1. 1 2014 ACC-SoCal In-House Counsel Conference #IHCC14 Secrets, Lies, And Money! Ethical Rules For Interacting With Non-Lawyers In Litigation And Transactions January 29, 2014 Anaheim, California Sponsored by Sidley Austin LLP Panelists: Robert W. Kadlec, Sidley Austin LLP Jennifer Altfeld Landau, Sidley Austin LLP Moderator: Katie Rodin, Assistant General Counsel, Anaheim Ducks & Honda Center #IHCC12

2. 090701_2 2 #IHCC14 2014 ACC-SoCal In-House Counsel Conference  Is it ethical for lawyers or parties to pay fact witnesses to cooperate in litigation?  Is it ethical for transactional lawyers to communicate with non-lawyers working for the opposing side of the transaction?  What are the ethical obligations of a lawyer with confidential information detrimental to a client, when participating in negotiations and litigation? Questions For Consideration

3. 090701_3 3 #IHCC14 2014 ACC-SoCal In-House Counsel Conference  Content of testimony vs. reasonable value for time lost, plus expenses incurred – ABA Model Rule 3.4(b) and Comment (3)  ABA Formal Opinion 96-402 – California Rule of Professional Conduct 5-310(B)  California Formal Opinion 1997-149 – 18 USC 201 – Federal anti-bribery and anti-gratuity statute Compensating A Fact Witness

4. 090701_4 4 #IHCC14 2014 ACC-SoCal In-House Counsel Conference  What about royalties or contingent payment in license or consulting agreement? – Generally not acceptable – But some IP cases have approved such arrangements  Ethicon, Inc. v. U.S. Surgical Corp., 135 F.3d 1456 (Fed. Cir. 1998)  ESN LLC v. Cisco, 685 F. Supp 2d 631 (ED Tex. 2009) Compensating A Fact Witness

5. 090701_5 5 #IHCC14 2014 ACC-SoCal In-House Counsel Conference  Can a lawyer prevent a former employee witness from communicating with the other side’s attorneys? – ABA Model Rule 3.4(f) – California Rule of Professional Conduct 5-310(A) “Locking Up” A Fact Witness

6. 090701_6 6 #IHCC14 2014 ACC-SoCal In-House Counsel Conference  Joint representation permissible – ABA Model Rule 1.13(g) – California Rule of Professional Conduct 3-600(E)  Potential conflicts disclosed and waived – ABA Model Rule 1.7 – California Rule of Professional Conduct 3-310  Solicitation rules – ABA Model Rule 7.3 – California Rule of Professional Conduct 1-400  Best Practices Representing A Current Or Former Employee Fact Witness

7. 090701_7 7 #IHCC14 2014 ACC-SoCal In-House Counsel Conference  Corporate “Miranda” / Upjohn Warnings – Who you are, who you represent (the organization), and that you do not represent the employee – The reason for the interview – to give advice to your client, the organization, as part of the investigation – The employee is free to obtain separate counsel – The interview is covered by the attorney-client privilege, and that the privilege belongs to the organization, not the employee – The organization may waive the attorney-client privilege without notice to the employee – The company may disclose the employee’s statements to third parties, including the government, without the employee’s consent – The communication should be kept confidential in order to maintain the privilege – Confirmation that the employee is willing to proceed Communicating With A Non- Lawyer Employee Fact Witness

8. 090701_8 8 #IHCC14 2014 ACC-SoCal In-House Counsel Conference  Prohibition on communication with person represented by counsel – ABA Model Rule 4.2 – California Rule of Professional Conduct 2-100  Limitations on communication with unrepresented person – ABA Model Rule 4.3 – Proposed California Rule of Professional Conduct 4.3(b) Communicating With An Adverse Party’s Employee

9. 090701_9 9 #IHCC14 2014 ACC-SoCal In-House Counsel Conference  Prohibition on communication with person represented by counsel – ABA Model Rule 4.2 – California Rule of Professional Conduct 2-100 Communicating with Represented Parties: Prohibition

10. 090701_10 10 #IHCC14 2014 ACC-SoCal In-House Counsel Conference  Ethical rules apply to transactions as well as litigation, and whether acting in business or attorney capacity – California Rule of Professional Conduct 2-100 and Discussion – Graham v. U.S., 96 F.3d 446 (9th Cir. 1996) – In re Heider, 217 Or. 134 (1959) – In re Lurie, 113 Ariz. 95 (1976) Communicating with Represented Parties: Broad Application

11. 090701_11 11 #IHCC14 2014 ACC-SoCal In-House Counsel Conference  Split on whether constructive knowledge of representation is sufficient – ABA Model Rule 4.2, comment 8 – California Rule of Professional Conduct 2-100 – California Bar Formal Opinion 1996-145 – Snider v. Superior Court (Quantum Productions Inc.), 113 Cal.App.4th 1187 (2003) Communicating with Represented Parties: Knowledge

12. 090701_12 12 #IHCC14 2014 ACC-SoCal In-House Counsel Conference  Subject of the representation – Little Guidance – Common Sense  Continuation of prior representation  Related facts or situation – Prudence Communicating with Represented Parties: Subject

13. 090701_13 13 #IHCC14 2014 ACC-SoCal In-House Counsel Conference  Consent to communication with represented party must come from the party’s counsel – California Rule of Professional Conduct 2-100 – ABA Model Rule 4.2 – ABA Formal Opinion No. 06-443 Communicating with Represented Parties: Consent

14. 090701_14 14 #IHCC14 2014 ACC-SoCal In-House Counsel Conference  Communication via social media – SDCBA Legal Ethics Opinion 2011-2 Communicating with Represented Parties: Social Media

15. 090701_15 15 #IHCC14 2014 ACC-SoCal In-House Counsel Conference  Best Practices – Do not communicate with the other side’s business people without consent of their attorney – Consider all forms of communication – be wary of represented parties being “looped in” on phone or email conversations – Note that the rule applies to communications “about the subject of the representation” – Obtain confirmation that you may copy opposing counsel’s client on email distributions of draft documents, etc. Communicating with Represented Parties: Best Practices

16. 090701_16 16 #IHCC14 2014 ACC-SoCal In-House Counsel Conference  The client is the organization, acting through its officers and employees – ABA Model Rule 1.13 – California Rule of Professional Conduct 3-600 Organization As Client

17. 090701_17 17 #IHCC14 2014 ACC-SoCal In-House Counsel Conference  Duty to follow client’s instructions and to keep confidences – ABA Model Rule 1.2 – ABA Model Rule 1.6 – California Rule of Professional Conduct 3-100 – California Business and Professions Code § 6068(e) Duties Owed To Clients

18. 090701_18 18 #IHCC14 2014 ACC-SoCal In-House Counsel Conference  No duty to protect the interests of non-clients – Fox v. Pollack, 181 Cal. App. 3d 954 (1986) – Skarbrevik v. Cohen, England & Whitfield, 231 Cal. App. 3d 692 (1991)  Limited exceptions – where the third party is the intended beneficiary of the attorney’s services, or – the foreseeability of harm to the third party resulting from professional negligence is not outweighed by other policy considerations Duties Owed To Non-Clients

19. 090701_19 19 #IHCC14 2014 ACC-SoCal In-House Counsel Conference  No disclosure duties owed to opposing parties or their counsel – Goodman v. Kennedy, 18 Cal.3d 335 (1976) – ABA Formal Opinion No. 94-387 (September 26, 1994) Duties Owed To Opposing Parties

20. 090701_20 20 #IHCC14 2014 ACC-SoCal In-House Counsel Conference  Ethical rules prohibiting attorney misconduct – ABA Model Rule 4.1 – ABA Model Rule 8.4 – ABA Model Rule 1.2(d) – California Business & Professions Code § 6106 – California Rule of Professional Conduct 3-210 and related Discussion – Vega v. Jones, Day, Reavis & Pogue, 121 Cal.App.4th 282 (2004) Prohibition on Attorney Misconduct

21. 090701_21 21 #IHCC14 2014 ACC-SoCal In-House Counsel Conference  No obligation to volunteer detrimental information  May not lie  May need to “Report up” and perhaps, ultimately, withdraw – ABA Model Rule 1.13(b) – ABA Model Rule 1.16(a)(1) – California Rule of Professional Conduct 3-600(C) – California Bar Formal Opinion 1996-146 Duties Owed in Negotiations

22. 090701_22 22 #IHCC14 2014 ACC-SoCal In-House Counsel Conference  Duty of candor to the court – standards differ – ABA Model Rule 3.3 – California Rule of Professional Conduct 5-200 – California Business & Professions Code § 6068(d) – California Rule of Professional Conduct 3-100 Duty of Candor: Litigation

23. 090701_23 23 #IHCC14 2014 ACC-SoCal In-House Counsel Conference  Best Practices – Generally have no duty to disclose detrimental information – But cannot knowingly make a false statement of fact or perpetrate a fraud – Duty of confidentiality to client is qualified by duty of candor under the ABA Model Rules – Duty to “report up” and, possibly, to withdraw Duty Of Candor: Best Practices

24. 090701_24 24 #IHCC14 2014 ACC-SoCal In-House Counsel Conference  Robert W. Kadlec – Partner, Corporate and Finance Sidley Austin LLP  Jennifer Altfeld Landau – Partner, Litigation Sidley Austin LLP  Katie Rodin – Assistant General Counsel Anaheim Ducks & Honda Center Panelists