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Recent Trends in IL Lawyer Regulation

Workers’ Compensation Lawyers Association Ethics Seminar Recent Developments and Other Ethical Considerations for Workers’ Compensation Lawyers February 12, 2013 8:30 - 10:00 a.m. Mary F. Andreoni Ethics Education Counsel, ARDC. Recent Trends in IL Lawyer Regulation.

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Recent Trends in IL Lawyer Regulation

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  1. Workers’ Compensation Lawyers AssociationEthics SeminarRecent Developments and Other Ethical Considerations for Workers’ Compensation LawyersFebruary 12, 20138:30 - 10:00 a.m. Mary F. AndreoniEthics Education Counsel, ARDC

  2. Recent Trends in IL Lawyer Regulation • Rise in number of investigations docketed • Overdraft of trust account investigations • UPL claims brought by ARDC against non-lawyers and out-of-state lawyers • Increase in real estate mortgage fraud prosecutions • Internet-based prosecutions

  3. Key Changes to Client Trust Account Requirements (eff. Sept. 1, 2011) • Types of Client Trust Account ¶(a), (f) & (g) - interest-bearing IOLTA or Non-IOLTA • Overdraft Notification ¶(h) • Automatic notification of overdraft of trust account • Recordkeeping Requirement ¶(a)(1)-(8) - Required preparation & maintenance of journals and record for seven years

  4. Overdraft InvestigationsRule 1.15(h) • 421 overdraft notifications in 2012; 317 of which were closed in 2012 • ARDC automatically notified when a client trust account check is presented against insufficient funds ( “NSF”) • Applies regardless of whether a check is ultimately honored. • Provides an early warning that a lawyer’s trust account systems are deficient or that the lawyer is engaging in conduct that could injure clients or others.

  5. Top Ten Overdraft Reasons • Trust account check issued against uncollected funds (post-dated check syndrome); • Deposited item is returned; • There is a failure to make a timely make deposits; • Bank Fees (e.g., dormant account and check printing charges); • Online computer banking errors (Lawyer mistypes information); • Telephone banking errors (e.g., teller/backroom personnel credit items into a different account); • Using the trust account for personal, not client trust, purposes; • Lawyer math errors; • Using the wrong check book; and • The bank got it wrong!

  6. Suggestions • Select Trust Account Checks that are Distinguishable from Business Account Checks • Let Deposits Clear Before Writing Checks • Reconcile Monthly • Establish an Accounting System that You Understand and Can Follow Even if You Delegate Bookkeeping Tasks • Know Your Financial Institution’sCharges and Fees for Maintaining the Trust Account

  7. Where to Deposit Retainers Rule 1.15(c): Funds for fees and expenses not yet earned/incurred (a/k/a “security payment retainer) MUST be deposited in the client trust account EXCEPT for: • General Retainer = payment to secure lawyer’s availability • Fixed/lump Fee Agreement = payment for a specific service for a fixed amount • Advance Payment Retainer = payment to retain lawyer’s commitment to provide future services See Comments [3B]-[3D] to Rule 1.15

  8. Other Considerations • Guiding principle in choice of retainer – protection of client’s interests • If agreement is unclear = deposit in trust account • Advance Payment Retainers should be used “sparingly” • Amount of retainer = reasonable fee under Rule 1.5(a)

  9. New IL Supreme Court Rule 779UPL Proceedings • Adopted by Court – Dec. 2011 • ARDC authority to investigate and bring complaints against disbarred lawyers and non-lawyers for the unauthorized practice of law (UPL) • Actions against disbarred lawyers and non-lawyers filed in circuit court • Civil and/or contempt actions

  10. Unauthorized Practice of Law • Only licensed lawyers are allowed to practice law • Only the IL Supreme Court has authority to regulate and define the “practice of law” • Court has defined the “practice of law” as: • giving of legal advice or • services requiring use of legal knowledge or skill • Rationale – to protect clients and the integrity of the legal system

  11. Out-of-State Illinois Lawyer Representation • Allowed under ILRPC 5.5 if: • Work in conjunction with an Illinois lawyer • Pro hac vice admission • Reasonably related to pending or potential arbitration, mediation or other ADR proceeding • Arise out of or are reasonably related to lawyer’s practice in a jurisdiction where lawyer is admitted • Out-of-state lawyers under this Rule are subject to Illinois disciplinary jurisdiction under Rule 8.5

  12. Investigations of UPL Matters Against Non-Lawyers • Approx. 90 investigations against non-lawyers for engaging in UPL in 2012 • 5 Complaints filed in 2012: • 4 against non-lawyers: • Holly, 2012PR00047 (paralegal giving legal advise) • Dupree, 2012PR00070 (con man/fake atty in WC claims) • Biscardi, 2012PR00125 (RE service filing motions) • Home Advocate Trustees LLC, 2012PR00126 • 1 against a disbarred lawyer – Charles Conner, 2012PR0006

  13. Types of Non-Attorney Perpetrators • Worker's Compensation Consultants • Immigration Notarios • Personal Injury Advisors • Real Estate closing representatives • Non-attorney Estate Planning Experts • Divorce Self-Help Assistance Services • Paralegal that will manage a case for "half the price“ of an attorney. • Law Students that decide to handle legal matters before being licensed • Simple fraud- non-attorney w/ business cars, advertisement or office • Sovereign Immunity People- who don't believe they are subject to IL law • POA/Attorney-in-Fact Individuals acting on behalf of others • 716 - House Counsel, not registered and holding themselves out as attorneys

  14. How do these matters come to ARDC attention? Same way as attorney investigations are reported • Aggrieved customers of these service providers complain • Attorneys and Judges report such conduct • Bar association officials notify us of the problem • Ad advertisement or publication comes to ARDC attention

  15. Lawyers & Social Media • Informality + speed = errors in judgment and possible ethical transgressions • Communications over social networks: • public • easily searched and • permanently archived. • Blurs the line between professional and personal, e.g., discussing one’s cases on Twitter, Facebook, or a blog runs the risk of violating Rule 1.6, absent client consent.

  16. Personal Misconduct • Inappropriate conduct in your personal life online may have a bearing on your professional capacity and judgment. • For example, the Illinois Supreme Court sanctioned a lawyer for a posting an inappropriate ad for a legal secretary on Craigslist

  17. Lawyer posted the following job description for a legal secretary for his law firm on the adult gigs classified ad section of Craigslist. One woman responded to the ad. Lawyer defined what “additional duties” would be required.

  18. Lawyer was suspended 1 year, UFO for lying to the ARDC and bringing the legal profession into disrepute about the ad and neglecting two immigration cases. He was not represented and did not appear at the disciplinary hearing. SeeIn re Chowhan, M.R. 24851, 2009 PR 00053 (Ill. 2011)

  19. Maintaining Client Confidentiality • Disclosing confidential information violates the Rules, whether the disclosure occurs intentionally or inadvertently. • For example, an assistant public defender in Illinois was fired and suspended from the practice of law for 60 days after she revealed confidential information in a blog post. • The assistant public defender concealed her client’s identity by referring to him by his jail identification number, even though the identity of her client was easily determinable with such information. • In the blog post, she referred to her client as a “stupid kid” and chastised him for “taking the rap for his drug-dealing dirtbag of an older brother.” • In another post, the lawyer referred to the judge as being “a total ***hole,” and as “Judge Clueless.” In re Peshek, M.R. 23794, 09CH89(2010)

  20. Avoiding Unintended Lawyer-Client Relationships • Facebook messages, online postings, and other online communications between a lawyer and visitor regarding legal representation or advice may lead the visitor to be categorized as a “prospective client” under Rule 1.18. • A lay person that is directly communicating online with a lawyer may have a “reasonable expectation of confidentiality,” depending upon how the lawyer handled the direct messaging. • Use conspicuous and easily understood disclaimers when posting information online to effectively limit, disclaim, or condition any obligations to website readers. • Such warnings or statements should be written to avoid a misunderstanding by the visitor that: • a client-lawyer relationship has been created; • the visitor’s information will be kept confidential; • legal advice has been given; or • the lawyer will be prevented from representing an adverse party.

  21. Pretexting Lawyers violate the Rules when the lawyer (or their agent) “friends” a third party on a social networking site under false pretenses (Rules 4.1, 5.3 and 8.4). • See Phil.Bar Ethics Op. 2009-02 (March 2009) (unethical for lawyer to ask a third person to “friend” a witness for the purpose of gaining access to information on the witness’s Facebook and MySpace pages for possible use in litigation) • Cf., New York City Bar Ass’n Comm. On Prof’l & Judicial Ethics, Op. 2010-2 (2010) (lawyer may “friend” a third party on a social network without disclosing the reasons for making the request if the lawyer uses her real name and profile) • E.g., In re Milos, M.R. 24760, 2011PR00069 (Ill. 2011) (lawyer suspended 90 days for falsely identifying himself as a real estate broker in order to gain access to opposing party’s residence for purpose of obtaining incriminating evidence)

  22. Can Judges and Lawyers Be “Friends” • Lawyers must be careful to not “knowingly assist a judge or judicial officer in conduct that is a violation of applicable rules of judicial conduct or other law.” Rule 8.4(f). • A lawyer may violate this rule if she “friends” a judge before whom she may appear if the lawyer is in a jurisdiction that labels these social networking connections as unethical. • But there is a split of authority as to whether such conduct is unethical. • Found to be ethical by the judicial ethics committees of Kentucky, New York, and South Carolina. • However, a Florida committee on judicial ethics reached the opposite conclusion - Florida Bar Ass’n Advisory Comm. on Judicial Ethics, Op. 2009-20 (2009).

  23. The “Ex Parte Party” Former workers comp arbitrator involved in e-mail exchanges with three lawyers appearing before her without copying the opposing side led to charges of improper ex parte communications • In one email the lawyer asks the arbitrator how much the arbitrator thinks her cases are worth and in another complained to the arbitrator about opposing counsel, “Then he upped his demand to $80k, but said he hadn’t talked to his client yet. WTF?” The arbitrator replied, “I think we should just finish the trial and you say, F him.” • In another email exchange with the arbitrator, the lawyer called a claimant “my pro se from hell” and “insane” and made disparaging comments about opposing counsel, calling him an “idiot,” “annoying” and “a bad lawyer.” • Disciplinary action against three lawyers: In re Nadenbush, M.R. 25622, 2011PR00077 (Ill . 2013) (90 days suspension+seminar); In re Barringer, M.R. 25465, 2011PR00079 (Ill. 2012) (censure+seminar); In re O’Sullivan, M.R. 24972, 2011PR00078 (Ill. 2012) (censure) • Disciplinary action against arbitrator: In re Teague, pending before Ill. Supreme Court, ___, 2011PR00076 (Hearing Board recommended 2 years suspension) (11/26/12)

  24. Advertising & Social Media • If online activities promote a law practice, the activity is considered lawyer advertising. • For example, a lawyer’s tweet proclaiming a court victory is likely an advertisement, and therefore subject to the Rules on advertisements. • But a personal blog or Facebook page that does not mention the writer’s profession is likely not an advertisement. • Trouble often arises when lawyers blend both.

  25. Advertising & Social Media • Rules recognize a lawyer’s right to include accurate, non-misleading information about themselves, their practice, and their firm on their own websites. • Lawyers should update their information regularly. • Lawyers may also include information about current or former clients on their websites if they obtain their clients’ informed consent, as required by Rule 1.6 (current clients) and Rule 1.9 (former clients). • Lawyers are prohibited from allowing third parties to create unjustified expectations or otherwise mislead a prospective client.

  26. Advertising & Social Media • Rules require advertisements to include “the words ‘Advertising Material,’” both “at the beginning and ending of any recorded or electronic communication.” Rule 7.3 (2010). • But it may be impractical to shoehorn disclaimers into certain social media platforms. • Twitter’s 140 character limit

  27. False and Misleading • In re L. Tod Schlosser, M.R. 24458, 2009PR00032 (Ill. May 18, 2011) disbarred for neglecting 8 immigration matters and failed to return >$31,000.00. Website: “we specialize in results not promises”, “100% success rate” Failure to Monitor Website • In re Thomas Paul Demuth, M.R. 24908, 2011PR00122 (Ill. Nov. 17, 2011) Reprimanded (reciprocal) in Wisconsin for practicing law while suspended for non-payment of annual dues Website: misleading statements about authority to practice law in other states

  28. Best Practices When Using Social Media • Regarding Clients • Refrain from posting information about client matters online; • Or obtain consent. • Regarding Third Parties • Use caution when blasting general legal advice over social media • Avoid posting false or misleading statements • Use caution about who you “friend” or “follow”

  29. Best Practices When Using Social Media • Regarding Judges • Avoid communicating inappropriately with judges • Avoid publically commenting on their abilities • Regarding Advertisements • Websites, posts, tweets, blasts, and comments must be accurate. • Should be up to date. • Disclaimers should be clear and noticeable.

  30. Resources & Questions ARDC website - www.iardc.org ARDC Ethics Inquiry Program: For questions on the IL RulesChicago office – (312) 565-2600 or (800) 826-8625 Springfield office – (217) 522-6838 or (800) 252-8048

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