1. HAVE YOU BEEN NAPPING RIP VAN WINKLE? 2013-2014 ETHICS UPDATE March 28, 2014 Georgette Phillips Kevin L. Shepherd Pamela Westhoff

2. Overview Review work by ABA Commission on Ethics 20/20 Review several recent opinions from the ABA Standing Committee on Ethics and Professional Responsibility 2

3. ABA Commission on Ethics 20/20 Created in 2009; last action taken in February 2013 Focus on Model Rule changes in context of advances in technology and global legal practice developments ABA House of Delegates adopted 10 resolutions approving changes in Model Rules 3

4. GLOBALIZATION Mainly dealt with globalization, i.e., foreign lawyers practicing in U.S. Unauthorized Practice of Law and Multijurisdictional Practice of Law (Model Rule 5.5) (Feb. 2013) Allows foreign lawyers to practice in U.S. for employer on matters that do not involve U.S. law If foreign lawyer provides advice on U.S. law, foreign lawyer must base that advice on advice of a lawyer who is licensed in that jurisdiction to provide such advice 4

5. GLOBALIZATION CONT. Model Rules for Registration of In-House Counsel (Feb. 2013) 2008 Model Rule provides for registration of in- house counsel located in another U.S. jurisdiction Makes applicable to lawyers licensed in foreign jurisdiction Can render advice only to employer Cannot appear before tribunals Subject to disciplinary authority in jurisdiction Terminates upon employment termination 5

6. GLOBALIZATION CONT. Pro Hac Vice – Allowed for foreign lawyers in pending litigation (Feb. 2013) Additional Requirements: Training and Experience Knowledge of law to be applied Relationship with client and knowledge of facts English facility Local Counsel more responsibility for Conduct of Proceeding (e.g., attend all depositions) Advice regarding law where there is a difference 6

7. DISCIPLINARY AUTHORITY; CHOICE OF LAW Change to Comment 5 of Model Rule 8.5 (Feb. 2013) Not subject to disciplinary authority of a jurisdiction if reasonably believes that “predominant effect” of conduct occurs in another jurisdiction Choice of law in engagement letter can be considered as “reasonable belief” in context of conflicts of interest 7

8. TECHNOLOGY Technology and Confidentiality (Aug. 2012) Screening – Applies to electronic information (Model Rules 1.0 and 1.6) Competence – requires knowledge of risks and benefits of technology applies to email, social media, cloud computing and cloud storage Communication – Must respond to emails promptly Does not address whether lawyer must take additional steps to safeguard client’s information to comply with federal or state data privacy laws 8

9. DISCLOSURE New Model Rule 1.6(c) – lawyer must use “reasonable efforts” to prevent unauthorized or inadvertent disclosure of information relation to client representation. Applies to: Misdirected email Hacking Unauthorized posting of confidential information 9

10. DISCLOSURE What are factors in determining “reasonable efforts”? Sensitivity of information Likelihood of disclosure if additional safeguards not used Cost of additional safeguards Difficulty of employing additional safeguards Adverse impact on client representation 10

11. INADVERTENT DISCLOSURE Unauthorized and Inadvertent Disclosure Three issues Hacking Unauthorized personnel “posting” Misdirected email Must take reasonable efforts to prevent Client may require special security measures not required by Model Rules Client may be required to give informed consent to fewer safeguards than required by Model Rules Privacy laws – may require more protection 11

12. INADVERTENT DISCLOSURE Rule applies to misdirected e-mail New Comment requires you to tell the recipient to notify the other side – “Return to Sender” Does not deal with the issue of whether you can use it or whether information loses its privileged status States have issued differing opinions 12

13. CLIENT DEVELOPMENT Prospective Clients – Model Rule 1.18 Prospective client = person who consults with lawyer about possibly forming a client-lawyer relationship with respect to a matter Consultation may include electronic communications “Reasonable Expectations” of creation of relationship can be limited by cautionary statements Eliminates potential “taint shopping”—person who communicates with lawyer for purpose of disqualifying the lawyer is not a prospective client 13

14. ADVERTISING Model Rule 7.2 – Can pay for Internet leads if generator states: Not recommending lawyer It is being paid Not analyzed legal issue Tries to distinguish “runners” and “marketers” 14

15. ADVERTISING Model Rule 7.3 – Solicitation of Clients Automatically generated responses to Internet searches OK Google ads OK Mere response to request for information OK Potential for abuse when solicitation involves direct in- person/real time electronic contact by lawyer with someone known to need legal services 15

16. OUTSOURCING Labor—comment to Rule 1.1 (Aug. 2012) Outsourcing = lawyer retains lawyers outside of firm to provide/assist in provision of legal services to client Need client consent Must be “competent” Must not be assisting in UPL 16

17. OUTSOURCING Services Title of Model Rule 5.3 changed from “Assistant” to “Assistance” Applies not only to labor but to services such as Database management Internet based storage (cloud computing) Lawyer needs to use “reasonable efforts” to assure that outside vendor complies with lawyer’s confidentiality obligations May be necessary to disclose and obtain client consent. Supervisory authority applies to non-employee non-lawyer assistants 17

18. UNIFORMITY/MOBILITY Practice Pending Admission Allowed for up to 1 year if lawyer has been in active practice for 3 of last 5 years Virtual Presence may constitute UPL Admission by Motion Conflicts and Laterals Allows limited disclosures for conflict detection and resolution. 18

19. NON-LAWYER OWNERSHIP Commission punted issue in 2012 to the ABA Standing Committee on Ethics and Professional Responsibility Can lawyer in jurisdiction that prohibits nonlawyer ownership of law firms and sharing of legal fees with nonlawyers divide a fee with a lawyer in a different firm in which such ownership or fee sharing occurs and is permitted by Rules applicable to that firm? Is fee sharing permissible among lawyers in single firm where the Rules applicable to one of the firm’s offices permit nonlawyer owners and the Rules applicable to another of the firm’s offices do not? 19

20. NEW ABA FORMAL OPINIONS Opinions issued by ABA Standing Committee on Ethics and Professional Responsibility 4 opinions issued in 2012-2013 and 4 in 2011 20

21. Opinion re E-Mail with One’s Client (No. 11-459) Duty to protect the confidentiality of e-mail communications with one’s client Must warn if “significant risk” that a third-party will access Ex. Advise client not to send attorney/client information via employer’s email system or through library, hotel, or borrowed computer 21

22. Opinion re Third Party’s Email Communications (No. 11-460) Duty when Lawyer Receives Copies of a Third Party’s E-mail Communications with Counsel Old ethical rules (Model Rule 4.4(b)) do not require notification (Note: new rule approved in 2013 requires notification) Other rules may require disclosure Is allowed if these rules require If no rule, up to the client, but lawyer must explain the implications and alternatives 22

23. Opinion re Direct Contact with Represented Persons (No. 11-461) Advising Clients Regarding Direct Contacts with Represented Persons (Model Rule 4.2’s “no contact” rule) May assist client with the substance, e.g., lawyer can draft talking points Such assistance may not result in overreaching, e.g., disclosure of confidential information. 23

24. Opinion re Judges' Use of Electronic Social Networking Media (No. 11-462) Can you “friend” a judge? Can judge “friend” you? Allowed if it does not affect independence, integrity, or impartiality or create appearance of impropriety 24

25. JUDGES AND SOCIAL MEDIA Should not be used: to “friend” in a manner that would indicate an ability to influence the judge to create “ex parte” communications to obtain information on pending matters for judicial campaigns should not “like” other people’s campaigns 25

26. Opinion re Client Due Diligence, Money Laundering, and Terrorist Financing (No. 463) Committee took nearly 2 years to issue opinion Committee rejected modification to Model Rules or addition of new Comment The Good Practices Guidance is consistent with the Model Rules and provides information to help lawyers recognize and evaluate situations where providing legal services may assist in money laundering and terrorist financing. By implementing the risk-based control measures detailed in the Good Practices Guidance where appropriate, lawyers can avoid aiding illegal activities in a manner consistent with the Model Rules. 26

27. Opinion re Client Due Diligence, Money Laundering, and Terrorist Financing (No. 463) House of Delegates approved Voluntary Good Practices Guidance to Combat Money Laundering in August 2010. Opinion states that Good Practices Guidance is consistent with the Model Rules and provides information to help lawyers recognize and evaluate situations where providing legal services may assist in money laundering and terrorist financing. By implementing the risk-based control measures detailed in the Good Practices Guidance where appropriate, lawyers can avoid aiding illegal activities in a manner consistent with the Model Rules. 27

28. Opinion re Division Of Fees With Non- Lawyers (No. 464) Lawyers subject to the Model Rules may work with other lawyers or law firms practicing in jurisdictions with rules that permit sharing legal fees with nonlawyers. Where there is a single billing to a client in such situations, a lawyer subject to the Model Rules may divide a legal fee with a lawyer or law firm in the other jurisdiction, even if the other lawyer or law firm might eventually distribute some portion of the fee to a nonlawyer, provided that there is no interference with the lawyer’s independent professional judgment. 28

29. Opinion re “Deal of the Day” Marketing Programs (No. 465) Lawyers hoping to market legal services using these “group coupon” programs must comply with various Model Rules, including rules governing fee sharing, advertising, competence, diligence, and the proper handling of legal fees. Lawyer must determine whether conflicts of interest exist. Although the Committee believes that coupon deals can be structured to comply with the Model Rules, it has identified numerous difficult issues associated with prepaid deals and is less certain that prepaid deals can be structured to comply with obligations under the Model Rules. 29

30. OTHER ITEMS OF INTEREST New York State Bar Association Opinion – 969 (June 12, 2013) Allows lawyers to limit their liability to a non-client (Model Rule 1.8) But not to client Opinion Letters Can you limit your liability to the amount of malpractice insurance? Can you limit the liability to the firm itself, not the attorney(s) preparing the opinions individually? 30

31. CONCLUSION THANK YOU