Professional Responsibility Cases

Front 1

Spaulding v. Zimmerman

Back 1

Brief Fact Summary. In the course of settlement negotiations, defense counsel elected not to share with minor plaintiff information regarding a potentially life-threatening condition that their doctors had found in discovery. After learning of this condition two years later, Plaintiff moved to vacate the settlement, arguing that he would not have agreed to the same settlement if he had been made aware of this condition.

Synopsis of Rule of Law. The extent of a lawyer’s duty to disclose.

Facts. Plaintiff, David Spaulding, was a victim in a serious car accident. Insurance companies for both sides conducted examinations of him to determine the extent of his injuries, but only the defendant’s doctor discovered that his life was at risk from a serious brain aneurysm which may or may not have been caused by the accident. Counsel for Defendant Zimmerman decided not to reveal this information while negotiating settlement. Plaintiff did not become aware of this condition until two years later, and requested that the trial court vacate the prior settlement at that time. Defendant appeals.

Issue. Can the prior settlement order be vacated on the grounds that Defendant knew of Plaintiff’s condition when Plaintiff did not?
Held. Yes. The lower court did not abuse its discretion in vacating the settlement.
While Defendant’s counsel had no specific ethical obligation to disclose Plaintiff’s life-threatening condition, they had reason to know that Plaintiff would not have agreed to the same settlement had he known of it.

Discussion. It is important to note that Plaintiff was a minor at the time of the settlement. Had he been an adult, it is more likely that he would have been bound by it, although he would have had grounds for a claim against both his doctor and his lawyer for malpractice.

Front 2

Commonwealth v. Stenhach

Back 2

Brief Fact Summary. Public defenders came into possession of a rifle barrel which their client was alleged to have used during a murder and are now appealing various obstruction charges relating to their failure to relinquish it to the prosecution.

Synopsis of Rule of Law. Defendants and their counsel must relinquish all incriminating physical evidence to the prosecution before trial. Withholding such evidence constitutes an obstruction of justice.

Facts. Defendants George and Walter Stenhach, part-time public public defenders in Potter County, Pennsylvania, were appointed to represent Richard Buchanan, a murder suspect. They retained Daniel Weidner, a former police officer, to investigate the crime scene to retrieve various pieces of evidence identified by the defendant. Weidner recovered a broken rifle stock from a rifle matching the description of the one the client had provided, and returned it to the Defendants. Defendants considered the issue and determined that they were “obligated” to keep this evidence to protect their client. The stock was stored in a paper bag in Defendants’ office until its existence was revealed on the fourth day of trial. Defendants were charged with several counts of obstruction of justice, which they now appeal.

Issue.
Must defense counsel provide the prosecution with incriminating physical evidence?
Was the statute under which the Defendants were convicted unconstitutionally vague or overbroad?
Held.
Yes. Incriminating physical evidence is not protected by any privilege, and defense counsel has a duty to deliver it to the prosecution immediately after a reasonable time for examination.
Yes. These statutes do not provide enough notice for what might constitute a crime in these kinds of circumstances. Effective criminal statutes must clearly proscribe certain types of behavior. Reversed, sentence vacated.

Front 3

United States v. Gallene

Back 3

Brief Fact Summary. Defendant applied to act as counsel for bankruptcy proceedings without disclosing that one of the filing corporations primary creditors was a client of his firm’s.

Synopsis of Rule of Law. Rule 2014 of the Federal Rules of Bankruptcy Procedure.

Facts. Defendant, attorney John Gallene, assisted Bucyrus, a Wisconsin corporation, in filing for bankruptcy. He then applied to the federal bankruptcy court to act as counsel for bankruptcy proceedings without disclosing that Bucyrus’s primary creditors was already a client of his firm’s. He was sentenced to 15 months and $15,000 for bankruptcy fraud and perjury, and now appeals.

Issue. Was there sufficient evidence presented at trial to established that Defendant’s failure to disclose his firm’s prior relationship with his client’s creditor was fraudulent?

Held. Yes. Defendant’s knowing omission of material facts met the statute’s requirements, and the government provided sufficient evidence (including the Defendant’s own testimony as to his mental state at the time) to establish that Defendant was guilty.

Front 4

Greycas v. Proud

Back 4

Brief Fact Summary. Defendant knowingly misrepresented the status of his brother-in-law’s property in an opinion letter used to secure a loan.

Synopsis of Rule of Law. The tort of negligent misrepresentation and an attorney’s duty of care to an adversarial party.

Facts. Defendant, attorney Theodore Proud, wrote a letter to Plaintiff, Greycas, Inc., stating that his brother-in-law Crawford’s farm equipment had no prior liens on it to assist him in securing an emergency loan. After Crawford’s suicide, Defendant learned that the equipment was already heavily indebted and that Plaintiff had never performed the tax and judgment searches that he had claimed to have completed in his letter. Plaintiff is claiming negligent misrepresentation. Defendant argues that he had no duty of care to the Plaintiff in this situation.

Issue. May an attorney be liable for negligent misrepresentation to an adversarial party?

Front 5

In re American Continental Corporation/Lincoln Sav. And Loan Securities Litigation

Back 5

Brief Fact Summary. In the aftermath of the early ’90s savings and loan scandal, law firm Jones, Day, Reavis & Pogue was alleged to have condoned-and possibly even assisted in-an ongoing cover-up of serious regulatory violations committed by Lincoln.

Synopsis of Rule of Law. The court considers a summary judgment motion brought by Jones Day to dismiss the claims brought against them.

Facts. In the course of its representation of these savings and loan corporations, Jones Day was alleged to have actively assisted its clients in attempting to cover up business practices that it knew to be fraudulent. In the course of an audit, Jones Day attorneys became aware of a variety of regulatory violations and deficiencies, but never challenged or reported them. Attorneys were actually instructed to “rectify” incriminating deficiencies and destroy any evidence of having done so. In its defense, Jones Day argued that its fiduciary duty prevented any other action, and that any attempt to advise the client otherwise would have been futile.

Issue. This case presented the following major issues:
To whom does corporate counsel’s fiduciary duty primarily extend?
When does corporate counsel’s knowledge of possible regulatory violations and/or deficiencies overcome the duty of confidentiality and trigger the obligation to withdraw representation?
Is an attorney acting as an “expert” for purposes of Section 11 when he issues an opinion letter advising a client as to an SEC registration statement?

Held. Jones Day’s motion for summary judgment was denied.
An attorney’s highest fiduciary duty is to the corporate client itself, not to its directors, officers, and other affiliates.
An attorney has the duty to raise concerns about possible regulatory violations with the client, and to withdraw representation if the client insists on continuing with them. An attorney may not continue representation when it is apparent that such representation may be a “substantial factor” in allowing such violations to continue.
An attorney providing an opinion letter used in connection with an SEC registration statement is acting as an “expert” for the purposes of Section 11.

Front 6

F.D.I.C. v. O

Back 6

Brief Fact Summary. A major law firm is accused of being complicit in serious corporate fraud.

Synopsis of Rule of Law. An attorney’s duty is to the corporation as an entity, not to its owners, managers, or officers.

Facts. Defendant, national law firm O’Melvany & Myers, assisted American Diversified Savings Bank (”ADSB”) in preparing lengthy documents designed to attract investors to various real estate projects. They were alleged to have done so knowing that ADSB’s officers were engaging in massive fraud and that the company’s net worth was nearly zero. Defendant argued that it had no duty to ADSB or its investors to expose the company’s own internal fraud.

Issue. How much of a duty, if any, does corporate counsel have to the corporation and its investors to expose ongoing fraud?

Held. An attorney’s duty to the corporation should always supersede any duty it may have to its officers and managers.
A corporate client’s fraud does not “cancel” the attorney’s fiduciary duty of due care.
The attorney’s duty of care to a corporate client includes a duty to its investors, not merely its managers and officers.
Attorneys always have an obligation to conduct investigations independent of what their clients have told them.

Front 7

SEC v. National Student Marketing

Back 7

Brief Fact Summary. Defendant law firm is charged with aiding and abetting securities law violations committed by their client due to their knowledge of certain misrepresentations.

Synopsis of Rule of Law. Attorneys may be held liable for aiding and abetting their client’s fraud if they knowingly allow a merger to close in violation of securities law.

Facts. Remaining Defendants considered in this portion of the opinion, two partners at Lord Bissell & Brook, were representing Interstate National Corporation in its proposed merger with National Student Marketing. The closing of the merger was to be conditioned upon a mutual exchange of opinion letters from each corporation’s attorneys as well as “comfort letters” from each corporation’s accountants. Defendant attorneys became aware of serious concerns-involving NSMC’s financial statements, which probably should have demonstrated a net loss, rather than a net profit-held by the accountants a few hours before the merger was scheduled to close, but proceeded with the closing in the face of these concerns after a brief discussion.

Issue. Did attorney Defendants aid and abet their client’s security law violation?

Held. Yes. Defendants’ participation in the closing of the merger despite their knowledge of inaccurate financial statements amounted to aiding and abetting the fraud.

Front 8

Upjohn v. United States

Back 8

Brief Fact Summary. Respondent claims that the results of an investigation carried out by their counsel should be protected by attorney-client privilege.

Synopsis of Rule of Law. When an attorney is retained to represent a corporation, the attorney-client and work product privileges may extend to every employee in that corporation.

Facts. Counsel for Respondent, Upjohn Corporation, conducted a confidential investigation of the company’s international offices following reports that some foreign managers were making “questionable payments” to various foreign government officials in violation of U.S. law. When the IRS attempted to obtain copies of questionnaires, memoranda, and interview transcripts from Upjohn relating to this investigation, Respondents’ objection on attorney-client and work product grounds was overruled by the Appeals Court, which held that attorney-client privilege did not apply to communications made by employees not in Upjohn’s “control group”; i.e., not responsible for directing the company’s policies.

Issue. May attorney-client privilege protect corporate counsel’s communications non-management employees?

Held. Yes. Corporate counsel represent the corporation, not merely the “control group” of officers and directors. Any employee capable of making a decision that would substantially effect the corporation’s legal position must be granted this privilege so that counsel may properly assess the corporation’s liabilities. Lower court reversed.

Front 9

Fisher v. United States

Back 9

Brief Fact Summary. The Court considers two cases in which defendants attempted to claim privileged status under the attorney-client privilege and the Fifth Amendment for various financial records and documents delivered to attorneys in anticipation of IRS action.

Synopsis of Rule of Law. The Fifth Amendment and the attorney-client privilege do not protect incriminating evidence that is not testimonial or disclosed to an attorney in anticipating of litigation.

Facts. In both Fisher and Kasmir, the Internal Revenue Service was attempting to obtain financial records that were in the care of the defendant taxpayers’ attorneys. Defendants argue that allowing these records to be produced would be a violation of their Fifth Amendment rights as well as constituting a violation of the attorney-client privilege.

Issue. Both Fifth Amendment and attorney-client issues are discussed:
May a taxpayer’s attorney be compelled by subpoena to provide incriminating evidence in the form of business-related books and papers?
Should the attorney-client privilege protect these records from subpoena?

Held.
Yes. The Fifth Amendment only protects a defendant from compelled production of incriminating evidence that is explicitly testimonial.
No. This privilege would only have protected these records if they would have already been protected from subpoena while in the client’s care. Since these were wholly business-related documents that had already been thoroughly reviewed by accountants, they would be eligible for this privilege under any circumstances.
Concurrence. Brennan: Agrees with the reasoning, but believes that the majority has gone too far and opened the door for further erosion of the protection against compelled production of private books and papers.

Front 10

Klein v. Boyd

Back 10

Brief Fact Summary. Following the failure of a limited partnership, four investors in the partnership are bringing suit against the partnership’s law firm, asserting violations of Section:10b-5 and RICO as well as fraud for the firm’s part in knowingly omitting key facts about the partnership.

Synopsis of Rule of Law. Lawyers may become primary violators in securities cases if they knowingly assisted in the creation of false or misleading documents which they knew would be relied upon by investors.

Facts. Drinker, Biddle & Reath (”Drinker”) was retained by William Coleman to assist in the formation and management of a new business entity, known as Mercer LP. Partner Robert Strouse, the attorney assuming responsible for the oversight of Mercer’s interests, became aware of Coleman’s long history of securities fraud and other serious violations, and prepared a disclosure letter to be read and signed by all of the partership’s investors that carefully outlined Coleman’s background. Although Coleman did not deliver it to all of the investors, Strouse only advised that it should be and continued the representation. When Plaintiffs-who never received the original letter-renewed their investment in November 1993, Strouse prepared another disclosure letter which purposely omitted the information regarding Coleman’s history. The partnership subsequently collapsed due to fraud and mismanagement, and the investors are now attempting to reclaim their money.

Issue. May a lawyer be held primarily liable to an investor for his part in knowingly assisting a corporate client to prepare a fraudulent securities document?

Front 11

In Re Sealed Case (Lewinsky)

Back 11

Brief Fact Summary. Once it became apparent that Monica Lewinsky had perjured herself in her affidavit submitted in response to a subpoena in the Paula Jones sexual harassment case, the district court determined that her communications with her attorney would no longer be privileged. She appeals this finding.

Synopsis of Rule of Law. The crime-fraud exception to attorney-client privilege does not apply when the client retained the attorney for unlawful or fraudulent purposes.

Facts. Monica Lewinsky retained attorney Francis Carter to represent her regarding the subpoena she had received to appear in the lawsuit that Paula Jones had brought against then-President Clinton in Arkansas. Lewinsky attempted to have the subpoena quashed by submitting an affidavit under penalty of perjury attesting that she had never had a sexual relationship with the President. Once it became apparent that this was a knowing misrepresentation, the district court deemed that the attorney-client privilege no longer applied and reviewed the relevant information in camera. Lewinsky and her attorney now appeal this decision.

Issue. Does the crime-fraud exception apply to Lewinksy’s communications with her attorney, or are they still privileged?

Front 12

In Re Columbia/HCA Healthcare Corp. Billing Practices Litigation

Back 12

Brief Fact Summary. Defendants, a health care consortium previously forced to settle with the Department of Justice in a health care fraud investigation, are challenging Plaintiffs’ attempt to obtain internal audits that Defendant had previously shared with the government in the course of its investigation, arguing that these documents are still privileged.

Synopsis of Rule of Law. Any disclosure of privileged information will constitute a waiver of the applicable privileges, despite any outstanding confidentiality or nondisclosure agreements.

Facts. Anticipating an investigation by the U.S. Department of Justice as to possible Medicare and Medicaid fraud, Defendant Columbia/HCA Healthcare Corp. conducted several internal audits of its Medicare patient records in an effort to determine if any “miscoding” of these records had occurred.
When the DOJ attempted to obtain copies of these audits, Columbia initially refused on the grounds of the work product and attorney-client privileges.
Following a change in management, Defendants subsequently offered to cooperate with the DOJ by releasing some of these audits for its inspection–with the agreement than this would not constitute a waiver of any privileges-and this cooperation eventually resulted in an $8.5 million settlement.
In the wake of this settlement, a wave of insurance companies and private individuals sought access to these same records to determine the amounts, if any, that they had been overbilled during the same period. Their argument was based on the alleged waiver of privileges in the course of Defendant’s cooperation with the investigation.
Issue. Does a cooperative disclosure to a governmental agency such as Defendant’s in this case constitute a waiver of attorney-client privilege?

Held. Yes. Under the Court’s “bright-line” test, waivers are absolute despite any confidentiality or nondisclosure agreements that the parties may make. Although the work-product privilege is somewhat broader than the attorney-client privilege, that privilege has little to do with the issue here: a party’s desire to cooperate with a government investigation.

Held. Yes, the crime-fraud exception was properly applied by the district court. Lewinsky’s affidavit was based upon knowing misrepresentation regarding a material fact, suggesting that her entire purpose in retaining counsel was fraudulent.

Front 13

Meyerhofer v. Empire Fire & Marine Insurance Co

Back 13

Brief Fact Summary. An attorney named as a defendant in a securities law violation case wants to be able to use attorney-client privileged information to demonstrate his nonparticipation in the wrongful acts alleged by Plaintiffs.

Synopsis of Rule of Law. An attorney’s right to reveal previously privileged information to insulate himself from liability for alleged wrongdoing.

Facts. Attorney Charles Goldberg was named as a defendant along with the insurance company that he had advised in this suit brought by a shareholder claiming a number of securities law violations. Goldberg argues that he was not a party to this wrongdoing, and wants to be able to use a copy of an affidavit previously submitted to the SEC to prove this. His co-defendants seek to enjoin the production of this information.

Issue. Was Goldberg justified in making this information public once he learned that he had been included as a co-defendant?

Held. Yes. An attorneys may circumvent the attorney-client privilege if the previously privileged information would protect them from allegations of wrongdoing.

Front 14

Balla v. Gambro, Inc

Back 14

Brief Fact Summary. Plaintiff, working as in-house counsel for Defendant, became aware of Defendant’s intent to market non-compliant medical equipment and was fired shortly after advising Defendant that he could not allow this action.

Synopsis of Rule of Law. Rule 1.6(b) of the Rules of Professional Conduct mandates that an attorney has an ethical duty to disclose dangerous public policy violations once he becomes aware of them. This ethical safeguard implies that an attorney working as in-house counsel has no claim in tort against an employer for retaliatory discharge.

Facts. Plaintiff, Attorney Bella was employed as in-house counsel for Defendant Gambro, a corporation distributing kidney dialysis equipment. Plaintiff became aware of Defendant’s intent to distribute a shipment of irregular dialyzers which did not comply with the Food and Drug Administration’s relevant regulations, and notified Defendant of his intent to “do whatever necessary” to stop the sale of the dialyzers. Plaintiff was discharged shortly thereafter and brought this retaliatory discharge action against Defendant.

Issue. Does an attorney employed as in-house counsel for a corporation have a cause of action against that corporation when he is discharged for threatening to expose public policy violations as a “whistleblower”?

Held. No. Appellate court reversed, lower court affirmed.
Retaliatory discharge is a limited and narrow exception to the general concept of at-will employment, and these claims may only be granted when the moving party’s termination was in response to a good-faith attempt to prevent a violation of public policy.
Although a non-attorney would probably have a cause of action under these facts, an attorney’s conduct is subject to the Rules of Professional Conduct, which already has an established procedure for attorneys to follow when clients state an intention to commit public policy violations. Attorneys have no choice but to follow this course of action in the face of public policy violations, and recognizing a further cause for retaliatory discharge would therefore be redundant.
Employers are less likely to completely candid with their in-house counsel if a request for advice regarding potentially questionable conduct could leave them liable for a retaliatory discharge suit. Allowing this cause of action would inappropriately chill the attorney-client relationship by restricting the free flow of information between the parties.
Dissent. Why should there be a different standard for attorneys?
As it is, ethical safeguards aren’t enough to guarantee that attorneys will “do the right thing” in these kinds of cases. The majority’s standard will allow corporations to dismiss in-house counsel in these cases without fear of sanctions. This decision is far too lenient on corporations and far too difficult for attorneys.
Allowing this cause of action would only chill the attorney-client relationship in those cases in which an employer purposely decides to violate public policy against advice of counsel, and this is a very small price to pay.

Front 15

Westinghouse Elec. Corp v. Kerr-McGee Corp

Back 15

Brief Fact Summary. Major law firm Kirkland and Ellis was simultaneously representing two opposing parties in matters dealing with trade practices in the uranium industry.

Synopsis of Rule of Law. Conflicts of interest in large law firms, especially regarding firms representing trade associations as well as their opponents.

Facts. Major law firm Kirkland and Ellis worked with both the American Petroleum Institute (a consortium that included the Appellants, Kerr-McGee Corp.) and Westinghouse. These two interests were put in serious conflict when the firm released a report on behalf of the API finding trade practices to be generally acceptable in the uranium industry on the same day that it filed suit on behalf of Westinghouse alleging an ongoing illegal conspiracy in restraint of trade in the same industry. In the course of preparing this report, Kirkland’s lawyers had sent out a questionnaire to employees of API member companies, including the Appellants, with the understanding that the results would be held in confidence.

Issue.
May an attorney-client relationship arise when a lay party submits confidential information to a law firm under the belief that the firm will be representing him?
May a firm representing a trade association also represent interests opposing members of that association?

Held.
The court declined to create a per se rule that representation of a trade association creates an attorney-client relationship with each member of the association, but clearly stated that this may create such a relationship depending on the circumstances.
Although this may be more of a problem in other situations, the Court allows this as the representations were taken on ten years apart.

Front 16

Fiandaca v. Cunningham

Back 16

Brief Fact Summary. Appellants are requesting that a legal services organization be removed from a case in which the interests of two different classes of plaintiffs that it represents are directly opposed.

Synopsis of Rule of Law. Conflicts of interest so serious as to be deemed “unresolvable.”

Facts. Two appeals regarding the future of an institution in New Hampshire involving parties represented by New Hampshire Legal Assistance (NHLA) have been consolidated in this opinion. NHLA served as counsel for two class actions: one brought on behalf of female prisoners seeking better facilities, and one involving the residents of an institution for the mentally retarded that was under consideration as a temporary replacement for the women’s prison. (The state had, at one point, offered to use the institution as a replacement for the prison that the women were challenging, but NHLA did not accept this offer.) Appellants argue that these cases placed NHLA in an unresovable conflict of interest and that they should have been removed, an argument dismissed by the district court on the grounds of “necessity.”

Issue. Should NHLA be disqualified from this litigation due to the inherent conflict of interest that arises from representing these two parties?

Held. Yes. The district court mistakenly ignored the serious conflict of interests presented in this case. Although this conflict probably didn’t seriously affect the trial proceedings, it undoubtedly affected NHLA’s actions in the remedial stage. As such, the district court’s remedial order is vacated and the case is remanded for a new trial to determine the proper remedy for the prisoner’s Constitutional deprivation.

Discussion. This is a classic example of a conflict so severe that it is essentially unwaivable. It is particularly unfortunate in this case, however, since NHLA was a legal services organization and neither party is likely to have much luck finding alternate counsel. This was largely the basis of the district court’s necessity finding, but was still not convincing enough for this court.

Front 17

Cuyler v. Sullivan

Back 17

Brief Fact Summary. Respondent challenges his murder conviction on the grounds that his counsel’s representation of his co-defendants presented an unacceptable conflict of interests that denied him effective assistance of counsel.

Synopsis of Rule of Law. Defendants alleging a conflict of interest in cases in which multiple defendants are being represented by the same attorney in the same matter must demonstrate an “actual conflict” that “adversely affected” the outcome.

Facts. Respondent, John Sullivan, was convicted of a double murder relating to a union dispute and sentenced to life imprisonment. He had been indicted with two other defendants, and all three were represented by two privately retained attorneys. Sullivan’s trial, however, occurred before the other two defendants, and there was evidence on the record to suggest that his attorneys may have purposely rested their case earlier than necessary in order to avoid exposing too much of their strategy in advance of the two remaining trials. Sullivan is now seeking a federal writ of habeas corpus, claiming that his retained defense counsel represented potentially conflicting interests.

Issue.
Must a state trial judge inquire into the propriety of of multiple representation even if no party raises an objection?
When do attorneys representing multiple criminal defendants in charges arising from the same incident truly face a conflict of interests?

Held. The possibility of conflict isn’t enough; defendant must show that he there was an actual conflict that “adversely affected” his case. Reversed and remanded for further proceedings.
No, a state trial judge has no such obligation. Absent a request to do so from a party, a trial judge is not required to question the propriety of multiple defendants being represented by the same counsel.
When multiple defendants are being represented by the same attorney in the same case, a defendant must show that an actual conflict “adversely affected” counsel’s performance in order to establish a true conflict that would constitute a denial of effective assistance of counsel.

Front 18

Meehan v. Hopps

Back 18

Brief Fact Summary. Respondents are requesting that Petitioner’s law firm be disqualified from its representation of Petitioner on the grounds that the firm was previously retained to represent the corporation that Respondent managed as an officer.

Synopsis of Rule of Law. Corporate counsel’s duty to the corporation does not specifically extend to any of its officers or managers. Counsel has a duty to act in the best interests of the corporation, even if these actions may conflict with the best interests of individual officers.

Facts. Respondent, former chairman of the Rhode Island Insurance Company, was charged with breach of his fiduciary duty to Petitioners, filing on behalf of the creditors, policyholders, and stockholders of the company. Respondent is attempting to have the Providence firm Edwards and Angell disqualified from further participation in the case, arguing that they had a “dual relationship” to himself and the corporation.

Issue.
Was there an attorney-client relationship between Respondent and the law firm?
When an attorney represents a corporation dominated by an officer whose personal interests are strongly tied to the company, does an attorney-client relationship exist to the degree that the law firm may not represent the company in a suit against the officer?

Held. No. No disqualification.
No. The attorney-client relationship was between Respondent’s corporation and the law firm, not between himself and the firm. The firm was never retained to act as his personal attorney.
No. Respondent’s personal interests were irrelevant here, as the firm was representing the corporation as a whole, not those of himself or any of the other officers.

Front 19

Fassihi v. Sommers, Schwartz, Silver, Schwartz and Tyler, P.C

Back 19

Brief Fact Summary. Plaintiff was a 50% shareholder in a corporation represented by Defendant law firm. His corporate partner retained Defendants to advise him on how to safely oust him from the partnership, and he

Synopsis of Rule of Law. Counsel to a closely-held corporation have a fiduciary duty to shareholders.

Facts. Plaintiff, radiologist Dr. Fassihi, formed a business partnership with Dr. Rudolfo Lopez to open and run a radiology practice. The doctors practiced together at a local hospital for about 18 months before Lopez came to Defendant law firm seeking advice on how to end his association with Plaintiff and oust him from the corporation. Once this was accomplished, Plaintiff sued Defendant on the theory that the firm had breached a fiduciary duty to him by representing Lopez exclusively while claiming to be acting on behalf of the corporation.

Issue. The court is primarily examining the nature of Defendant’s duty, if any, to Plaintiff.
Was there an attorney-client relationship between Plaintiff and Defendant?
If not, what duty of care, if any, did Defendant owe Plaintiff?

Front 20

Georgine v. Amchem Products

Back 20

Brief Fact Summary. After many years of complex litigation and negotiation, Plaintiff class (consisting of people affected by asbestos) came to a settlement with Defendant asbestos companies.

Synopsis of Rule of Law. Conflicts of interest as they apply to class counsel in mass torts cases.

Facts. Plaintiffs, a group whose exact size is unknown but easily ranks in the “tens of thousands” represent a class of persons injured by asbestos products. In an attempt to reach a settlement with the Center for Claims Resolution (”CCR”), a conglomerate of asbestos companies, counsel from both parties spent a significant amount of time negotiating a complex settlement agreement. This agreement is now before the court for its final approval.

Issue. Was the proposed settlement of the class action fair to the class? Specifically:
Was there a conflict of interest on the part of the class counsel in reaching a settlement that also included the claims of potential future claimants?
Was the settlement the product of collusion?

Held. Yes, the settlement was generally consistent with historical settlement averages, and is entirely fair to the class.
There was no serious conflict of interest presented by counsel’s simultaneous representation of present and future asbestos claimants.
The court found no evidence of collusion at any point in the settlement negotiations. Mere opportunity to collude is hardly enough to prove that collusion actually occurred.

Front 21

Nix v. Whiteside

Back 21

Brief Fact Summary. Appellee claims ineffective assistance of counsel following a trial in which his attorney refused to allow him to lie on the stand.

Synopsis of Rule of Law. The limits of the Sixth Amendment right to “effective counsel.”

Facts. Appellee Whiteside was on trial for murder and informed his attorney of his intention to testify that he had seen “something metallic” in the victim’s hand before killing him, in direct contradiction to his earlier sworn statements that the victim had been unarmed. Respondent Nix, his attorney, warned him that he would have an ethical obligation to report any perjured testimony to the court. Appellee then testified that he had believed the victim had a gun but did not see it, and was convicted for murder. He now appeals his conviction, arguing ineffective assistance of counsel based upon the fact that his lawyer’s warning forced him to change his testimony.

Issue. Is a criminal defendant’s Sixth Amendment right to effective assistance of counsel violated when an attorney refuses to allow defendant to present perjured testimony at trial?

Held. No. In this unanimous opinion, Justice Burger writes that a defendant’s Sixth Amendment rights do not include “the right to have a lawyer who will cooperate with planned perjury.” A client’s expression of his intention to commit a crime is not a protected communication.

Concurrence.
Brennan: This case could have been decided without the Court’s “essay” on this subject, and the majority of this opinion should be treated as dicta.
Blackmun: Appellee has completely failed to demonstrate any “actual prejudice” to his case as a result of his lawyer’s actions as per the Strickland standard, and the case could have just as easily been disposed of on these grounds.

Front 22

Messing, Rudavsky & Weliky, P.C. v. President and Fellows of Harvard College

Back 22

Brief Fact Summary. Plaintiffs challenge sanctions imposed on them for ex parte communication with some of Defendant’s employees during the course of a gender discrimination suit.

Synopsis of Rule of Law. The “no-contact rule” regarding communication with an opposing party’s employees only applies to those employees with “authority to commit the organization regarding the subject matter of representation.”

Facts. In the course of a gender discrimination suit against the Harvard University police department, Plaintiff law firm communicated with five members of the department-two lieutenants, two patrol officers, and a dispatcher-without notifying Defendant’s counsel or giving them an opportunity to be present for the communication. (None of the individuals contacted were alleged to have engaged in the discriminatory behavior.) Defendant, Harvard University, requested the court to issue sanctions for this behavior as a violation of Massachusetts Rule 4.2, which prohibits ex parte communication with employees of an organization represented by counsel. The lower court, interpreting this rule to apply to any employee whose statements would constitute an “admission” for evidentiary purposes, granted these sanctions, and Plaintiffs now appeal.

Issue. Was Plaintiff’s communication with Defendant’s employees a violation of Rule 4.2 under these circumstances?

Held. No. The court offers a new interpretation of the rule such that only ex parte contact with employees with the authority to “commit the organization to a position regarding the subject matter of representation” would constitute a violation of the Rule. These employees did not have that authority, and the contact was not inappropriate. Reversed.

Front 23

Bushman v. State Bar of California

Back 23

Brief Fact Summary. The California State Bar is investigating an attorney for his claim that he spent over 100 hours on a simple divorce case, resulting in a bill of almost $3,000.

Synopsis of Rule of Law. Determination of excessive fees must be made on a case-by-case basis.

Facts. Attorney Bushman was retained by a 16-year-old woman and her parents to represent her in divorce and custody proceedings. The fee agreement included a $5,000 retainer and a rate of $60/hour. His client won her custody suit, and the court ordered her former husband to pay reasonable attorney’s fees and costs of $360. (Bushman had not informed the court of the previous fee agreement.) Bushman than submitted his bill of over $2,800, claiming that he had worked over 100 hours on the case-even though his opponent had spent only a little more than five hours.

Issue. Was Bushman’s fee excessive under these circumstances?

Held. Yes. Bushman’s bill was completely unreasonable in this context. Suspended for one year.
“Under the circumstances, the fee charged by Bushman was so exorbitant and wholly disproportionate to the services rendered to the defendants as to shock the conscience.”

Front 24

White v. McBride

Back 24

Brief Fact Summary. Plaintiff probate attorney is seeking to enforce the contingency fee agreement made with his client before his death on the theory of quantum meruit.

Synopsis of Rule of Law. The theory of quantum meruit may not be used to enforce a clearly excessive fee.

Facts. Plaintiff, attorney White, made a contingency agreement with his client shortly before his death by which his fee would consist of one-third of the client’s statutory share of his wife’s estate-a total of $108,000. The probate court found that Plaintiff had devoted about 114 hours to this matter, and awarded him $12,500 using the Tennessee’s maximum allowable rate of $150/hour for probate work. Plaintiff now appeals, arguing that he is entitled to the full $108,000 (even if this was held to be excessive) under the theory of quantum meruit.

Issue. May a clearly excessive fee by upheld under the theory of quantum meruit?

Held. No. The court reversed previous cases holding that an excessive fee may be upheld in some circumstances and determined that an attorney charging a clearly excessive fee has forfeited his right to any fee.
“An attorney who enters into a fee contract… that is clearly excessive [has committed] an ethical transgression of a most flagrant sort… [and should not be permitted] to fall back on the theory of quantum meruit when he unsuccessfully fails to collect a clearly excessive fee.”