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Preparing for a Disaster and A Lawyer's Ethical Obligations

Storm WarningWith the unpredictable weather patterns that have plagued our country earlier this year, as lawyers, we may think that the only thing that these weather systems (i.e. tornados, hurricanes, wild and flash flooding to name a few) may affect is our personal property or our vacation plans.  While storms like hurricanes are considered unusual for Maryland, we know that in recent history the rash of devastation and destruction caused by major storms, such as Hurricane Sandy and Hurricane Irene, have caused fatalities and millions of dollars in damage.

A natural disaster can shut down a lawyer’s law firm causing loss of revenue and data, prohibit access to critical client files and information, prevent access to the court system, and even cause unintentional disclosures [1]  which would result in an attorney running afoul of the ethical Rules of Professional Conduct.   In order to mitigate the risks caused by such disasters, it is prudent for a lawyer to have a disaster recovery and business continuity plan.

Many law firms do not have such a plan prepared and, unfortunately, begin to think about developing one once disaster strikes, which is oftentimes, too late. Critical aspects to a good disaster recovery and business continuity plan include taking several key steps:

  1. Analyze your data. Take a minute to analyze your office’s communication systems.  Determine what type of data your firm stores, the data’s format, and know where this data is stored. The most important data, of course, are the client files. Many lawyers keep hard copies of files stored in file cabinets, which reduces the risk of damage during some emergency systems.  However, especially in cases of flooding, it is always a good idea to have an electronic copy of this data scanned into the firm’s system.  This data may later be transmitted through several forms of electronic devices as well so it is advisable to find out from staff members where they either store or review the firm’s data.
  2. Backup your data. It is critical to the survival of your practice to back up your data. It is wise to also have an electronic database of client files either kept off-site or accessible through the cloud so that in the event of disaster, a firm can maintain client information, quickly contact the client, and establish business continuity at another location if it becomes necessary. [2]
  3. Test your Plan. No need to wait for disaster to strike to evaluate how effective your recovery plan is. If there are any vulnerable areas in your plan, make the necessary updates.  During your testing period, it will be important to get input from all of your employees to identify if there are any problems or breaches with the recovery plan. [3]
  4. Evaluate. Review the overall effectiveness of your plan. As technology is constantly changing, a continuous evaluation of your plan will require you to remain vigilant and perhaps use new software or tools which will require you to remain competent in that area. [4]

It is better to be prepared and never have the need for your disaster recovery plan then to face a natural disaster and have to start from square one.

[1] Unintentional disclosures implicates Maryland Lawyers’ Rule of Professional Conduct 1.6 (Confidentiality of Information)  which states:

  1. A lawyer shall not reveal information relating to representation of a client unless the client gives informed consent, the disclosure is impliedly authorized in order to carry out the representation, or the disclosure is permitted by paragraph (b).
  2. A lawyer may reveal information relating to the representation of a client to the extent the lawyer reasonably believes necessary:
    1. to prevent reasonably certain death or substantial bodily harm;
    2. to prevent the client from committing a crime or fraud that is reasonably certain to result in substantial injury to the financial interests or property of another and in furtherance of which the client has used or is using the lawyer’s services;
    3. to prevent, mitigate, or rectify substantial injury to the financial interests or property of another that is reasonably certain to result or has resulted from the client’s commission of a crime or fraud in furtherance of which the client has used the lawyer’s services;
    4. to secure legal advice about the lawyer’s compliance with these Rules, a court order or other law;
    5. to establish a claim or defense on behalf of the lawyer in a controversy between the lawyer and the client, to establish a defense to a criminal charge, civil claim, or disciplinary complaint against the lawyer based upon conduct in which the client was involved or to respond to allegations in any proceeding concerning the lawyer’s representation of the client; or
    6. to comply with these Rules, a court order or other law.

[2] While backing up data, lawyers need to be mindful of their ethical obligation under MLRPC 1.6 to ensure that client matters are kept confidential. It is always advisable to review the firm’s general policies and procedures to ensure that client confidentiality is not compromised– especially if data is stored in or passes through devices such as smartphones, portable computers, tablets, I-pads, servers, or in the cloud.

[3] Communication is the most important element of disaster planning.  Communication with your employees, clients, vendors, courts, and opposing counsel is key to a successful disaster recovery plan.

[4] In 2012, the American Bar Association amended the Model Rules of Professional Conduct Rule 1.1 (Competence) and added a new provision to Comment [8] which now advises attorneys, “[t]o maintain the requisite knowledge and skill, a lawyer should keep abreast of changes in the law and its practice, including the benefits and risks associated with relevant technology, engage in continuing study and education and comply with all continuing legal education requirements to which the lawyer is subject.”


Update on the ABA's Ethics 20/20 Commission

The American Bar Association’s Commission on Ethics 20/20, the group commissioned in 2009 by then ABA President Carolyn B. Lamm, to thoroughly review the ABA Model Rules of Professional Conduct and to make necessary recommendations to revise those rules as they apply to the evolution of the legal profession as it relates to advances in technology and the globalization of the practice, has concluded its work and has made significant recommendations for revisions to the Model Rules.

The ABA Commission on Ethics 20/20 met at the ABA 2013 Mid-year meeting in Dallas, Texas in early February and the Commission successfully rallied support for sponsorship for four of its Resolutions (including support from the Young Lawyers Division for the Resolutions involving foreign lawyers).  As a result of the support as evidenced by several co-sponsorships, the ABA House of Delegates on February 11, 2013, adopted all four of the Commission’s final Resolutions. Three of those Resolutions involved a highly controversial issue – the limited practice authority for inbound foreign lawyers to practice in the United States.  The Resolutions are:

Resolution Revised 107A now amends Rule 5.5(d) of the ABA Model Rules of Professional Conduct (Unauthorized Practice of Law; Multijurisdictional Practice of Law) to permit foreign lawyers to serve as in-house counsel in the U.S., but with the added requirement that foreign lawyers not advise on U.S. law except in consultation with a U.S.-licensed lawyer;

Resolution Revised 107B now amends the ABA Model Rule for Registration of In-House Counsel to permit foreign lawyers to serve as in-house counsel in the U.S. but with added requirements ;

Resolution 107C now amends the ABA Model Rule on Pro Hac Vice Admission to provide judges with guidance about whether to grant limited and temporary practice authority to foreign lawyers to appear in U.S. courts; and

Resolution 107D amends the Comment to ABA Model Rule 8.5 to permit lawyers and clients to agree which conflict of interest rules govern the representation.

Congratulations to the Commission for three years of hard work which resulted in phenomenal changes to the rules which governs our conduct. The Commission, in its earlier Resolutions to the House which are now adopted as of August 2012, recommended several changes as they relate to technology and now has addressed the globalization of the practice which will now allow for lawyers to provide more services to clients whose needs may not be limited to our jurisdictional borders.

How does this effect Maryland? We shall soon see if our court adopts similar provisions in the Maryland Lawyers’ Rule of Professional Conduct.

Read more about the work of the Commission on the ABA website.

Dolores Dorsainvil is a Senior Staff Attorney at the Office of Bar Counsel and is an Adjunct Professor of Law at American University’s Washington College of Law where she teaches Legal Ethics.

Retainer Agreements and Rule 1.5(b)

The most important aspect of the attorney-client relationship is the contract between the parties. If you have not recently taken the time to review your firm’s retainer agreement, now is a great time to make sure you are in compliance with the ethical rules.  Rule 1.5(b) of the Maryland Lawyers’ Rules of Professional Conduct (hereinafter “the Rules”) sets forth the ethical requirements for retainer agreements and states, “[t]he scope of the representation and the basis or rate of the fee and expenses for which the client will be responsible shall be communicated to the client, preferably in writing, before or within a reasonable time after commencing the representation, except when the lawyer will charge a regularly represented client on the same basis or rate.  Any changes in the basis or rate of the fee or expenses shall also be communicated to the client.”  Although the Rules do not require that a standard (non-contingent) retainer agreement be in writing, it is a good practice for an attorney to memorialize such an agreement so that in the event that a dispute arises, the parties can review the document.

There are two requirements under Rule 1.5(b). First, the retainer agreement must clearly state, “the basis or the rate of fee,” or in other words, how the attorney will be compensated for their legal services.    Therefore, whether the fee is contingent[1] on the outcome of a recovery or settlement, an advanced fee for legal work to be performed in the future,[2] a flat fee, an hourly fee that will be billed to the client as work is performed, a statutory fee, or a combination of these fees (also known as “hybrid retainers”), it is important for the attorney to set forth and explain to the client how they expect to be compensated regardless of the type of retainer agreement.

Second, the retainer agreement should clearly state, “the scope of the representation,” or stated another way, the legal services that the attorney has agreed to perform.  When describing what the scope of the representation is, an attorney should provide as much detail as possible and, in some instances, it may be appropriate to include the services that the attorney will not provide under the retainer agreement. An attorney may want to include language that should further legal services be required, the parties, can either modify the current retainer agreement or enter into another retainer agreement altogether at an additional cost to the client.  For example, if an attorney is retained in a criminal matter and represents a client at trial, the attorney should state in the retainer agreement that the representation does not include any appellate work, should the matter present such a necessity. Having such detail in the retainer agreement will help eliminate any confusion in the event that the client is convicted and desires an appeal.

Lastly, Rule 1.5(b) requires that the attorney inform the client of any expenses related to the representation for which the client will be responsible.  By doing so eliminates any undue surprise on the part of the client once his or her matter is resolved.

Having a good iron-clad written retainer agreement serves as source of protection not only for the client but the attorney as well, especially in the event that the client files either a grievance with Bar Counsel’s office, or a fee dispute.

For more information on this topic and more on starting a solo practice, listen to this Podcast by Anthony I. Butler, Esquire. http://www.yls.org/sec_comm/sections/yls/podcasts.asp

Also check out the new MSBA App for iPhone, Android and Blackberry, which keeps theMaryland Professional Code of Conduct right at your fingertips!

[1] Contingency fee agreements in Maryland must be in writing. (emphasis added).  Rule 1.5(c) states, “[a] fee may be contingent on the outcome of the matter for which the service is rendered, except in a matter in which a contingent fee is prohibited by paragraph (d) or other law.  A contingent fee agreement shall be in a writing signed by the client and shall state the method by which the fee is to be determined, including the percentage or percentages that shall accrue to the lawyer in the event of settlement, trial or appeal; litigation and other expenses to be deducted from the recovery; and whether such expenses are to be deducted before or after the contingent fee is calculated.  The agreement must clearly notify the client of any expenses for which the client will be responsible whether or not the client is the prevailing party.  Upon conclusion of a contingent fee matter, the lawyer shall provide the client with a written statement stating the outcome of the matter, and, if there is a recovery, showing the remittance to the client and the method of its determination.”

[2]  Maryland takes the default position that advanced fees are considered unearned upon receipt and are property of the client unless the client agrees to a different arrangement.  Rule 1.15(c) states, “[u]nless the client gives informed consent, confirmed in writing, to a different arrangement, a lawyer shall deposit legal fees and expenses that have been paid in advance into a client trust account and may withdraw those funds for the lawyer’s own benefit only as fees are earned or expenses incurred.”

Effective Client Screening

By Dolores Dorsainvil

Running a successful practice includes the ability to effectively screen prospective clients. In this tough economy, lawyers need to establish a practice policy by which they are able to make appropriate screening decisions about the clients they wish to represent. Doing so would assist an attorney in not feeling the need to accept any and every legal matter that should come through the door; and, it would also assist an attorney in avoiding possible ethical pitfalls and/or disciplinary complaints.

The initial meeting with the prospective client is an important time to assess several things. First, an attorney should determine early on whether he or she is qualified to handle the matter. (If an attorney does not feel competent enough to handle such a matter, than it is advisable for the attorney to send the prospective client a writing indicating so in the form of a non-engagement letter.) Second, the meeting provides the attorney an opportunity to assess whether the client will be a high risk or difficult client. Third, the attorney should determine what the prospective client’s expectations are and also determine whether the attorney can reasonably satisfy those expectations. After making these assessments and advising the client on the applicable law and/or the legal process, an attorney should inform the client on their fee basis and the attorney should consider whether the client can meet the attorney’s financial expectations.

If an attorney is able to complete these steps without incident, the decision to undertake such a representation should be a fairly easy one. However, there are some prospective clients that may cause an attorney some concern. When faced with these warning signs, an attorney may wish to decline the representation:

  • Client who is changing lawyers
  • Client who has had several previous lawyers on the same matter
  • Client whose expectations exceed the evaluation of the case
  • Client who has unreasonable motives or a hidden agenda
  • Client who has performed considerable amount of research on the case
  • Client who refuses to pay the required consultation fee or retainer
  • Client who you cannot empathize with
  • Client who makes you feel uncomfortable

While this list is certainly not exhaustive, an attorney should recognize certain negative gut feelings that they may have about a prospective client. Doing so will help an attorney make the critical judgment call on whether, or not, to accept the representation. Developing an effective client screening process means an attorney will spend less time defending against bar complaints, malpractice actions, and fee disputes, and can spend more time, in the long run, focusing on such things as client development, marketing, firm growth, and professional development.

For more information on this topic, check out this Podcast:  Dolores Dorsainvil on Law Practice Management.

Dolores discusses the importance of law practice management, effective client screening, retainer agreements and how to handle attorney trust accounts. She also explains what attorneys should do if disputes arise with clients and where to turn for assistance.

For more information, check out this article on Choosing Clients Wisely by Pat Yevics, MSBA LOMA director. Another helpful link from MSBA LOMA is this sample Client Intake Form.

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