TOPIC H: CLIENT-LAWYER CONFLICTS OF INTEREST 2016 P.R. Prof. Janicke

“CONFLICT” DOES NOT IMPLY: ANGER HOSTILITY ILL WILL 2016TOPIC H -- LAWERY-CLIENT CONFLICTS 2

“INTEREST” MEANS A FINANCIAL INTEREST E.G., LENDER & DEBTOR HAVE CONFLICTING INTERESTS EXAMPLE: CONFLICT CREATED BY A LAWYER-TO-CLIENT LOAN –EVEN IF LOAN IS A HUMANITARIAN KINDNESS, –SORELY NEEDED, AND AT A LOW INTEREST RATE, –AND LAWYER IS TAKING A BIG CHANCE!! 2016TOPIC H -- LAWERY-CLIENT CONFLICTS 3

“CONFLICT” MEANS WHAT IS $$ GOOD FOR ONE IS OR COULD BE $$ BAD FOR THE OTHER 2016TOPIC H -- LAWERY-CLIENT CONFLICTS 4

CONTRAST: A GIFT TO A CLIENT IS USUALLY OK 2016TOPIC H -- LAWERY-CLIENT CONFLICTS 5

RULE 1.8 GIVES MANY EXAMPLES OF CONFLICTS 2016TOPIC H -- LAWERY-CLIENT CONFLICTS 6

“BUSINESS” POSITION ADVERSE TO CLIENT IS HEAVILY RESTRICTED R. 1.8(a) PRETTY MUCH COVERS EVERY KIND OF MONEY RELATIONSHIP >>> 2016TOPIC H -- LAWERY-CLIENT CONFLICTS 7

THIS ADVERSE-INTEREST CONFLICT CAN BE OVERCOME, BUT DIFFICULT TO DO: –MUST BE FAIR [CAVEAT: HINDSIGHT] –MUST ADVISE CLIENT IN WRITING RE. DESIRABILITY OF SEPARATE COUNSEL –MUST GET WRITTEN INFORMED CONSENT OF CLIENT 2016TOPIC H -- LAWERY-CLIENT CONFLICTS 8

NOTE THE MEANING OF “PECUNIARY INTEREST ADVERSE” R. 1.8(a) –HUMANITARIAN LOANS ARE “ADVERSE” –INVESTMENTS IN CLIENT ARE LIKELY “ADVERSE” R. 1.8 C1 –LAWYER-TO-CLIENT GIFTS ARE NOT 2016TOPIC H -- LAWERY-CLIENT CONFLICTS 9

BUT A CAVEAT ON GIFTS TO CLIENTS: ABA: LAWYER CANNOT PAY CLIENT’S MEDICAL OR LIVING EXPENSES IN CONNECTION WITH A LITIGATION REPRESENTATION R. 1.8(e) – PROVIDING “FINANCIAL ASSISTANCE” THIS RULE IS NOT BASED ON ADVERSENESS 2016TOPIC H -- LAWERY-CLIENT CONFLICTS 10

VALUABLE INFORMATION USE OF CURRENT OR FORMER CLIENT’S INFO TO THAT CLIENT’S “DISADVANTAGE” R. 1.8(b), R. 1.9(c)(1) –DIFFERENT FROM THE NON-DISCLOSURE (CONFIDENTIALITY) RULE; THIS IS A NON- USE RULE –E.G.: SELLING OFF STOCK IN CLIENT COMPANY 2016TOPIC H -- LAWERY-CLIENT CONFLICTS 11

[COULD BE CRIMINAL SANCTION AS WELL – INSIDER TRADING] 2016TOPIC H -- LAWERY-CLIENT CONFLICTS 12

FURTHER SPECIFIC CONSTRAINTS R. 1.8 NO PROPERTY TRANSACTIONS R. 1.8(a) SAME AS FOR “BUSINESS” –SAME HEAVY EXCEPTIONS 2016TOPIC H -- LAWERY-CLIENT CONFLICTS 13

RESTRICTIONS ON GIFTS FROM CLIENTS GIFTS ARE NOT PER SE FORBIDDEN SOLICITING A CLIENT GIFT IS FORBIDDEN R. 1.8(c) – NO EXCEPTIONS >>> 2016TOPIC H -- LAWERY-CLIENT CONFLICTS 14

DRAFTING PAPERS FOR A CLIENT GIFT IS FORBIDDEN –NO DRAFTING OF AN INSTRUMENT GIVING LAWYER (OR LAWYER’S RELATIVE) A GIFT R. 1.8(C) – NO EXCEPTIONS, UNLESS CLIENT/LAWYER ARE THEMSELVES RELATIVES –INCLUDES TESTAMENTARY GIFT 2016TOPIC H -- LAWERY-CLIENT CONFLICTS 15

RESTRICTION ON GIFTS TO CLIENTS IN LITIGATION CONTEXT, A LAWYER CAN “ADVANCE” LITIGATION COSTS IN LITIGATION CONTEXT, A LAWYER CAN PAY LITIGATION COSTS FOR AN INDIGENT CLIENT BUT OTHERWISE: NO FINANCIAL ASSISTANCE IS ALLOWED BY ABA RULE 1.8(e)>>> 2016TOPIC H -- LAWERY-CLIENT CONFLICTS 16

ABA COMMENT 10 SAYS THE REASONS FOR THIS RESTRICTION ARE: 1.TO DISCOURAGE GROUNDLESS LITIGATION 2.TO AVOID GIVING THE LAWYER TOO MUCH STAKE IN THE CASE [TEXAS R. 1.08(d) IS LESS RESTRICTED – MEDICAL AND LIVING COSTS CAN BE PAID] 2016TOPIC H -- LAWERY-CLIENT CONFLICTS 17

LITERARY RIGHTS RELATING TO THE REPRESENTATION –USUALLY CRIMINAL CASE CANNOT NEGOTIATE THESE UNTIL THE REPRESENTATION IS OVER R. 1.8(d) 2016TOPIC H -- LAWERY-CLIENT CONFLICTS 18

FINANCIAL ASSISTANCE TO CLIENTS R. 1.8(e) IS NOT REALLY A “CONFLICT” SITUATION UNLESS REPAYMENT IS INVOLVED STILL PROHIBITED IN LITIGATION SITUATIONS, OR LIMITED, FOR PUBLIC POLICY REASONS 2016TOPIC H -- LAWERY-CLIENT CONFLICTS 19

EXCEPTIONS: –ADVANCEMENT OF CASE EXPENSES EVEN IF REPAYMENT IS CONTINGENT –PAYMENT OF CASE EXPENSES FOR INDIGENT CLIENTS 2016TOPIC H -- LAWERY-CLIENT CONFLICTS 20

LIMITING PROSPECTIVE MALPRACTICE CLAIMS LIMITING AMOUNT IS RESTRICTED R. 1.8(h) –CAN DO IF CLIENT IS INDEPENDENTLY REPRESENTED FOR THE RESTRICTION IF CLIENT IS NOT INDEP. REPRESENTED: CAN PROSPECTIVELY LIMIT THE PROCEDURE TO BINDING ARBITRATION R. 1.8 C TOPIC H -- LAWERY-CLIENT CONFLICTS 21

SETTLING A MALPRACTICE CLAIM IS HEAVILY RESTRICTED R. 1.8(h)(1) CLIENT MUST HAVE INDEPENDENT COUNSEL 2016TOPIC H -- LAWERY-CLIENT CONFLICTS 22

SETTLING A PROSPECTIVE MALPRACTICE CLAIM IS ALSO RESTRICTED R. 1.8(h)(2) BUT LESS –CLIENT NEED NOT HAVE INDEPENDENT COUNSEL CLIENT MUST BE ADVISED, IN WRITING, OF DESIRABILITY OF INDEPENDENT COUNSEL 2016TOPIC H -- LAWERY-CLIENT CONFLICTS 23

[JANICKE COMMENT: DIFFICULT TO TELL WHEN A POTENTIAL MALPRACTICE CLAIM EXISTS. –MOANING AND GROANING? – COMPLAINTS ABOUT BILLS?] 2016TOPIC H -- LAWERY-CLIENT CONFLICTS 24