Merri Baldwin Brian Martin John Steele Maya Steinitz CONTRACTING AROUND ETHICS RULES (ABA-CPR; JUNE 2014)
Henry Sumner Maine Ancient Law 1861
Henry Sumner Maine “The movement of progressive societies has hitherto been a movement from Status to Contract” Maine, Ancient Law, Chapter 5
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Henry Sumner Maine “… [those] persons … are subject to extrinsic control [because] they [lack] the faculty of forming a judgment of their own interests; in other words, that they are wanting in the first essential of an engagement by contract. ” Maine, Ancient Law, Chapter 5
Status to Contract “The legal profession is moving away from traditional conceptions of professionalism to a commercialized and industrialized alternative. ” John Flood, Will There Be Fallout from Clementi? (http: //papers. ssrn. com/sol 3/papers. cfm? abstract_id=1128398)
Status to Contract Corporate GC and Biglaw Lawyer: GC: “Are you trying to contract for the sale of your conflicts space? ” Biglaw: “Are you trying to buy it? ”
Privatizing Ethical Obligations “clients can, in fact, exert considerable influence over the ethical behavior of their outside counsel. More significantly … such influence is an important form of ‘private regulation’ that may fill in the gaps between government regulation of legal ethics and self-regulation by the industry” [Christopher J. Whelan & Neta Ziv, Fordham Law Review, 2012]
Theses 1. 2. 3. 4. 5. Courts should presume the validity of contracts between lawyers and clients with in-house GCs. Contracts of that type are generally beneficial to clients and lawyers. Vulnerable clients should be more limited in their ability to enter into such contracts. Judicial review of certain categories of agreements is necessary. This process is more developed than most judges realize.
Contracting Around?
Clash of Ethics and Conflicts in Non-Class Aggregate Litigation Professor Nancy Moore (Boston University) "Ethical Issues in Mass Tort Plaintiffs' Representation: Beyond the Aggregate Settlement Rule" 81 Fordham Law Review 3233 (2013).
Questionable Provisions in Non-Class Aggregate Litigation Lawyers shall: Recommend the settlement Rire clients who don’t settle Refuse new clients Clients bound re settlement by: Majority or super-majority vote Committee vote Clients receive a group representation rather than individual representation
Corporate Affiliate Conflicts One Client Clause Enforced GSI Commerce Solutions v. Baby. Center, LLC 618 F. 3 d 204 (2 nd Cir. 2010) E 2 Interactive v. Blackhawk 2010 U. S. Dist. LEXIS 48333 One Client Clause Not Enforced
Some Examples
2011 US App LEXIS 19414 (Fed. Cir. 9/22/11) In re Shared Memory Graphics LLC In-house lawyer covered by JDA Advance waivers are ok, even beneficial DQ motion denied Dissent: would ignore advance waiver
APPC Services v. AT&T Corp. Firm’s written agreement bound lawyer who left firm Agreement exceeded ethics rules standards
2011 US Dist LEXIS 46237 (4/29/2011) Multimedia Patent Trust v. Apple Splitting suits to avoid current client conflict Other firm handled suit against current client Same technology at issue Client intervened; DQ denied
62 Hastings L. J. 677 (2011) Rotunda Resolving Client Conflicts by Hiring "Conflicts Counsel"
2013 US Dist LEXIS 24171; N. D. Tex. (2/21/2013) Galderma v. Actavis Upholds open-ended advance waiver at to unrelated matters Advance waiver held enforceable Client: sophisticated purchaser of legal services Client reppred by sophisticated GC
Macy's Inc. v. J. C. Penny Corp. , 2013 NY Slip Op 04891 (App Div, 1 st Dept June 27, 2013) [2013 BL 170689] Upholds open-ended advance waiver at to unrelated matters Was not signed by client! If you accept our work, you agree to these terms In-house lawyer “subliminally rejected” clause Macy’s v. J. C. Penny Corporation
OCG Terms 1. 2. 3. 4. 5. 6. 7. 8. Client ID Definition of “Conflict” Process for Conflicts/Waivers Tasks and Tactics Indemnification Most-Favored-Nation Choice of Ethics Rules 1 -Lawyer Rule
Choice of Ethics Law Choice of ethics law rejected “Back door” provision in 8. 5
Corporate Affiliates This Representation is limited to representing the Company [and any entities listed on Exhibit A]. Company acknowledges that the Representation does not include the representation of any individual, officer or subsidiary, parent, or other corporate affiliate of the Company [unless included on Exhibit A]; any future expansion of the engagement beyond the Actions will be specified in writing.
Funding Clauses 1. 2. 3. 4. 5. 6. Choice of Counsel Decision-making Attorney Loyalty Frivolous Litigation Confidentiality/Monitoring Keeping Funder Advised
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