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, EXCEPT FEES FOR LEGAL SERVICES >>> 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 ONE 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 – BUT ON CONSTRAINING THE STIRRING UP OF LITIGATION 2016TOPIC H -- LAWERY-CLIENT CONFLICTS 10

USING CLIENT 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>>> 2016TOPIC H -- LAWERY-CLIENT CONFLICTS 11

EXAMPLES: ADVICE TO LATER CLIENT RE. SELLING STOCK IN FORMER CLIENT CORP. ADVICE TO LATER CLIENT TO AVOID BUYING LAND OWNED BY FORMER CLIENT 2016TOPIC H -- LAWERY-CLIENT CONFLICTS 12

[FOR STOCK, COULD BE CRIMINAL SANCTION AS WELL – INSIDER TRADING] 2016TOPIC H -- LAWERY-CLIENT CONFLICTS 13

FURTHER SPECIFIC CONSTRAINTS ON LAWYERS R. 1.8 NO CLIENT-PROPERTY TRANSACTIONS R. 1.8(a) SAME AS FOR “BUSINESS” –SAME HARD-TO-MEET EXCEPTIONS 2016TOPIC H -- LAWERY-CLIENT CONFLICTS 14

RESTRICTIONS ON GIFTS FROM CLIENTS GIFTS ARE NOT PER SE FORBIDDEN SOLICITING A CLIENT GIFT IS FORBIDDEN R. 1.8(c) – NO EXCEPTIONS AND: >>> 2016TOPIC H -- LAWERY-CLIENT CONFLICTS 15

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 –HELPING WITH DRAFTING IS ALSO FORBIDDEN 2016TOPIC H -- LAWERY-CLIENT CONFLICTS 16

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 17

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 18

LITERARY RIGHTS RELATING TO THE PRESENT REPRESENTATION –USUALLY IN A CRIMINAL CASE CANNOT NEGOTIATE THESE UNTIL THE REPRESENTATION IS OVER R. 1.8(d) OTHER LITERARY RIGHTS: COME UNDER THE GENERAL RULE LIMITING BUSINESS WITH CLIENTS 2016TOPIC H -- LAWERY-CLIENT CONFLICTS 19

LIMITING PROSPECTIVE MALPRACTICE CLAIMS LIMITING THE AMOUNT IS HEAVILY RESTRICTED R. 1.8(h) –CAN DO IF CLIENT IS INDEPENDENTLY REPRESENTED FOR THE LIMITATION AGREEMENT IF CLIENT IS NOT INDEP. REPRESENTED: CAN PROSPECTIVELY LIMIT THE PROCEDURE TO BINDING ARBITRATION R. 1.8 C TOPIC H -- LAWERY-CLIENT CONFLICTS 20

SETTLING A MALPRACTICE CLAIM IS ALSO RESTRICTED, BUT LESS R. 1.8(h)(2) CLIENT MUST BE ADVISED IN WRITING RE. GETTING INDEPENDENT COUNSEL 2016TOPIC H -- LAWERY-CLIENT CONFLICTS 21

SETTLING A PROSPECTIVE MALPRACTICE CLAIM SAME RULE R. 1.8(h)(2) –CLIENT MUST BE ADVISED IN WRITING RE. INDEPENDENT COUNSEL 2016TOPIC H -- LAWERY-CLIENT CONFLICTS 22

[JANICKE COMMENT: DIFFICULT TO TELL WHEN A POTENTIAL MALPRACTICE CLAIM EXISTS. –MOANING AND GROANING? – COMPLAINTS ABOUT BILLS?] 2016TOPIC H -- LAWERY-CLIENT CONFLICTS 23