The Business Of Law

When I was in law school there was a story that got told about a guy who tried to cut his hedges by holding his running lawn mower above his head by the handle.  You can guess what happened next.  He loses his grip on the lawnmower and ends up trimming himself rather than the hedges.   The end result: the addition to the lawnmower’s warning label of a ‘do not hold the lawnmower above your head’ caution.   My take on the story, admittedly once I stopped laughing, was that there should have been no need to state something so obvious. All the label really needed to say was that the operation of the lawnmower required common sense.

Today, the nation’s court system faces a similar dilemma as it seeks to manage juries in the age of smart phones  and Twitter. These and other new technologies and applications have not only changed the speed with which we can communicate with the world. They have also made it possible to communicate from virtually any place, at any time – even from a jury room, where such activity is expressly forbidden. Yet somehow it would seem that the ease and prevalence of these new technologies have stripped jurors of common sense when it comes to complying with the rules of the courthouse.

Let’s start with the basics.  Perhaps you’re a “Law and Order” junkie, or a follower of another television courtroom drama.  Maybe you’ve served on a jury, or witnessed a jury trial.  If you have, you’ve likely heard a judge give the jury instructions admonishing them not to discuss the case with anyone and prohibiting jurors from conducting any outside research beyond the evidence presented within the four walls of the courthouse.

Those basic jury instructions are now being forced to catch up with modern technology.  According to BLT: The Blog of Legal Times, a committee of the Judicial Conference of the United States has endorsed a set of model jury instructions for district judges to help them deter jurors from using cell phones, computers or other electronic technologies during jury service.

The intent of the rule is clear, and it’s consistent with the long-standing rules for juries.  Jurors should decide the case before them on the merits, based on only the evidence as presented in the courtroom.

To ensure this, judges will sometimes order juries sequestered, to prevent them from being exposed to outside information. But what do you do when a juror can access a dictionary, an encyclopedia and a copy of every newspaper in the world, all at the push of a button on their cell phone?

Similarly, in the old days, jurors were limited in who they could talk to on the phone while sequestered.  But how do you limit who jurors can talk to, when the media they communicate with expands to include not only mobile phones but also gchat, Twitter, Facebook, Blackberry Messenger, and text messaging?

The answer is that we make the jury instructions very specific, and we trust jurors to do the right thing.  Here are the key points of the proposed model federal jury instructions:

(Courtesy of our friends at: BLT, The Blog of Legal Times)

Before Trial:

…you should not consult dictionaries or reference materials, search the internet, websites, blogs, or use any other electronic tools to obtain information about this case or to help you decide the case.

…many of you use cell phones, Blackberries, the internet and other tools of technology. …You may not communicate with anyone about the case on your cell phone, through e-mail, Blackberry, iPhone, text messaging, or on Twitter, through any blog or website, through any internet chat room, or by way of any other social networking websites, including Facebook, My Space, LinkedIn, and YouTube.

At the Close of the Case:

During your deliberations, you must not communicate with or provide any information to anyone by any means about this case. You may not use any electronic device or media, such as a telephone, cell phone, smart phone, iPhone, Blackberry or computer; the internet, any internet service, or any text or instant messaging service; or any internet chat room, blog, or website such as Facebook, My Space, LinkedIn, YouTube or Twitter, to communicate to anyone any information about this case or to conduct any research about this case until I accept your verdict.

What do you think?  Important update, or needless revision?

Kim Atkins over at Lawyers USA recently had a nice piece (subscription required) on the data security bills working their way through the U.S. House and Senate.  Certainly law firms who often deal with confidential personal information and who are increasingly collecting that information online, will need to be aware of the provisions that will likely be included in a compromise bill.  In the meantime states are not waiting on the federal government to act.  For example,  Massachusetts’ data privacy security act, considered one of the strictest in the nation, goes into effect March 1.

In the House, the Data Accountability and Trust Act, H.R. 2221, would require any person or business that acquires online personal information, or has a third party maintaining such data, to have information security practices to protect the data.

According to Atkins:

All covered individuals would be required to put into place a security policy for collecting, selling and maintaining the information, designate a contact person responsible for managing the information and create a plan to address system vulnerabilities.

Violations of the law could carry fines up to $5 million per offense.

The Senate bill, the Personal Data Privacy and Security Act, S. 1490, would require people who buy and sell data to implement similar data privacy and security programs.

Having witnessed too many high profiles examples of lax cybersecurity, the Congress appears to mean business.

As I’ve written before, here and here, the rules of legal ethics are being forced to adapt to changing circumstances in the profession caused by the social networking revolution.  The latest example of this is a legal ethics ruling out of Florida in which the state’s Judicial Ethics Advisory Committee said that judges and lawyers should avoid “friending” one another on the popular social networking site Facebook.   (The opinion specifically says it isn’t picking on Facebook:  the rule would apply to similar types of social networking sites).

The AP has a nice write up of the Florida situation here.

Specifically, the committee was worried that “friendships” could create the impression that lawyers have a special relationship with their judge friends that could give rise to some kind of undue influence.  I appreciate the concern but am afraid that the cure does more harm than good.

One of the judges from Florida quoted in the AP story said the following: “We as judges can still be good judges and still have friends. Part of our job is to not let that friendship interfere in any way with our decisions,” he said.  Of course, he’s exactly right: Judges will always have relationships with attorneys who practice before them.

But here is where I think that the Florida advisory committee might have gotten this one wrong.  When does less information ever lead to greater safety?  If a judge feels that he or she knows a particular lawyer well enough to allow that person to view the pictures of the judge’s last skiing vacation with the kids, wouldn’t it be better for everyone to know that?

Consider what happened before and continues now in the Facebook age.  Judges and lawyers talk when they meet in the changing room at the country club or when they see each other in the local grocery store.  The medium is different (golf course, grocery store, or social networking site) but the relationship is no different. In fact, on Facebook, one could argue that the relationship is much more transparent.

One of the many advantages of our increasingly interconnected world is the idea that it promotes greater transparency.

We know judges have friends, and we know that the possibility exists that those relationships could influence their decisions.  We hope they don’t, but we know it’s possible.  So again I ask:  isn’t it better to know about those potential relationships?

Facebook and other social networking sites don’t create relationships; they are a manifestation of them, a medium through which those relationships occur.  In the case of judges and lawyers, I’d prefer that those relationships were out in the open, where everyone could see them and thus be the judge (pardon the pun) of whether a judicial decision is influenced by a friendship.

A recent Florida District Court of Appeal case could raise serious implications for so-called “third-party litigation financing” (TPLF).  TPLF is the practice of providing money to a party to a lawsuit with repayment of the loan contingent on the party “winning” the case.

Here’s how it works:  I am hurt, I want to sue the party that hurt me, but I cannot afford the costs of litigation.  Currently, there are lenders who will loan me the money to pursue the matter (based on their belief that I will win) and if/when I reach a settlement or am awarded damages, I have to pay back the loan plus interest.

The Florida case was significant since it held that a third-party funder was by law, a “party” to the lawsuit, rather than an arms-length lender.  The reason that this matters is because the court then held the lender liable for the other side’s attorney’s fees and costs — just as it held the named plaintiff liable.  That’s important, because if you’re a party to a lawsuit you expose yourself to all kinds of responsibility and liability that a lender certainly doesn’t bargain for.

For me, the Florida ruling is a chilling one for lenders because it says that if a lender lends you the money for a lawsuit, and tries to protect its loan by involving itself in the case, then they may have the same liability that you do.   In its decision, the court focused on the degree to which the lender sought to participate in the plaintiff’s prosecution of the lawsuit in order to protect its loan, honing in on the fact that the lender had the right to approve the choice of counsel, “veto power over whether litigation was filed, who would file it, and how it would be pursued,” and “final say over any settlement”.

Granted this lender played a much more active role than typical TPLFs but what a slippery slope the court’s decision starts us down.

Keep in mind that the court wasn’t saying the plaintiff was a shill for the lender.  But consider the potential ramifications of this decision.  Imagine that after you take over your father-in-law’s business, you find that you have to sue a big distributor that has just breached its supply contract, which may result in your company going under.   “Dad” knows the business better than you, he knows just the right lawyer, and has a serious personal stake in his son-in-law’s ability to provide for his daughter.  Maybe he still has some of his money tied up in the business.  So he gets involved and loans money to fund the lawsuit on the condition that he actively participates in how it is run. Do you now have to warn him that he might be on the hook for attorney’s fees if you lose?

Let’s step back from my intentionally one-sided fact pattern and talk about what is really going on here.  There is an ongoing war between those in favor of TPLF as a way to help people most in need get their day in court and those that see it as the work of the devil.   In October, 2009, the U.S. Chamber Institute for Legal Reform (an interest group founded by the U.S. Chamber of Commerce) issued a paper outlining their view of the matter.  In it, they wrote:

“The root of the problem with third-party litigation financing is that it introduces a stranger to the attorney-client relationship whose sole interest is a financial one. “

(As an aside, it’s always interesting when the U.S. Chamber of Commerce is attacking people for having a “financial interest.”)

However, that’s not the Chamber’s real argument.  Its real argument is that access to lending will increase the number of cases that are brought.  For the business community, which sees lawsuits not as an access to justice issue but simply another cost of doing business, that’s a problem.  Right now, businesses rely on the fact that most people don’t know how to or have the money to protect themselves.  If lenders are willing to finance suits, it becomes easier for people to sue, and that means more litigation, more settlements, and more money (and by the way, more compensated tort victims, though they always seem to forget that part).

We at Sokolove support more access to the civil justice system.  We’ve made it our business for over thirty years.  If lenders are able to allow more people to have their day in court, that is a positive development in our view.  Agree? Disagree? I’d love to hear from you.

Martin Lomasney, a legendary Boston politician from the West End, coined a now-popular expression regarding communicating.  He famously advised his young associates, to “never write if you can speak; never speak if you can nod; never nod if you can wink.”

Lomasney would surely spit out his Ward 8 (a drink named in his honor) if he learned that many lawyers are now communicating with their clients via text messaging. But that’s exactly what’s happening.

Like it or not, the mobile communications revolution has hit the legal profession, and according to a recent article in Lawyers USA (subscription required), more and more clients are wanting their attorneys to communicate with them via text message, online chat, or instant messaging applications such as Blackberry Messenger.

That’s good news in some ways for the clients who feel like their lawyer is now more accessible than ever, and they can communicate with them in ever-faster ways.  But according to legal malpractice experts these new media pose new challenges for attorneys.  Here are some of the pitfalls as reported by Lawyer’s USA:

1.    Texting increases the likelihood of errors and miscommunication because of the short rapid phrases and use of abbreviations.

2.    Texting and messenger features employed by smart phones can lead to loss of sensitive data and information.  It’s still fairly easy to lose your phone. But imagine losing your phone with all kinds of sensitive client information stored in old text messages on it.

3.    Texting can also lead to violations of information security because you can’t be sure who’s on the other end of a text message.  Most phones are not as secure as email accounts, and anyone could pick up a cell phone and start texting.

4.    Finally, texting can lead to document recovery and chain of custody issues because text messages can be inadvertently deleted very easily, and they are not typically backed up by a server.

I suspect the same will happen with respect to text messaging and other forms of online and mobile communication.  The times they are a–changin’ and we as lawyers will, once again, have to change the rules and mores  along with them.

As my fellow ethics lawyer Ellen Pansky of Pansky Markle & Ham said in the article:

“Both in a civil action for malpractice or in a disciplinary proceeding, if a lawyer can’t document [that he or she] had a certain communication there is something of a presumption it didn’t happen.”

This is of course exactly what Martin Lomasney wanted.  But for attorneys, it’s better to have a record of what transpired and to preserve that record.

All of that said, I must say that this feels like a bit of much ado about nothing.  I remember when lawyers first started using email and there was somewhat of a hue and cry citing many of the very same concerns now being raised about instant messaging and texting.  Eventually it all died down as the courts and state bars conceded, without saying so, that the prevalence of email required its acceptance as a communication method between  lawyers and their clients.  Today it would be nearly impossible to find attorneys who don’t use email.

I want to give credit in this post.  Credit to the FTC for a very creative legal argument, but more importantly credit to Steven Krane of Proskauer Rose for blowing that argument up in Federal Court.

First a bit of background.  The case at issue had to do with whether the FTC could make law firms comply with a set of regulations designed to prevent identity theft known as the Red Flags Rule.  The rule requires that businesses develop and implement plans to protect the personal information of their customers by screening for certain identity theft “red flags.”  The RFR was born out of the Fair and Accurate Credit Transactions Act of 2003 and requires certain businesses, primarily financial institutions,  to establish “reasonable policies and procedures” to detect and prevent identity theft.

Here’s the FTC’s creative argument.  In seeking to regulate law firms, the FTC  argued that lawyers were essentially in the business of “extending credit” because they typically get paid after they complete their work.  Therefore, the argument went, they are subject to the RFR.  So basically if a lawyer gets paid after they work, they’re just like a bank and therefore subject to these regs.  See what I mean, give them credit for creativity.

Not so fast though. In August the American Bar Association filed suit in federal court in Washington, D.C., to prevent the FTC from applying the Red Flags Rule to attorneys. The ABA was represented by Steven Krane, an attorney at Proskauer Rose with an annoyingly impressive resume who in addition to his many accomplishments is Sokolove Law’s chief consigliere on professional responsibility issues.

On October 29, the judge granted summary judgment for the ABA.   There’s a nice write up of the case here.

The judge made the right decision.  Lawyers don’t extend credit to their clients; some of them simply get paid after the work is complete.  That doesn’t make them “creditors” by any common sense definition, anymore than plumbers, carpenters, accountants or any other service provider can be classified as a “creditor”.

What’s more interesting about the FTC case though is the question of federal regulation of the practice of law—an area traditionally regulated by the states.  Some have argued that we need a more uniform set of professional responsibility rules.  I would agree.  As the largest marketer of legal services in the country, I know full well the task of navigating 50 different sets of rules around legal advertising, and the time and resources that go into compliance with all those rules.

That said, I tend to worry about federal regulations where they don’t appear to be necessary, or worse, are redundant.  For example, lawyers already operate under strict rules of professional responsibility, which require confidentiality on behalf of clients, so why do we need a new federal regulation around identity theft?

At Sokolove Law, our mission is to open the doors of the American civil justice system to everyone. As lawyers and regulators consider new rules, or look to streamline old ones, it seems to me that this mission is a helpful prism through which to consider reform.  Of course there are other reasons for rules changes, but perhaps if we considered whether the effect of a change would be to expand or contract access to the civil justice system that might be a helpful litmus test.

It took three years and I am guessing an obscene amount of time, money and energy on all sides given the reliance on a 300 page Special Master’s Report, but the New Jersey Supreme Court recently overturned a controversial prohibition against New Jersey lawyers  advertising their inclusion in certain ranking systems like  Super Lawyers, Best Lawyers in America and Martindale-Hubbell AV.  The original prohibition had been based on the New Jersey ethical rule that bars as “misleading” lawyers comparing themselves to other lawyers.  While I applaud the baby step in the right direction, it is just that - a baby step and one that came with a ball and chain tied to the poor baby’s ankle.

Under the new regulations, attorneys are free to include the ratings in their marketing materials so long as the conferring service made a legitimate inquiry into the lawyer’s qualifications, and no price was paid for the honor.  In addition, here comes the ball and chain part, ads must include a disclaimer that states “No aspect of this advertising has been approved by the Supreme Court” and describes the methodology for the ranking system or gives a description of where it can be found.

Legal disclaimers are in part what give lawyers a bad name.  I defy anyone to argue with a straight face that the small print or speed talking you see and hear on all different types of advertising, including lawyer advertising, provides any real benefit to the consumer. So as a navigator of the often complicated and varied rules of legal marketing in the 50 states, I’ll still gladly take this baby step forward, even with the ball and chain.

Machiavelli’s “Prince” wisely observed: “Keep your friends close, and your enemies closer” but when it comes to social networking sites, some experts are recommending that bosses keep their subordinates at arms’ length.

As social networking expands at lightning speed, faster than even mores and ethical rules can keep up, employment lawyers are warning that bosses who “friend” their subordinates on social networking sites are exposing themselves to legal risk.

Tresa Baldas over at the National Law Journal had a great piece recently about the risk.  She writes:

Managers sending friend requests to staff via Facebook, Twitter and other sites constitute a growing trend in the workplace. And it’s one that needs to stop, the lawyers stress, because online relations between boss and employee can trigger or exacerbate a host of legal claims, including harassment, discrimination or wrongful termination, as well as touch off cries of favoritism if the boss friends only a select few subordinates.

The problem, of course, is that social networking sites often contain piles of highly personal information about one’s family, religion, sexuality, hobbies, lifestyle, you name it.  What if a worker is fired for a performance issue, and then later claims that the termination was because of some kind of discrimination?

Ordinarily in employment law, the plaintiff would have to prove that as the basis of the claimed discrimination, for example, the employer knew that the employee was gay, or was of a particular ethnicity, or religious group, or had a health condition of some kind, which was known to the employer. Now with the advent of social networking, plaintiffs may be able to prove “knowledge” not because it was said in the office but because it was simply posted. All they must prove is that the boss and subordinate were connected on Facebook.  That could be enough to prove knowledge and it would bolster the plaintiff’s claim.

The bottom line according to the article:

“Bosses who “friend” their subordinates on social networking sites may seem warm and harmless, but they’ve got liability risk written all over them.”

So should we stop any social networking between bosses and subordinates?
No. If companies wanted to shield themselves from employment liability they should in my experience first say goodbye to the office party, night shifts and small satellite offices staffed only by salespeople.  So instead, I am suggesting that companies consider the issue and whether some sort of sensible guidelines could be found to allow for collegiality.

Well, this is not my legal opinion, but I suppose each company is different, and the thing that likely makes the most sense is for companies to get their legal and HR departments together and come up with sensible guidelines that protect both management and employees.

Additionally, as a general rule, think of social networking as a giant cocktail party.  If you wouldn’t pull out pictures of your bachelor party at a cocktail party with your colleagues and subordinates there, then it likely doesn’t make sense to do it on Facebook either.

Everyone knows the old cliché, “you break it, you bought it”. Well we may need to create a new version of that old saying when it comes to lawyer’s interaction with internet sites such as Avvo and Martindale-Hubbell that talk about them. The new saying being, “You touch it, you own it”.

In the world of legal marketing, almost all law firms now have websites, and many are using blogs to publish their expert commentary on legal topics. Some are even including social networking sites like Facebook, LinkedIn and Twitter as part of their effort to promote their services. Finally there are sites like Martindale-Hubbell, SuperLawyers and Avvo that post informational listings of attorneys.

We have seen a continued struggle as state ethics regulators try to apply ethical rules that were often put in place well before the creation of the Internet to the Internets newest applications such as sites like these. A new ethics ruling out of South Carolina reflects just this struggle.

It’s a given attorneys are responsible for the ethical compliance of their advertising. That is, if you place an advertisement you have to be sure it conforms to the applicable ethical rules. What rules apply is a whole other issue.

But what about listings on Avvo, or Martindale-Hubbell? Are those listings third party information, or are they more like ads? Well according to the Ethics Advisory Committee of the South Carolina Bar, lawyers who “claim” their listing on these websites, become responsible for ensuring that the content on the listing is accurate and in conformity with the advertising and other ethical rules. Here’s the problem though: even if a lawyer claims their profile that does not mean that they control all of the material on it. For example most of these sites, allow third parties to make comments about the attorney. Those commenting might be other attorneys or current or former clients.

The South Carolina opinion makes very clear that while websites may post informational listings about lawyers without their knowledge or consent. Once a lawyer, however, participates in the listing, the rules change. “By claiming a website listing, a lawyer takes responsibility for its content and is then ethically required to conform the listing to all applicable rules,” the opinion said. That means that if a client posts a testimonial about how wonderful his or her lawyer was, depending on the jurisdiction, the lawyer might need to either have the testimonial removed or ensure that it has the proper disclaimer. So here are some one of the many unanswered questions – If a lawyer is now required to monitor the web sites that talk about him or her, how often must he or she do it? Once a week, a day, an hour? If the website is now considered an advertisement, because the lawyer “claimed” it, when does a change in the web site require a resubmission of the site for the states that require advertising submissions? What if the change was only to a section the lawyer does not control and that does not implicate the applicable ethical rules?

Greetings readers, my name is Gabriel Miller, and I’m the General Counsel of Sokolove Law.  As the top lawyer for the largest marketer of legal services in the country, I spend a great deal of my time watching very closely the rules of professional responsibility across the country.  From time to time, I’ll weigh in here to comment on interesting happenings in the area of legal ethics.

Last week, law.com brought news that Connecticut outlawed the practice of hiring so-called “runners” to solicit legal business for personal injury lawyers.  The Law.com article had a great description of how the system worked:

“People known as “runners” would be on stand-by, listening to police scanners and waiting for an auto accident to occur so they could rush to the scene. Their job was to contact accident victims and steer them toward specific doctors, chiropractors and, often, personal injury lawyers. The runners would be paid for each client they delivered; sometimes the runners would wait in busy hospital emergency rooms and spot people waiting to be treated and then whisk them out with a promise that they knew a doctor who could see the person immediately.

Runners also obtained police reports and contacted accident victims at their homes. Connecticut trial lawyer, Kathryn Emmett also had heard from other trial lawyers that some accident victims were being encouraged to file insurance claims and lawsuits based on phony injuries”

Connecticut joins 9 other states who have outlawed this practice, punishing lawyers with up to a year in jail and fines up to $5,000 if they are caught hiring “runners”.

What’s really interesting about the law is that it brought trial attorneys and the insurance companies together on the same side of a political debate.  In fact part of the impetus for the law came from the Connecticut Trial Lawyer’s Association, whose members starting hearing about runners’ unscrupulous practices from their clients.

The practice is more common than one might think with lawyers in Philadelphia, New York, and New Jersey having been convicted in recent years for violations of anti-runner laws.

Simply put, the practice of hiring runners, and other such actions give all attorneys, but particularly personal injury lawyers a bad name. There is a big difference between providing access to the civil justice system by educating people about their legal rights and options, and preying on people when they are the most vulnerable.

The Connecticut Trial Lawyers and their colleagues around the country are smart to support reasonable regulation to weed out the bad actors.

If you have a question about this or another topic on legal ethics and professional responsibility or if you know of a topic you’d like me to comment on, drop me a note.