Ethical Considerations in Economic Development Aaron J. Harkins 17 th Annual DC Indian Law Conference November 10, 2015

Tribal Project Developments ► Complicated Legal and Regulatory Environment Unsettled and untested law Regulatory approvals subject to review Litigation is common ► Historical Record May determine the outcome of important legal questions Often unclear or unknown Subject to interpretation ► Political Considerations 2

Duties to Clients ► General Duties owed to Clients Fiduciary duty Duty to possess and apply the knowledge, skill and care ordinarily used by reasonably well-qualified attorneys Duty to represent and advise clients in a non-negligent, responsible and competent fashion. ► Does a lawyer have an obligation to advise clients of all legal risks that could affect a proposed project? ► Does the lawyer need to advise clients that the law could either change or be misapplied by courts? 3

Case Study: When Problems Arise ► Clients were seeking to develop a new gaming facility for a Tribe. ► Proposed site was an allotment held in trust for a member of the Tribe. ► Lawyers were engaged by Clients to, among other things, assess the legal and regulatory requirements for pursuing gaming on the proposed site. ► Clients were relying on the opinions and advice of the Lawyers in deciding whether and when to make expenditures, incur debt and begin developing the new gaming facility. 4

First Signs of Potential Problems ► Tribal Facility License Gaming commission submitted a timely notice to the NIGC of intent to issue license NIGC did not respond within 120 days License was issued by the gaming commission ► Tribal Jurisdiction Questioned State Attorney General questioned the adequacy of the Tribe’s jurisdiction over the proposed site Attorney General asked to review Lawyers’ analysis Parties were aware that NIGC was reviewing the Tribe’s jurisdiction 5

Lawyers’ Advice to Clients ► Any regulatory issues which could prevent the project from moving forward would be resolved in the Tribe’s favor. ► No non-tribal party has standing to challenge the facility license issued by the Tribe’s gaming commission. ► Attorney General possessed all the information necessary to conclude that Tribe had jurisdiction over the proposed site. ► A legal challenge would not result in an injunction being issued to prevent development of the facility. 6

Lawyers’ Advice to Clients ► Tribe had the requisite jurisdiction over the proposed site to conduct gaming. ► Adverse determination by the NIGC on the issue of jurisdiction would not prevent the Tribe’s operation of the proposed facility. ► Lawyers did not advise Clients that the Attorney General could pursue legal action to prevent the construction and operation of the facility. ► Based on Lawyers’ advice, Clients hired personnel, entered into numerous construction and equipment contracts and commenced construction of the facility. 7

Problems Arise ► Attorney General commenced an action against the Tribe and the Clients Seeking declaration that the Tribe lacked the requisite jurisdiction to operate facility. Seeking preliminary and permanent injunctions enjoining the construction or operation of the facility. ► Shortly after litigation was commenced, NIGC issued a letter to the Tribe, together with a memorandum prepared by legal staff, concluding that the Tribe lacked the requisite jurisdiction to conduct gaming on the site. ► Court issued a preliminary injunction enjoining construction and operation of the facility. 8

Lawyers Sued by Clients ► Clients sued Lawyers for malpractice, alleging that Lawyers: Failed to advise Clients of potential legal actions that could be taken to block the development or operation of the facility. Negligently advised Clients that gaming could be conducted at the proposed site. Negligently advised Clients that nothing more was required for Attorney General to conclude that Tribe possessed requisite jurisdiction. Failed to advise Clients to delay the expenditure of significant funds and the incurrence of debt until all legal challenges were resolved. Negligently assured Clients that Attorney General’s legal challenge would be unsuccessful. Failing to adequately advise Clients of the potential risks of moving forward with the development and construction of the proposed facility. 9

Subsequent Events while Litigation Pending ► Supreme Court decided Michigan v. Bay Mills Indian Community. ► In reliance on Bay Mills, the Attorney General’s action was dismissed with prejudice and the preliminary injunction was vacated. ► Lawyers’ advice to Clients regarding the Attorney General’s standing to challenge the facility license and to seek an injunction was ultimately correct. Were the Lawyers’ still negligent by not advising Clients that a court could misapply the law and wrongfully issue an injunction? Were the Clients’ damages the result of the Lawyers’ negligence or the District Court’s misapplication of the law, which was eventually corrected? 10

NIGC Letter ► Although the Attorney General’s action was dismissed, Clients also claim existence of the NIGC letter prevents the project from moving forward. ► Lawyers disagree and believe that advice regarding the Tribe’s jurisdiction may still be correct. NIGC letter is nonbinding. NIGC does not have jurisdiction over activities on the site until gaming commences. 11

NIGC Letter ► How could conclusions in NIGC letter become binding? The facility would need to be opened and gaming commenced. The NIGC would need to issue a notice of violation and seek a temporary closure order. The full Commission would need to determine that the closure order should be permanent, which would then constitute a “final agency action.” The Tribe would have to challenge the NIGC’s determination in federal court, and a federal court would need to determine the closure order was proper after the exhaustion of all appeals. ► Clients unwilling to accept the financial risk of testing the NIGC’s position. 12

Questions 13