance with these Rules;
(3) to establish a claim or defense on behalf of the lawyer in a controversy between
the lawyer and the client, to establish a defense to a criminal charge or civil claim
against the lawyer based upon conduct in which the client was involved, or to
respond to allegations in any proceeding concerning the lawyer's representation of
the client;
(4) to comply with other law or a court order; or
(5) to detect and resolve conflicts of interest arising from the lawyer's change of
employment or from changes in the composition or ownership of a firm, but only if
the revealed information would not compromise the attorney-client privilege or
otherwise prejudice the client.
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Illinois Wrong-Doing Exceptions
(b) A lawyer may reveal information relating to the representation of a client to the extent the lawyer reasonably believes necessary:
(1) to prevent the client from committing a crime in circumstances other than those specified in paragraph (c);
(2) to prevent the client from committing 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;
(3) to prevent, mitigate or rectify substantial injury to the financial interests or property of another that is reasonably certain to result or has resulted from the client’s commission of a crime or fraud in furtherance of which the client has used the lawyer’s services; . . .
(c) A lawyer shall reveal information relating to the representation of a client to the extent the lawyer reasonably believes necessary to prevent reasonably certain death or substantial bodily harm.
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Protecting Confidences – Missouri PRC 4-1.6(c)
A lawyer shall make reasonable efforts to prevent the inadvertent or unauthorized disclosure of, or unauthorized access to, information relating to the representation of a client.
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What Are "Reasonable" Precautions
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Estate Planning Fee
• Ann and Bill approach Lawyer to establish mutual estate plans
• Ann and Bill agree to pay $1500
• They want to pay by credit card
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Trust Accounting
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Assessment for AFA
Outcome
EffortCertain
Uncertain
Uncertain
Fixed
Risk-Sharing
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Flat Fees in Advance: Missouri Formal Opinion 128 (2010)
• We believe that all flat fees must be deposited into a lawyer trust account and promptly removed when actually earned, similar to prompt removal of earned hourly fees.
• Flat fees could be removed based upon reaching a particular stage of a case or based on some other reasonable criteria, depending on the nature and circumstances of the representation.
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Firm OperatingAccount
TrustAccount
Earned FeesAdvances for fees
(Retainers) and“Other People’s
Money”
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Trust Account Violations
• Misappropriation – stealing money
• Commingling – lawyers money mixed with client's money
• Record-keeping
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Basic Rule on Handling Funds Paid for Legal Services
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WorkPayment Payment
Trust Account
Operating Account
Earned
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Receiving Funds
Method of PaymentActual Receipt of
Funds
Risk of Unilateral Cancelation or
WithdrawalAmount received
Cash Immediate None Amount paid
Check
Minimum of several days and up to two weeks,* presuming no attempt to “stop
payment”
None
(after funds are received)
Amount paid
Credit Card Several daysConsiderable – often
for six months (or more)
Amount paid less fees
Electronic Fund Transfer
Immediate None Amount paid
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Credit Cards• Payments after earned
– Funds to into operating account
– All fees and “charge backs” (canceled payments) come out of operating account
• Payment in advance (before earned)
– Funds go into trust account
– What about fees and “charge backs” (canceled payments)?• Lawyer specific processing: can set to come out of operating
account
• Non-lawyer specific: have to manage another way. My advice: TOO DANGEROUS, DON’T DO IT
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Methods of Disbursement
• Check with named payee
• Electronic transfer to named payee
• Not permitted
– Cash
– Counter checks
– Cash-back transactions from deposits
– ATM card withdrawals
– Debit card transactions
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Sharing Information (and Conflicts of Interest)
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Estate Planning
• Ann and Bill approach Lawyer to prepare an estate plan
• Ann later tells Lawyer she wants to take care of someone not disclosed to Bill
• Does Lawyer need to tell Bill?
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Missouri Rule 4-1.4(a)
A lawyer shall: . . . (3) keep the client reasonably informed about the status of the matter;
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DeBold v. Case (8th Cir. BAP 2005)
“When two or more persons, each having an interest in
some problem, jointly consult an attorney, their
confidential communications with the attorney, though
known to each other, will of course be privileged in a
controversy of either or both of the clients with the
outside world, that is, with parties claiming adversely
to both or either of those within the original charmed
circle.”
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Joint Representation Conflicts: Missouri Rule 4-1.7(a)
Except as provided in paragraph (b), a lawyer shall not represent a client if the representation involves a concurrent conflict of interest. A concurrent conflict of interest exists if:
(1) …
(2) there is a significant risk that the representation of one or more clients will be materially limited by the lawyer's responsibilities to another client, a former client or a third person or by a personal interest of the lawyer.
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Conflict Waiver
• Circumstances
• Risks
– To “zeal”
– To “confidences”
• Alternatives
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Estate Planning
• Ann and Bill approach Lawyer to prepare an estate plan
• Ann later tells Lawyer she wants to take care of someone not disclosed to Bill
• Ann reports Bill has been unfaithful, and provides Bill’s emails
• Does Lawyer need to tell Bill?
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Respecting the Rights of Third Persons: Missouri Rule 4-4.4
(a) In representing a client, a lawyer shall not use means that have no substantial purpose other than to embarrass, delay, or burden a third person, or use methods of obtaining evidence that violate the legal rights of such a person.
(b) A lawyer who receives a document or electronically stored information relating to the representation of the lawyer's client and knows or reasonably should know that the document or electronically stored information was inadvertently sent shall promptly notify the sender.
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How Does Lawyer Deal WithWrong-Doing
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Trustee Misconduct
• Lawyer represents Trustee in administration of trust
• Lawyer believes Trustee has engaged in misconduct
• What can Lawyer tell and to whom?
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Reporting Up (and Out?)
MO Rule 4-1.13(c) If, despite the lawyer's efforts in accordance with Rule 4-1.13(b), the highest authority that can act on behalf of the organization insists upon action, or a refusal to act, that is clearly a violation of law and is likely to result in substantial injury to the organization, the lawyer may resign in accordance with Rule 4-1.16.
Up
Out
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Reporting Up and Out – Illinois
Illinois Rule 1.13(c) Except as provided in paragraph (d), if
(1) despite the lawyer's efforts in accordance with paragraph (b) the highest authority that can act on behalf of the organization insists upon or fails to address in a timely and appropriate manner an action or a refusal to act, that is clearly a crime or fraud, and
(2) the lawyer reasonably believes that the crime or fraud is reasonably certain to result in substantial injury to the organization,
then the lawyer may reveal information relating to the representation whether or not Rule 1.6 permits such disclosure, but only if and to the extent the lawyer reasonably believes necessary to prevent substantial injury to the organization.
Up
Out
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Candor to Tribunal – Rule 4-3.3
(a) A lawyer shall not knowingly:
(1) make a false statement of fact or law to a tribunal or fail to correct a false statement of material fact or law previously made to the tribunal by the lawyer;
(2) fail to disclose to the tribunal legal authority in the controlling jurisdiction known to the lawyer to be directly adverse to the position of the client and not disclosed by opposing counsel; or
(3) offer evidence that the lawyer knows to be false. If a lawyer, the lawyer’s client, or a witness called by the lawyer has offered material evidence and the lawyer comes to know of its falsity, the lawyer shall take reasonable remedial measures, including, if necessary, disclosure to the tribunal. . . .
(b) A lawyer who represents a client in an adjudicative proceeding and who knows that a person intends to engage, is engaging, or has engaged in criminal or fraudulent conduct related to the proceeding shall take reasonable remedial measures, including, if necessary, disclosure to the tribunal.
(c) The duties stated in Rule 4-3.3(a) and (b) continue to the conclusion of the proceeding and apply even if compliance requires disclosure of information otherwise protected by Rule 4-1.6.
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Estate Planning
• Ann and Bill approach Lawyer to establish mutual estate plans
• Ann and Bill later tell Chris that Chris is a beneficiary, but this is false
• Chris calls lawyer to learn truth
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How Do You CommunicateWith Third Parties?
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Candor – Missouri Rule 4-4.1
In the course of representing a client a lawyer shall not knowingly:
(a) make a false statement of material fact or law to a third person; or
(b) fail to disclose a material fact when disclosure is necessary to avoid assisting a criminal or fraudulent act by a client, unless disclosure is prohibited by Rule 4-1.6.
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Unrepresented Persons – Rule 4-4.3
• In dealing on behalf of a client with a person who is not represented by counsel, a lawyer shall not state or imply that the lawyer is disinterested.
• When the lawyer knows or reasonably should know that the unrepresented person misunderstands the lawyer’s role in the matter, the lawyer shall make reasonable efforts to correct the misunderstanding.
• The lawyer shall not give legal advice to an unrepresented person, other than the advice to secure counsel, if the lawyer knows or reasonably should know that the interests of such a person are or have a reasonable possibility of being in conflict with the interests of the client.
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The Entrepreneurs
• Ann and Bill and Great Idea LLC get in a dispute with Chris
• Attorney represents Chris
• Who may negotiate with Chris, without involving Attorney?
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Anti-Contact Rule:Missouri Rule 4-4.2
In representing a client, a lawyer shall not communicate about the subject of the representation with a person the lawyer knows to be represented by another lawyer in the matter, unless the lawyer has the consent of the other lawyer or is authorized to do so by law or a court order.
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Anti-Contact Rule – Rule 4-4.2
• In representing a client,
• a lawyer shall not communicate about the subject of the representation
• with a person the lawyer knows to be represented by another lawyer in the matter,
• unless the lawyer has the consent of the other lawyer or is authorized to do so by law or a court order.
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What Confidences Can You Share With Outsiders?
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Estate Planning
• Ann and Bill approach Lawyer to establish mutual estate plans
• Ann and Bill later tell Chris that Chris is a beneficiary
• Ann and Bill die, and Chis subpoenas lawyer’s file
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The Entrepreneurs
• Ann and Bill and Great Idea LLC get in a dispute with Chris
• Chris sues Ann and Bill, and subpoenas Lawyer
• What should Lawyer reveal to Chris?
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DeBold v. Case (8th Cir. BAP 2005)
“When two or more persons, each having an interest in
some problem, jointly consult an attorney, their
confidential communications with the attorney, though
known to each other, will of course be privileged in a
controversy of either or both of the clients with the
outside world, that is, with parties claiming adversely
to both or either of those within the original charmed
circle.”
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Attorney-Client Privilege
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Client Lawyer
Rendition of
Legal Services
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"Necessary" Agents – Kovel
Client Lawyer
Agent
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Joint Representation
Client 1 Client 2
Lawyer
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Joint Defense/Common Interest Privilege
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Client 1 Client 2
Lawyer 1 Lawyer 2
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Attorney-Client
Privilege
Common Interest
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Adverse in Business Transaction
Seller
Buyer
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Shared Interest in Evaluating Lawsuit
Seller
Buyer
Plaintiff
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Written Common Interest Agreements
• Helps establish intent to share while maintaining privilege
• Can address what happens if parties'interests separate
• Generally discoverable
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Work Product Protection
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The Entrepreneurs
• Ann and Bill and Great Idea LLC get in a dispute with Chris
• Lawyer asks Ann, Bill and Employee to prepare summaries regarding litigation
• Chris sues Ann and Bill, and subpoenas Lawyer for summaries
• What should Lawyer reveal to Chris?
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Trustee Litigation
• Trustee administers Trust
• Trustee is sued, and prepares summary of conduct to share with defense counsel
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Federal Rule of Civil Procedure26(b)(3)(A)
• Documents and Tangible Things. Ordinarily, a party may not discover documents and tangible things that are prepared in anticipation of litigation or for trial by or for another party or its representative (including the other party's attorney, consultant, surety, ", insurer, or agent). But, subject to Rule 26(b)(4), those materials may be discovered if:
– (i) they are otherwise discoverable under Rule 26(b)(1); and
– (ii) the party shows that it has substantial need for the materials to prepare its case and cannot, without undue hardship, obtain their substantial equivalent by other means.
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FRCP Rule 26(b)(3)(A) Parsed
• Documents and Tangible Things.
• Ordinarily, a party may not discover
• documents and tangible things that
• are prepared in anticipation of litigation or for trial
• by or for another party or its representative (including the other party's attorney, consultant, surety, indemnitor, insurer, or agent)
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Work-Product Protection
A lawyer's involvement is not required
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Protection for Mental Impressions –FRCP 26(b)(3)(B)
• Protection Against Disclosure. If the court orders discovery of those materials, it must protect against disclosure of the mental impressions, conclusions, opinions, or legal theories of a party's attorney or other representative concerning the litigation.
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Attorney-Client
Privilege
Work-Product Protection
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Caution Regarding IllinoisWork Product
• Normal Rule (Missouri/Federal)
– Work product created by anyone is protected
– Ordinary work product receive protection, but it may be overridden by showing of need
– Opinion work product receives absolute protection
• Illinois Work Product
– Only attorney opinion work product is protected
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Michael DowneyDowney Law Group LLC
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