THE 2007 ANNUAL UPDATE: “2007 – AN ETHICS UPDATE” · PDF fileRecent...

NEW YORK STATE ACADEMY OF TRIAL LAWYERS

PRESENTS:

THE 2007 ANNUAL UPDATE:

“2007 – AN ETHICS UPDATE”

ETHICS MONOGRAPH PREPARED BY:

MICHAEL S. ROSS, ESQ. LAW OFFICES OF MICHAEL S. ROSS

60 EAST 42ND STREET FORTY-SEVENTH FLOOR

NEW YORK, NEW YORK 10165 (212) 505-4060

[email protected]

COPYRIGHT © 2007 BY MICHAEL S. ROSS, ESQ. ALL RIGHTS RESERVED

COPYRIGHT © 2007 BY MICHAEL S. ROSS, ESQ.

ALL RIGHTS RESERVED

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TABLE OF CONTENTS

PAGE

I. INTRODUCTION ............................................................................................................ 1

II. THE EVER-CHANGING LANDSCAPE OF ATTORNEY ETHICS ....................... 2

A. Recent Developments In The Ethics Of Attorneys’ Fees .................................. 2

B. Emerging Conflicts Of Interest Issues ............................................................... 9

C. Recent Developments In The Rules Governing Communications WithRepresented Parties ........................................................................................... 18

D. A Recent Development In The Limits Of Zealous (But Fair) Advocacy ...... 22

E. Recent Developments In New York Attorney Advertising Rules .................. 23

III. CONCLUSION .............................................................................................................. 29

The New York Lawyer’s Code of Professional Responsibility was patterned after the1

American Bar Association’s Model Code (“Model Code”). The A.B.A. Model Code, which alsouses the term “Disciplinary Rules,” has been superseded by the A.B.A. Model Rules (“ModelRules”). For the purposes of this monograph, the references to “D.R.” will refer to the rulesof the New York Lawyer’s Code. Although the A.B.A. Model Rules do not govern in NewYork, in federal court cases (see Rule 1.5[b][5] of the Local Rules of the Eastern and SouthernDistricts of New York), they are informative, particularly as they relate to ethics opinionsissued by the American Bar Association, which have been relied upon and cited on numerousoccasions by courts, disciplinary committees and ethics scholars.


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NEW YORK STATE ACADEMY OF TRIAL LAWYERS

PRESENTS:

THE 2007 ANNUAL UPDATE:


ETHICS MONOGRAPH PREPARED BY:

MICHAEL S. ROSS, ESQ.LAW OFFICES OF MICHAEL S. ROSS

60 EAST 42 STREETND

FORTY-SEVENTH FLOORNEW YORK, NEW YORK 10165

[email protected]

I. INTRODUCTION.

A. As the legal profession faces a new millennium, lawyers from every strata ofthe profession are facing new challenges and the judges before whom theyappear are being asked more and more frequently to evaluate claims ofethical impropriety. Some of the most important of these challenges involvethe application of new and modified disciplinary rules in the ever-changing1

landscape of attorney ethics.

B. This brief outline will address new and modified disciplinary rules, and theethics opinions and cases interpreting those rules, as well as some of thefrequently raised issues relating to the “practice” and “business” of law,which should be spotted by attorneys for closer examination.

mailto:[email protected]


MICHAEL S. ROSS, ESQ.


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II. THE EVER-CHANGING LANDSCAPE OF ATTORNEY ETHICS.

A. Recent Developments In The Ethics Of Attorneys’ Fees.

1. In Loza v. F&D Garet Motors Inc., N.Y. L.J., Jan. 31, 2007, p. 23, col.3 (Sup. Ct. Queens Co.), the court refused to grant the attorney’srequest for fees (totaling more than $50,000), which weresubstantially higher than the total recovery of $9,513.68 in theunderlying case.

a. The Loza case involved claims for damages based upon adefective automobile, made pursuant to, inter alia, theMagnusson-Moss Warranty Act (15 U.S.C. Section 2310[d]).The Magnusson-Moss Warranty Act contains a provision forattorneys’ fees, and states, in relevant part:

“If a consumer finally prevails in any actionbrought under ... this subsection, he may beallowed to recover as part of the judgement asum equal to the aggregate amount of costs andexpenses (including attorneys’ fees based onactual time expended) determined by the court tohave been reasonably incurred....” (Emphasisadded.)

b. The attorney’s request for fees totaling more than $50,000 wasbeyond the “reasonable fees” contemplated by the statute. Thecourt awarded the attorney $7,500 in “fair and reasonablefees,” explaining that:

“There comes a point where counsel cannotmake itself the de facto lead plaintiff in a casewhere it stands to reap exponentially more thanits client. ... Counsel is required to make areasonable assessment of its case, not only on themerits, but also on its possible costs andbenefits.”



The holding in the Dowling case has not yet been adopted in New York.2


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c. In the Loza case, the court also made the somewhat criticalfinding that the costs, supposedly, incurred by the attorney inthe case had not been “reasonably incurred.” For example, thecourt noted that charges such as “$61 for leaving a message onan answering machine (oft-repeated therein),” and “$24 for aparalegal’s preparation of a folder,” were not reasonable.

2. In Veneski v. Queens-Long Island Medical Group, P.C., 836 N.Y.S.2d504, 2007 WL 852109 (Sup. Ct. N.Y. Co. 2007), the attorney made amotion, pursuant to Judiciary Law Section 474-a, for increasedattorney’s fees (i.e., attorney’s fees beyond the fees called for in theretainer agreement). The court denied the attorney’s fee motion,notwithstanding the fact that the attorney and the client bothacknowledged that there had been an oral agreement between themfor the client to pay the attorney one-third of the recovery in the case(which was greater than the amount called for in the retaineragreement).

a. In the Veneski case, the attorney had noted in his disbursementdescription to his client that he was taking his one-third fee“[s]ubject to Court approval (if required).” Veneski, 2007 WL852109, at *1-2.

b. Apparently, however, at the time the attorney submitted the(belated) fee motion to the court, the attorney had alreadyreceived more than the fee called for in the retainer agreement– that is, without first obtaining approval from the court. Id.

3. In Dowling v. Chicago Options Associates Inc., 2007 WL 1288279(Sup. Ct. Ill. May 3, 2007) , the court concluded that, in some2

instances, attorneys and clients may agree to an “advance retainer”payment arrangement.

a. Unlike the more common “security retainer” arrangement,with respect to an “advance retainer”:

(1) The funds pass to the attorney the instant they are paid;

http://www.nycourts.gov/reporter/3dseries/2007/2007_50544.htm




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(2) The funds need not be maintained in a separate trustaccount for the client;

(3) The unused portion of the funds need not be returned tothe client subsequent to the conclusion of the lawyer’srepresentation of the client; and

(4) The funds are not reachable by the client’s creditors.

b. The use of such an arrangement may be appropriate when, forexample, a potential client is facing creditor judgements, or is adefendant in a criminal proceeding which may result in theforfeiture of property – and the potential client may, therefore,have difficulty retaining an attorney without such anarrangement. Dowling, 2007 WL 1288279, at *8.

c. Advance retainer agreements must be in writing, and must:

(1) Clearly state the nature of the arrangement (and ifthere is any ambiguity in the agreement, it will beconstrued as a security retainer);

(2) Advise the client of the “security retainer” option;

(3) State the reason for the lawyer’s belief that such anarrangement would be beneficial to the client; and

(4) Reveal where the money will be deposited and how thefirm will handle withdrawals. Dowling, 2007 WL1288279, at *9.

4. In Ween v. Dow, 35 A.D.3d 58, 822 N.Y.S.2d 257 (1st Dept. 2006), thecourt considered whether it was ethically proper for an attorney toinclude in a retainer agreement a provision requiring a client, whofailed to pay the attorney’s fees, to pay costs incurred by the lawyer incollecting those fees. The court concluded that such a provision is notenforceable, explaining that:





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a. Such a provision, “without a reciprocal allowance forattorney’s fees should the client prevail,” is “fundamentallyunfair and unreasonable.” Id., at 63, 822 N.Y.S.2d at 261.

b. Further, “the clause ... has the distinct potential for silencing aclient’s complaint about fees for fear of retaliation for thenonpayment of even unreasonable fees.” Id., at 63, 822N.Y.S.2d at 262 (citations omitted).

5. In Bar Association of Nassau County Opinion 2006-5 (2006), theCommittee concluded that a lawyer may not obtain advance consentto withdraw from the representation of a client in the event that theclient fails to pay the attorney’s fees.

a. The Committee noted that “although it is clear from the Code[D.R. 2-110(C)] ... that a client disregarding an expense or feeobligation to a lawyer risks the attorney’s withdrawal,”nonetheless, D.R. 2-110(C) requires that:

(1) The client deliberately disregards an agreement orobligation to the lawyer as to expenses or fees; and

(2) “[T]he lawyer has made a determination at the time ofthe happening of the event that withdrawal can beaccomplished without material adverse effect on theinterests of the client.” (Emphasis added.)

b. In Opinion 2006-5, the Committee further explained that suchan agreement would deprive the client of the ability to questionthe reasonableness of the fees being charged:

“To require a client ‘not to contest’ withdrawalof the lawyer from the matter unless all bills forfees and expenses are timely paid (withoutregard to any challenge as to reasonableness),effectively negates the opportunity that the clientmight otherwise have for a discussion of theappropriateness of the charges under thecircumstances of the particular case.”




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6. Similarly, in New York State Bar Association Opinion 805 (2007), theCommittee concluded that a retainer agreement may not provide forthe client’s advance consent for the attorney’s withdrawal predicatedon non-payment of attorney’s fees.

a. In Opinion 805, the Committee emphasized that a client’sfailure to pay fees will not always meet the requirements ofD.R. 2-110(C)(1)(f), which allows the attorney to withdrawwhen the client “deliberately disregards an agreement orobligation to the lawyer as to expenses or fees.” (Emphasisadded.) The Committee noted that a client’s failure to pay willnot be considered “deliberate” if the failure is: inadvertent; deminimus in amount; or de minimus in duration.

b. The Committee further found that such an agreement woulddeprive a tribunal of the opportunity to apply “the particularbalancing test that must be employed ... in evaluating even aconscious failure to pay legal fees.” Such a balancing testwould consider:

(1) Whether the client is unable to pay;

(2) “The amount of work performed and paid for incomparison to the work remaining”;

(3) “[T]he amount of the fees paid to date”; and

(4) The effect of withdrawal on the client.

c. However, the Committee also noted that an attorney mayadvise a client, in a retainer agreement, “of the lawyer’s rightto terminate the employment based on the deliberatedisregard’ standard of DR 2-110(C)(1)(f),” provided that theattorney also advises the client that the attorney may need toobtain permission from a tribunal prior to withdrawal.

7. In Life Dome Cinema Ministries v. Church Loans and InvestmentTrust, 2007 WL 1573905 (S.D.N.Y., May 24, 2007), the courtconcluded that an attorney who had previously withdrawn from arepresentation due to the client’s “lack of cooperation” and non-




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payment of fees, could not later re-appear in the proceeding on behalfof that client. The attorney had requested a stay following hiswithdrawal to allow his client to obtain new counsel. During theperiod of time that the case was stayed, the attorney contacted theclient in order to make payment arrangements and to arrange for theattorney to continue representing the client. The court refused toallow the attorney to re-enter the case, explaining that:

“An application to withdraw ought not be used as avehicle to encourage payment by a client....When ‘lackof cooperation’ is cited to the court as the reason for theapplication to withdraw, the Court is entitled to assumethat the non-cooperation is not of a transitory nature[and] is not capable of being repaired.”

Life Dome Cinema Ministries, 2007 WL 1573905, at *2, citing N.Y.Ethical Consideration (E.C.) 2-32 (“A decision by a lawyer towithdraw should be made only on the basis of compellingcircumstances....”).

8. In Rothfeder v. City of New York, 15 Misc.3d 1137(A), 2007 WL1470175, *2 (Sup. Ct. N.Y. Co., May 21, 2007), the court awardedquantum meruit fees to an attorney following his discharge withoutcause. However, the court refused to award fees to the same attorneyfor a related case filed against a new defendant after the attorney’sdischarge. The attorney claimed that he was not responsible for thewrong defendant having been named in the first of two cases.However, the court noted that the attorney had “failed to demonstratethat any of the work he performed resulted in the lawsuit against [thenew defendant],” and that the attorney “had no involvement in [thesecond action] whatsoever.”

9. In Vallejo v. Builders for a Family Youth, 836 N.Y.S.2d 490, 2007 WL10386, *3-5 (Sup. Ct. N.Y. Co. Jan. 1, 2007), the court consideredwhether an attorney who had been discharged from representing aclient several years earlier was entitled to quantum meruit feesfollowing the successful resolution of the case. Although the formerclient claimed that the attorney had been discharged for cause, thecourt concluded that the discharge had not been for cause, and






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awarded the attorney quantum meruit fees. In reaching its decision,the court observed that:

a. The three letters that had been sent to the attorney regardinghis discharge did not state that the attorney had beendischarged for cause;

b. The former client had admitted that the attorney had neverbeen given a reason for his discharge;

c. Soon after the discharge, the client’s new attorneydemonstrated a belief that the discharge had not been forcause by making, apparently, approving reference to a lienthat the former attorney had asserted against the formerclient’s file; and

d. “The only documentation presented with respect to [theattorney] being discharged for cause are ... affidavits,[submitted] three and one-half years after plaintiffs discharged[the attorney].”

10. In Bar Association of Nassau County Opinion 2006-2 (2006), theCommittee addressed the question of whether an attorney may chargea client for the storage of the client’s closed files. The Committeeconcluded that an attorney may not charge a client for the storage ofclosed files that the attorney is already legally obligated to retain.However, an attorney may charge a reasonable fee, or the actual cost,for the storage of closed files the lawyer is not legally obligated toretain.

a. When an attorney is legally obligated to preserve ceratin filesor documents, “charging a fee for a ‘service’ which consists ofwhat an attorney is already legally obligated to do isexcessive,” in violation of D.R. 2-106(A) and (B).

(1) See D.R. 9-102 (requiring New York attorneys tomaintain copies of certain financial-related documents“for seven years after the events which they record”);




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(2) See 22 N.Y.C.R.R. Sections 603.(f) and 691.20(f)(requiring attorneys practicing in the AppellateDivision, First Department, and Appellate DivisionSecond Department, to retain certain documents “inclaims or actions for personal injuries, propertydamage, wrongful death, loss of services from personalinjuries, and condemnation and change of gradeproceedings ... for seven years after the conclusion ofthe claim or action”); and

(3) See N.Y. State Bar Assoc. Op. 623 (1986)(recommending that attorneys who wish to destroy aclosed file, first search out “Documents In Need ofSalvaging” [“DINS”], and preserve such documents“according to the foreseeable needs of the client”).

b. In Opinion 2006-2, the Committee further explained that,when there is no prescribed retention rule for client files, anattorney may charge the client a reasonable fee for storage ofthe file only if the client has agreed to the fee “either at theoutset of the representation or in a separate agreement prior tothe fee being incurred.” Because it is the “usual practice ofattorneys in New York ... to store completed files withoutadditional charge to the client,” such a service has becomecustomary, and “must be deemed, without more, to have beenincluded in the fee paid by the client.”

B. Emerging Conflicts Of Interest Issues.

1. In Association of the Bar of the City of New York Opinion 2006-1(2006), the Committee addressed whether advance conflict waiversare ethically permissible. The Committee explained that:

a. An attorney may ethically solicit an advance conflicts waiverif:

(1) A “disinterested lawyer” would conclude that the clientshould agree to the waiver; and




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(2) The client is informed, and is able to understand, theimplications, benefits, and risks, of such a waiver.

b. While “full disclosure,” as required by D.R. 5-105(C), is mademore difficult in the case of future waivers because the detailsof the conflict may not be known, the attorney should advisethe client of “the types of possible future adverserepresentations that the lawyer envisions, as well as the typesof clients or matters that may present such conflicts.”

c. “Sophisticated” clients – i.e., clients who “readily appreciatethe implications of conflicts and waivers ... ,” including clientsthat regularly engage outside counsel for legal services, or thathave access to independent inside counsel for advice onconflicts” – generally require less disclosure.

d. When an advance waiver is in force and an actual conflictarises, the “disinterested lawyer” test should be applied asecond time, and the conflict is not waived if: (1) “the actualconflict is materially different from the conflict envisioned bythe waiver”; or (2) the actual conflict is non-consentable.

e. Conflicts with regard to substantially related matters cannotbe waived in advance, except by a “sophisticated” client.

f. With regard to a sophisticated client, advance waivers will bedeemed enforceable subject to the following conditions,inter alia, being satisfied:

(1) The “waiver is not applied to opposite sides of the samelitigation and opposite sides in a starkly disputedtransactional matter”;

(2) The “law firm is able to ensure that the confidences andsecrets of one client are not shared with, or used for theadvantage of, another client”; and

(3) The conflict is consentable under the tests of D.R. 5-105(C).




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2. In Veneski v. Queens-Long Island Medical Group, P.C., 836 N.Y.S.2d504, 2007 WL 852109 (Sup. Ct. N.Y. Co. Jan. 30, 2007), an attorneywho was a party to the case (in connection with a fee dispute) hadallegedly pressured his client to lend money to the attorney, withouthaving advised the client to seek independent representationconcerning the loan. The court noted that the attorney’s behaviorraised a “serious question ... regarding whether [the attorney’s]actions constituted professional misconduct” (citing, inter alia, D.R. 1-102 and D.R. 5-104), and the court referred the attorney to theDisciplinary Committee. 2007 WL 852109, at *5.

3. In New York State Bar Association Opinion 793 (2006), theCommittee addressed the potential for conflicts of interest when anattorney or law firm serves in an “of counsel” capacity to more thanone law firm.

a. The Committee reaffirmed the view that an “of counsel”relationship exists where “there is a continuing relationshipwith a lawyer or law firm, other than as a partner or associate... [where the] of counsel lawyer is available to the firm forconsultation and advice on a regular and continuing basis”(citing N.Y. State Bar Assoc. Op. 262 [1972]).

b. The Committee explained that when an attorney (or a lawfirm) is “of counsel” to more than one law firm, the conflictsimputed to that attorney through the association with one firmare also imputed to the additional firms at which that attorneyis of counsel.

c. The Committee noted that an exception to imputed conflictsmay exist where, for example, the conflict of one firm arisesfrom a personal interest of an attorney at that firm rather thanfrom conflicting representations – that conflict is imputed tothe attorney who is of counsel to that firm, but not to otherfirms at which that attorney is of counsel.

4. In Association of the Bar of the City of New York Opinion 2006-2(2006), the Committee addressed the conflict implications of a firm’sparticipation in “Beauty Contests” at which they promote themselvesfor work. The Committee explained that such a firm may be





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disqualified from subsequently representing a client with interestswhich are materially adverse to those of the prospective client,regardless of whether the prospective client retained the attorney orlaw firm. Specifically:

a. As to the individual attorney:

(1) If no confidences or secrets are disclosed by theprospective client at the pre-retention meeting, then theattorney should not be personally disqualified fromrepresenting a client with interests materially adverseto those of the prospective client. Cases cited by theCommittee hold that, in a pre-retention scenario, thereis no presumption that confidences or secrets have beenrevealed.

(2) If confidences or secrets have been shared by theprospective client, then the attorney would bedisqualified from representing a client with interestsmaterially adverse to those of the prospective client,with the following three exceptions, wherebydisqualification would not be warranted:

(a) The confidences or secrets learned from theprospective client could not be “significantlyharmful” to the prospective client in thelitigation.

(b) “[I]t can be established that the prospectiveclient revealed confidences or secrets withoutany intention of retaining [the firm], but for thepurpose of disqualifying [the firm] from anylater representation of possibly adverse parties.”

(c) The attorney secured an advance waiver fromthe prospective client of any conflicts that mightarise as a result of the sharing of confidences orsecrets by the prospective client.




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(3) The Committee further explained that in order tomaximize the likelihood of such a waiver being valid, alawyer should consider having the waiver:

“(1) in writing,

(2) signed by the prospective client,

(3) explain the preliminary nature ofthe beauty contest,

(4) request that the prospective clientnot reveal any confidences orsecrets during the beauty contest,and

(5) state that, if the prospective clientnonetheless divulges confidencesor secrets, and the attorney is notretained by the prospective client,the prospective client waivesobjections to (a) the attorney’slater retention by a client whoseinterests may be materiallyadverse to the prospective client’sinterests, and (b) the attorney’suse of the confidences and secretsin that representation.”

b. The firm of an attorney who has been disqualified from therepresentation of a client due to a conflict with a formerprospective client may rebut the presumed imputation of thatconflict to all of its attorneys, if the prohibited lawyer iseffectively screened from the remaining attorneys in the firm.Courts have considered the following factors in evaluating theeffectiveness of a screen:

(1) The timeliness of the firm’s implementation of thescreen. (Cited cases considered the timeliness of screenimplementation in relation to: the time of disclosure of




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confidences and secrets; the time when an actualconflict arises; and the time when the firm discovers orhas actual notice of the conflict.)

(2) The size of the firm. (Courts have questioned theefficacy of screening in the context of smaller firms.)

(3) The proximity of the prohibited lawyer to other lawyersin the firm. (Cited cases consider physical proximity ofthe lawyers as well as whether the lawyers worked inthe same department or section of the firm.)

(4) Whether “the personally prohibited lawyer works onother matters with the lawyers representing the client.”

(5) Affidavits of the prohibited lawyer and the otherlawyers at the firm confirming that the confidences andsecrets of the former prospective client have not beenshared.

(6) Whether the prohibited lawyer maintains filescontaining the confidences or secrets of the formerprospective client.

5. In Bar Association of Nassau County Opinion 2006-4 (2006), theCommittee opined that a lawyer who represents multiple clients inseparate, but related, matters may not enter into a discoveryagreement which could create conflicting interests between thevarious clients.

a. The agreement considered by the Committee would haveprovided for expedited discovery in one client’s matter, butwould have conditioned that expedited discovery on the“confidentiality” of the discovery documents.

b. The Committee explained that such an agreement, whichwould require the attorney to withhold information from hisother clients which could be potentially relevant to theirmatters, would cause the interests of the attorney’s clients tobecome “inconsistent.” D.R. 5-105(A) prohibits representation




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of clients with differing interests (which includes not onlyconflicting interests, but also interests that are merelyinconsistent [D.R. 1-101]).

6. In New York State Bar Association Opinion 802 (2006), theCommittee concluded that it is permissible for an attorney torepresent multiple parties to a bond transaction, with the client’sconsent, even if those multiple parties have differing interests.

a. Although the borrower and the issuer in a bond transactionhave differing interests, such a conflict is consentable“provided that the bond counsel’s role is limited to opining on[the tax-exempt status and validity of the bonds in] thetransaction,” and the lawyer does not assume an advocacy rolein which the lawyer would be “put in the position “ofnegotiating with him or herself” regarding the terms of thebonds.

b. “[C]onsent of both clients must ... be obtained after providingthe disclosure required by DR 5-105(C).”

c. “Particularly because of the apparent widespread acceptanceof multiple representation in the relevant practice area ... weconclude that the bond counsel’s professional judgement indelivering an opinion on the tax-exempt status and validity ofthe bonds will not necessarily be affected by the fact that he orshe is also representing the borrower.”

7. In New York State Bar Association Opinion 807 (2007), theCommittee addressed the question of whether two lawyers from thesame firm may represent the buyer and the seller on either side of areal estate transaction, where one of the attorneys in question was apart-time associate of the firm, and, in the real estate matter, wouldbe acting in her capacity as a solo practitioner. The Committeeconcluded that even with full disclosure and consent of the parties,such a conflict would not be waivable.




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a. Although the attorney was only a part-time associate of the lawfirm, her level of access and availability to the firm requiredthat she be treated as an associate for purposes of conflictimputation. The Committee further explained:

“A law firm may not denominate a lawyer as anassociate and then take the position that thelawyer is not an associate for the purpose ofimputation of conflicts of interest.”

b. The Committee noted that, while in some cases a single lawyermay represent both parties to a real estate transaction, as“where the interests of buyer and seller are not actually orpotentially differing or would vary only slightly,” in this casethe parties had manifested their conflicting interests by eachseeking out separate counsel for the transaction:

“Here a buyer and seller of residential real estateeach determined at the outset of the negotiationsto be represented by separate lawyers indifferent firms. ... The parties’ decision ...reflects an actual adversity and conflict ofinterest between them that would require thetwo lawyers to negotiate or bargain against eachother as adversaries. ... A conflict like the onehere is not consentable under DR 5-105(C)[because] a disinterested lawyer would notconclude that the two lawyers could‘competently represent the interests of each.’”

8. In 16 Maujer Street HDFC v. Titus, L&T 80216/2006, N.Y. L.J., Feb.23, 2007, p. 27, col. 3 (Civil Ct. Kings Co.), the court concluded thatthe attorney was not required to be disqualified from representing therespondent proprietary leaseholder in a summary holdoverproceeding, notwithstanding the fact that the attorney had previouslyrepresented the housing corporation who is now the petitioner in thecurrent holdover proceeding. The court found that a “substantialrelationship” did not exist between the prior and currentrepresentations.




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a. The attorney’s previous representation of the housingcorporation was limited to sending notices to cure or notices oftermination, and the attorney was “never privy to anyconfidences or secrets” of petitioner which could cause theattorney to have a potential advantage over the previous client.

b. The mere fact that both representations were in the context ofholdover proceedings did not, alone, automatically warrantdisqualification.

9. In 42-44 W.74th Street, LLC v. Savior, N.Y.L.J., Sep. 29, 2005, p. 19,col. 1 (N.Y. Co. Civil Ct.), the court disqualified a law firm fromrepresenting the petitioner in a summary holdover proceeding, wherethe law firm’s attorney had previously represented the respondent ina previous holdover proceeding involving the same apartment as thesubsequent holdover matter.

a. In the previous representation, the attorney had been privy toclient confidences which were at issue in the subsequentmatter, including advising the former client regarding thepurchase of a second home – the same second home thatpetitioner in the current proceeding alleged to be therespondent-tenant’s principal place of residence, which was amaterial issue in the later proceeding.

b. The court further explained that, “[a]lthough a hearing mayhelp to determine whether a conflict actually exists, the factthat [the attorney] represented the respondent in an earlierproceeding and is now representing the petitioner in asubstantially adverse related proceeding, and the court’sconcern with any suggestion of impropriety, the presumptionof disqualification ... is irrebuttable, and no hearing isrequired,” to warrant disqualification.



Author’s Note: But consider, there is a potentially significant vagueness in the opinion.3

The Court of Appeals premised its decision on the fact that the interviewing attorney directedthe former employee not to disclose “privileged or confidential information.” Under NewYork’s D.R. 4-101(A), “confidential” and “privileged” are defined synonymously. Since thatis so, was the Court using the term “confidential” in the sense of non-public or proprietary-type information? And if a lawyer cannot inquire about non-public or proprietary

(continued...)


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C. Recent Developments In The Rules Governing Communications WithRepresented Parties.

1. In Muriel Seibert & Co., Inc., v. Intuit Inc., 8 N.Y.3d 506, 511-512,836 N.Y.S.2d 527, 530 (2007), the court addressed the issue ofdisqualification in the context of an attorney who had engaged in exparte interviews of an opposing party’s former employee. The courtconcluded that such an interview is not prohibited by either D.R. 7-104(A)(1), or any other Disciplinary Rule.

a. However, the court noted that, with regard to such aninterview, counsel should inform the former employeeof counsel’s representation and interest in the litigation,and should “steer clear of privileged or confidentialinformation.”

b. The court explained that, under the circumstances ofthe Muriel Seibert case, disqualification was notwarranted because:

(1) The interviewing attorney “properly advised [theformer employee] of [the firm’s] representationand interest in the litigation”;

(2) The interviewing attorney “directed [the formeremployee] not to answer any questions thatwould lead to the disclosure of [privileged orconfidential] information”; and

(3) The former employee stated that he understoodthe admonitions and no privileged orconfidential information was, in fact, disclosed.3



(...continued)3

information, would that not further limit the permissible scope of interviews of formeremployees?


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2. In People v. Quiroz, 15 Misc.3d 1128(A), 2007 WL 1247257 (Dist. Ct.Nassau Co. Apr. 18, 2007), the court considered whether defendant’sattorney in a criminal case, who had engaged in communications withthe alleged victim in the same case, should be disqualified fromcontinuing to represent the defendant. The court concluded thatdisqualification was not required, explaining that:

a. The defense attorney represented his client in two matters –the criminal proceeding, and a separate, but related, FamilyCourt proceeding.

b. The defense attorney had engaged in interviews with thealleged victim in the criminal proceeding – who was also aparty to the Family Court proceeding.

c. The defense attorney engaged in interviews with the allegedvictim without obtaining the permission of the alleged victim’sattorney, in violation of D.R. 7-104. Based upon the attorney’sviolation of D.R. 7-104, the Family Court granted a motion to,inter alia, disqualify the attorney from the Family Courtproceeding. Quiroz, 2007 WL 1247257, at *2.

d. In response to a motion seeking disqualification of the attorneyin the criminal proceeding, the court opined that the right of acriminal defendant to counsel of his choosing, under thecircumstances presented in the Quiroz case, outweighed thecourt’s interest in disciplining attorneys who engage inprofessional misconduct:

“Turning, finally, to the People’s disqualificationmotion, the right to counsel of one’s ownchoosing in a criminal case is a fundamentalconstitutional right that is not to be interferedwith unless some competing matter of publicpolicy so dictates. ... Ethical violations are oftenthe basis for disqualification motions, but, while




Author’s Note: But is this reasoning sound?4


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the courts are always concerned with theintegrity of the judicial system and thepreservation of ethical standards ... , thedisciplining of attorneys who engaged inmisconduct is not of direct concern when rulingon such motions....”

Quiroz, 2007 WL 1247257, at *6 (citations omitted).

e. Moreover, the court appeared to grant broad deference toattorneys conducting pre-trial investigations in criminalmatters, noting that:

“‘[Z]ealous representation of a defendant in acriminal case is ... a matter of constitutionaldimension, which warrants giving a criminaldefense lawyer the broadest possible range ofpre-trial investigation.’”4

Quiroz, 2007 WL 1247257, at *5, citing Matter of Chan, 271 F.Supp.2d 539 (S.D.N.Y., 2003).

3. In New York State Bar Association Opinion 812 (2007), theCommittee considered whether the restrictions of D.R. 7-104(A)(1),prohibiting unauthorized communications with represented parties,apply to a lawyer’s communications, on behalf of a private individual,with members of a town planning board. In reaching its decision, theCommittee considered, inter alia, whether D.R. 7-104(A)(1)’sexception for communications which are “authorized by law” appliesto such communications – specifically, whether limiting suchcommunications would be contrary to the First Amendment’sencouragement of public discourse. The Committee noted that:

a. Most authorities share the view that “the literal application ofthe ‘no-contact’ rule must be tempered by constitutionalconsiderations where the First Amendment right to petitiongovernment is implicated.”




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b. The American Bar Association Standing Committee on Ethicsand Professional Responsibility, Formal Opinion 97-408(1997), addressed the issue of whether a lawyer representing aprivate party in a matter may engage in unauthorizedcommunications with responsible government officials onbehalf of a private party.

(1) The Committee noted that a balance must be reached“between a citizen’s right of access and thegovernment’s right to be protected from uncounseledcommunications by an opposing party’s lawyer.”

(2) Thus, in ABA Formal Opinion 97-408, the Committeeconcluded that unauthorized communications withgovernment officials, otherwise prohibited by a no-contact rule, are allowable, provided that, inter alia:

(a) The sole purpose of the communication is toaddress policy issues; and

(b) The lawyer representing the private party in thematter provides advance notice to the lawyerrepresenting the government official.

c. In New York State Bar Association Opinion 812, theCommittee adopted the approach taken in ABA FormalOpinion 97-408. However, the Committee noted that:

“[C]ommunications directed to governmentofficials who do not have the authority to take orrecommend action in the matter orcommunications that are intended to securefactual information relevant to a claim (forexample, mere witnesses to governmentmisconduct), should both be full subject to theno-contact rule as, in each of these situations,there are no First Amendment considerations atplay.”




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D. A Recent Development In The Limits Of Zealous (But Fair) Advocacy.

1. In Reynolds v. Amchem Products., Inc., et al., 32 A.D.3d 1268, 822N.Y.S.2d 216 (4th Dept. 2006), the Appellate Division, FourthDepartment, addressed the question of whether so called “high-lowagreements” (where parties to an action agree upon a minimum andmaximum payment amount, notwithstanding the actual award or lackthereof in the case), are improper when the high-low settlementagreement is not disclosed to all parties in a proceeding, which could,in theory, prejudice the non-agreeing parties.

2. The Appellate Division held that a party to the action who was notmade aware of the existence of such a high-low agreement enteredinto between the other parties, does not automatically have groundsfor appeal without a showing of actual prejudice.

3. Subsequently, however, the Court of Appeals reversed the FourthDepartment’s decision in the Reynolds case (8 N.Y.3d 717, 840N.Y.S.2d 546 [2007]). The Court of Appeals concluded that the non-disclosure of the agreement deprived the non-agreeing defendant ofits right to a fair trial, explaining that:

a. The high-low agreement “furnished plaintiffs with an incentiveto maximize [the non-agreeing defendant’s] liability whileminimizing [the agreeing defendant’s liability]....”

b. “Had the settlement been disclosed, [the non-agreeingdefendant] could have adjusted its trial strategy accordinglyand evaluated the risks of going to trial with the knowledge”that they would be the “target” defendant.

c. “Non-disclosure also deprived [the non-agreeing defendant] ofthe opportunity to, among other things, seek appropriateprocedural and evidentiary rulings from the trial court andargue the significance of the high-low agreement to the jury.”

4. Significantly, in its decision in Reynolds, 8 N.Y.3d at 732, the Court ofAppeals stated, in no uncertain terms, that:





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“To ensure that all parties to a litigation are treatedfairly, we hold that whenever a plaintiff and adefendant enter into a high-low agreement in amulti-defendant action which requires the agreeingdefendant to remain a party to the litigation, the partiesmust disclose the existence of that agreement and itsterms to the court and the nonagreeing defendant(s).”(Emphasis added.)

E. Recent Developments In New York Attorney Advertising Rules.

1. The globalization of the practice of law has created new challengesinvolving what has become the “business of law.” Some of the mostimportant of these challenges involve the day-to-day decisions lawyersmake with respect to innovative forms of advertising and marketingin print and on television as ways to generate legal business. InJanuary 2007, the four presiding justices of the Appellate Divisionadopted several amendments to the existing Disciplinary Rulesgoverning attorney advertising. These amendments took effect onFebruary 1, 2007.

2. Among New York’s new attorney advertising rules, the following areof particular importance:

a. 22 N.Y.C.R.R. Section 1200.1 defined “advertisement”:

“(k) ‘Advertisement’ means any public orprivate communication made by or on behalf ofa lawyer or law firm about that lawyer or lawfirm’s services, the primary purpose of which isfor the retention of the lawyer or law firm. Itdoes not include communications to existingclients or other lawyers.”

b. D.R. 2-103(B) defined “solicitation”:

“ ... ‘solicitation’ means any advertisementinitiated by or on behalf of a lawyer or law firmthat is directed to, or targeted at, a specificrecipient of group of recipients, or their family




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members or legal representatives, the primarypurpose of which is the retention of the lawyer orlaw firm, and a significant motive for which ispecuniary gain. It does not include a proposal orother writing prepared and delivered in responseto a specific request of a prospective client.”

c. D.R. 2-101(E) permits lawyers to include, for example, inadvertisements:

• “statements that are reasonably likely to create anexpectation about results the lawyer can achieve” (D.R.2-101[D][1]);

• “statements that compare the lawyer’s services with theservices of other lawyers” (D.R. 2-101[D][2]); and

• “statements describing or characterizing the quality ofthe lawyer’s or law firm’s services” (D.R. 2-101[D][4]);

Provided that, inter alia, the advertisements include thedisclaimer: “Prior results do not guarantee a similaroutcome.”

d. D.R. 2-102(E) permits lawyers to utilize a web site domainname that does not include the name of the lawyer or law firm,provided, inter alia, that:

• “all pages of the web site clearly and conspicuouslyinclude the actual name of the lawyer or law firm”(D.R. 2-102[E][1]);

• “the lawyer or law firm in no way attempts to engage inthe practice of law using the domain name” (D.R. 2-102[E][2]); and

• “the domain name does not imply an ability to obtainresults in a matter” (D.R. 1-102[E][3]).




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3. Less than six months after the new attorney advertising DisciplinaryRules took effect, Judge Frederick J. Scullin, Jr. of the United StatesDistrict Court for the Southern District of New York, issued a thirtypage decision in Alexander v. Cahill, 2007 WL 2120024 (N.D.N.Y.July 23, 2007), in which the court concluded that certain of the newrules are unconstitutional.

a. In the Alexander case, Judge Scullin concluded that thefollowing attorney advertising Disciplinary Rules wereunconstitutional:

(1) D.R. 2-101(C)(1) – prohibiting the use of anendorsement of, or testimonial about, a lawyer or lawfirm from a client with respect to a matter that is stillpending;

(2) D.R. 2-101(C)(3) – prohibiting the portrayal of afictitious law firm, the use of a fictitious name to referto lawyers not associated in a firm, or otherwiseimplying that lawyers are associated in a firm if that isnot the case;

(3) D.R. 2-101(C)(5) – prohibiting the use of techniques toobtain attention that demonstrate a clear andintentional lack of relevance to the selection of counsel,including the portrayal of lawyers exhibitingcharacteristics clearly unrelated to legal competence;

(4) D.R. 2-101(C)(7) – prohibiting the use of a nickname,moniker, or motto that implies an ability to obtain aresult; and

(5) D.R. 2-102(G)(1) – prohibiting the use of pop-up andpop-under advertisements on web-sites other than thosethat the attorney or law firm owns.

b. Although it has yet to be determined what impact New York’snew advertising rules or the Alexander case (which is now onappeal) will have on lawyers, what is clear is that change isinevitable in the way in which lawyers create and generate




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business through the use of print, television, internet, andother forms of marketing and advertising strategies. Thus,lawyers and law firms need to consider New York’s existingattorney advertising rules, while also monitoring some of thepossible changes to those rules, which impact on the manner inwhich lawyers develop and market their law practice in thefuture.

4. Recent Advertising Ethics Opinions Issued On The Heels Of ThePassage Of New York’s New Advertising Rules.

a. In New York State Bar Association Opinion 792 (2006), theCommittee concluded that it is permissible for a lawyer toutilize celebrity testimonials in television or radioadvertisements, provided that:

(1) If the testimonial discusses past results, a disclaimer isincluded “to the effect that the endorsement does notguarantee or predict a similar outcome with respect toany future matter on which the lawyer may beretained”;

(2) The advertisement is not otherwise false, deceptive, ormisleading; and

(3) The lawyer does not pay or give anything of value to thecelebrity client in exchange for the testimonial,including that the lawyer may not compensate thecelebrity client for his time or services in the making ofthe advertisement.

b. In New York State Bar Association Opinion 799 (2006), theCommittee described the conditions under which a lawyer mayparticipate in an online lawyer directory service, in which thelawyer pays a fee to be listed on a lawyer directory web-site.The Committee explained that a lawyer may utilize such aservice, and pay a fee for doing so, provided that:

(1) The lawyer does not contact a prospective client unlessclearly and unambiguously requested to do so by the




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prospective client. For this purpose, a on-screen check-box authorizing contact would generally be sufficient;and

(2) The online directory service:

(a) Allows prospective clients to sift through thedirectory using various “filters,” but does not“recommend” attorneys to a prospective clientbased upon an analysis of information providedby that prospective client, whether that analysisis done by a human or by a computer;

(b) “[R]efrains from claims that it will analyze theprospect’s legal problem in order to find asuitable lawyer”;

(c) “[A]dvises users that the services of the websitedo not constitute legal representation or thepractice of law”;

(d) “[E]xplains that its subscribing lawyers havepaid to be listed with the service”;

(e) “[S]tates the office address and telephonenumber of each lawyer participating in theservice”; and

(f) “[T]akes reasonable measures to prevent theinadvertent disclosure by the prospective clientof privileged information,” including:

(i) Permitting the prospective client to screenthe list of attorneys who will be shown theposting and remove lawyers from the list;

(ii) Revealing the identity of the prospectiveclient only to those subscribing lawyersthat the prospect requested;




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(iii) “[Minimizing] the communication ofconfidential information between thesubscribing lawyer and the prospectiveclient until the lawyer has been retainedand has completed an appropriateconflicts check”; and

(iv) “[Cautioning] the prospective client thatthe information provided to the servicemay not be protected by the attorney-client privilege, where that statement isapplicable.”

c. In New York State Bar Association Opinion 791 (2006), theCommittee addressed the permissibility of a lawyerparticipating in a networking organization which encouragesits members to refer business or clients to other organizationmembers. The Committee opined that a lawyer may not pay toparticipate in any organization which requires its participantsto make referrals of clients to the organization’s othermembers. The Committee observed that:

(1) A lawyer’s participation in a networking organizationthat requires its members to make referrals to otherorganization members would violate D.R. 2-103(B),which provides, in relevant part, that:

“A lawyer shall not compensate or giveanything of value to a person ororganization to recommend or obtainemployment by a client....”

(2) “A lawyer who pays to join and maintain membershipin an organization is giving something of value to theorganization, and is giving that value knowing thatmembership will, at least in part, generaterecommendations by other members that may lead toemployment of the lawyer by new clients. A lawyermay not pay dues to an organization that requires itsmembers to refer potential clients to the lawyer.”




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III. CONCLUSION.

Lawyers who face disciplinary and court inquiries into their conduct typically get“in trouble” not because they make the “wrong” ethical decisions, but rather,because they do not see the “issues,” or because they ignore the issues. Hopefully,the legal principles discussed above will sensitize lawyers to some of the frequentlyraised issues relating to the “practice” and “business” of law – because, once thoseissues are identified, more often than not the lawyer will make the “right” decision.

Michael S. Ross

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