ABA Commission on Ethics 20/20

1. ABA Commission on Ethics 20/20 • www.americanbar.org/Ethics2020

2. ABA Commission on Ethics 20/20: Studying a “New Normal” • Created in 2009 to study how rules and policies concerning lawyer conduct need to be revised in light of: • Changes in Technology • Globalization

3. Commissioners Jamie S. Gorelick (Co-Chair), WilmerHale (Washington, D.C.)Michael Traynor (Co-Chair), President Emeritus, ALI (California) Stephen Gillers, New York University Law School Jeffrey B. Golden, London School of Economics William C. Hubbard, Nelson Mullins Riley & Scarborough (S. Carolina) George W. Jones, Sidley Austin (Washington, D.C.) Justice Elizabeth B. Lacy, Virginia Supreme Court Carolyn B. Lamm, White & Case (Washington, D.C.) Judith A. Miller, Fmr. Chair, Section of Litigation (Washington, D.C.) Judge Kathryn A. Oberly, District of Columbia Court of Appeals Roberta Cooper Ramo, Modrall & Sperling (New Mexico) Herman J. Russomanno, Russomanno & Borello (Florida) Theodore Schneyer, University of Arizona Law School Carole Silver, Indiana University Maurer School of Law Frederic S. Ury, Ury & Moskow (Connecticut) Chief Justice Gerald W. VandeWalle, North Dakota Supreme Court

4. Commission Outreach to Date • Early release of draft proposals and revised drafts • Hundreds of comments received on the Commission’s initial proposals and papers • Public hearings held throughout the country • 75+ presentations to ABA entities as well as state, local, specialty, and international bar associations 

5. Ethics 20/20 Commission Working Groups • Technology • Outsourcing • Conflicts of Interest, Uniformity & Choice of Law • Inbound Foreign Lawyers • Alternative Litigation Financing • Alternative Law Practice Structures • Rankings

6. Timeline for Commission Proposals August 2012 February 2013 Conflicts-related choice of law issues Alternative Law Practice Structures (including choice of law issues) Inbound Foreign Lawyers • Technology (confidentiality) • Technology (marketing) • Outsourcing • Mobility Issues(admission in new jurisdictions, conflicts screening for laterals)

7. Technology Working Group • Two Sub-Committees • Confidentiality Issues • Client Development Issues

8. Technology Working Group (Confidentiality) The Past: Protecting Client Information

9. Technology Working Group (Confidentiality) The Reality: Protecting Client Information

10. Hypo on Technology and Confidentiality Lawyer keeps confidential client information on a laptop, smartphone, flash drive, and in the “cloud.” What steps must Lawyer take to satisfy ethical obligations to protect the confidential information? Under present rules? Under 20/20 proposal?

11. Proposal to Amend Model Rule 1.6 • Duty of Confidentiality: • (c) A lawyer shall make reasonable efforts to prevent the inadvertent or unauthorized disclosure of, or unauthorized access to, information relating to the representation of a client.

12. Factors for Determining the Reasonableness of the Lawyer’s Efforts • Sensitivity of information • Likelihood of disclosure without safeguards • Cost of additional safeguards • • Difficulty of implementing safeguards • • Extent to which the safeguards adversely affect lawyer’s ability to represent clients • Mere disclosure, by itself, does not trigger discipline.

13. Other Key Commission Proposals in this Area • •Creation of a user-friendly ABA website with answers to common questions • •Amendment to Comment [6] to Model Rule 1.1 (Competence). Competence requires a lawyer to stay abreast of the “benefits and risks associated with technology”

14. Other Key Commission Proposals in this Area • • Amendment to Comment [4] to Model Rule 1.4 (Communication), telling lawyers that they need to respond promptly to “client communications” and not just “telephone calls.” • • Amendments to Model Rule 4.4(b) (receipt of misdirected documents) to clarify that a lawyer’s duty to notify the sender of a mistake arises for both documents as well as “electronically stored information” (including electronic metadata).

15. Technology (Client Development) The Past

16. Technology (Client Development) Websites Pop-up Ads Blogs The Present

17. Hypo on Technology and Client Development Lawyer gives a talk to a large group of non-lawyers, including corporate executives, on the subject of corporate governance. Lawyer’s firm has a website that provides information on Lawyer’s practice and some of the innovative governance practices she has developed. A member of the audience writes Lawyer an email containing information about some dissension on Company D’s board and asking if Lawyer would be willing to represent the dissident directors. Lawyer knows that a client of the firm would very much like to know about the dissension on D’s board. May Lawyer provide the information she has received?

18. Amendments to Model Rule 1.18 (Prospective Clients) • (a) A person who discussescommunicates with a lawyer about the possibility of forming a client-lawyer relationship and has a reasonable expectation that the lawyer is willing to consider forming a client-lawyer relationship with respect to a matter is a prospective client.

19. Prospective Clients: Factors to Consider • Whether the lawyer encouraged or solicited inquiries about a proposed representation; • Whether the lawyer previously represented or declined to represent the person; • Whether the person encountered any warnings or cautionary statements that were intended to limit, condition, waive or disclaim the lawyer’s obligations; • Whether those warnings or cautionary statements were clear and reasonably understandable; and • Whether the lawyer acted or communicated in a manner that was contrary to the warnings or cautionary statements.

20. Client Development Hypos • Lawyer uses pay-per-click services to market her practice. What are the ethical issues? • Lawyer uses a Facebook promotional campaign to market her practice. What are the ethical issues?

21. Amendments to Comment [5] to Model Rule 7.2 (Advertisements) • Existing Rule: A lawyer must not give something of value in exchange for a “recommendation.” • What’s a recommendation? The Commission’s proposed definition: • “A communication contains a recommendation if it endorses or vouches for a lawyer’s credentials, abilities, competence, character, or other professional qualities.”

22. Paying for Lead Generation • Permissible as long as: • Lead generator does not “recommend” the lawyer; • Payment is consistent with Rules 1.5(e) (division of fees) and 5.4 (professional independence of the lawyer); and • Lead generator’s communications to potential clients are consistent with Rule 7.1 (false/misleading communications).

23. Amendments to Model Rule 7.3 (Solicitations) • SOLICITATION: A targeted communication initiated by a lawyer to a specific person that offers to provide, or can reasonably be understood as offering to provide, legal services. • NOT A SOLICITATION: A communication directed to the general public or in response to a request for information.

24. Outsourcing Outsourcing: Abroad

25. Question • What ethical obligations do lawyers have when using lawyers and nonlawyers outside the firm?

26. Outsourcing • Amendments to Model Rule 1.1 (Competence) that identify the relevant factors to consider when outsourcing work to lawyers outside the firm • Amendments to Model Rule 5.3 that identify the relevant factors to consider when outsourcing work to nonlawyers outside the firm

27. Uniformity Working Group (Lawyer Mobility) Lawyer Mobility in an Increasingly Borderless World

28. Hypo on Mobility and Confidentiality • A young lawyer seeks to move to a new firm. What does the new firm want to know about the young lawyer’s current and former clients? Why? When does the new firm need to know it? What is the lawyer ethically permitted to disclose under existing Rules?

29. Ethics 20/20’s Proposed New Rule 1.6(b)(7) • (b) A lawyer may reveal information relating to the representation of a client to the extent the lawyer reasonably believes necessary: • . . . • (7) to detect and resolve potential conflicts of interest, but only when the revealed information could not adversely affect the client. Information revealed under this paragraph shall not be used or revealed by the recipient for any purpose except the detection and resolution of potential conflicts of interest. • See Proposed New Comment [13] for More Detail

30. Other Mobility Issues • Amendments to the Model Rule on Admission by Motion that would reduce the time in practice requirement from 5 years to 3 years and a resolution urging jurisdictions that have not adopted this Model Rule to do so without additional restrictions, such as reciprocity requirements • A new Model Court Rule on Practice Pending Admission that would enable a lawyer licensed in one jurisdiction to establish a systematic and continuous presence in a new jurisdiction while diligently pursuing admission in the new jurisdiction through one of the procedures that the jurisdiction authorizes (e.g., admission by motion)

31. Timeline for Commission Proposals August 2012 February 2013 Conflicts-related choice of law issues Alternative Law Practice Structures (including choice of law issues) Inbound Foreign Lawyers • Technology (confidentiality) • Technology (marketing) • Outsourcing • Mobility Issues(admission in new jurisdictions, conflicts screening for laterals)

32. Conflicts-Related Choice of Law Problems Client A, a U.K. company, has retained Partner P, a London-based and U.K.-licensed lawyer of a Global Law Firm headquartered in the U.S. to negotiate an acquisition of assets located in the U.K. from X. Client B, a U.S. company and longtime, significant client of the firm, would like to retain New York Partner Q to negotiate an acquisition of assets located in the U.S. from a wholly owned subsidiary of A. May Partner Q take on the retention without obtaining consent of A? Would the result be different if A were a U.S. company and B a U.K. company?

33. Solutions to Conflicts-Related Choice of Law Problems? • Existing Model Rule 8.5 • Ethics 20/20’s Proposal to Allow Choice of Rule Agreements • Other Possibilities

34. Alternative Law Practice Structures: The Commission’s Conclusions • • No publicly traded law firms • • No outside passive equity investment in law firms • • No multidisciplinary practice

35. Discussion Draft Concerning Model Rule 5.4 • The Commission has asked for feedback on a form of nonlawyer ownership that is similar to (but more restrictive than) a form of nonlawyer ownership that has existed in the District of Columbia for more than 20 years.

36. Discussion Draft on Nonlawyer Fee Sharing Fee sharing with nonlawyers would be permitted, but only if: Such law firms are restricted to providing legal services; Nonlawyer owners provide services that support the delivery of legal services by the lawyers (i.e., no multidisciplinary practice); Nonlawyer ownership & voting interests are restricted by a cap sufficient to ensure that lawyers retain control of the firm; Nonlawyer owners agree in writing to act in a manner consistent with the Rules of Professional Conduct for lawyers; and Lawyer owners are responsible for ensuring that the nonlawyer owners are of good character and for supervising the nonlawyers with respect to their compliance with the Rules of Professional Conduct.

37. Nonlawyer Ownership Choice of Law Problems • Global Law Firm is headquartered in London, but has an office in a Model Rules state. The London office of the Firm would like to associate with a small group of accountants who would assist the law firm in its providing of legal advice and maintain an accounting practice for a limited number of clients. The leader of the group would like to be called a partner and would be paid an amount equal to that paid Level 5 partners in the firm. The other members of the group would be paid a salary and a discretionary bonus.

38. Current Answer • ABA Formal Opinion 91-360 says that it is permissible if the London office remains financially and managerially separate from the office in the Model Rules state.

39. Choice of Law and Nonlawyer Ownership • A distinct issue from whether nonlawyer ownership should be allowed. Possible proposals would: • Clarify that a lawyer can divide a legal fee with a different firm that has nonlawyer partners and owners. • Clarify that a lawyer who is practicing in the office of a law firm where nonlawyer fee sharing is impermissible can share fees with nonlawyers in the same firm who are located in another office where such fee sharing is permissible, but only when the nonlawyers are restricted to assisting in the provision of legal services.

40. Inbound Foreign Lawyers Foreign Lawyer Fly-In/Fly-Out (FIFO)

41. Question • How should the profession regulate the practice of foreign lawyers who need to visit the United States to assist their clients?

42. Commission Proposals Under Consideration • • Amendments to several Model Rules that will more clearly authorize, but place appropriate limitations on, the practice of foreign lawyers in the United States

43. ABA Commission on Ethics 20/20 • www.americanbar.org/Ethics2020