Do Lawyers Have A Duty To Disclose, To The Client, Significant Errors Committed By Co-Counsel?

by: Peter J. Gallagher (@pjsgallagher) (LinkedIn)

This was the question posed to the Committee on Professional Ethics of the New York State Bar Association. Its answer was a qualified yes — counsel has a duty to disclose the alleged error to the client but only if it was a significant error that could give rise to a malpractice claim.

The issue presented to the Committee was the following:

The inquirer was engaged to represent a client on the eve of trial. The client’s prior counsel is serving as co-counsel. In preparing the case, the inquirer has learned that co-counsel conducted virtually no discovery and made no document requests, although the inquirer believes correspondence and emails between the parties could be critical to the case. The inquirer believes this was a significant error or omission that may give rise to a malpractice claim against co-counsel. The outcome of the case, however, has yet to be decided. The inquirer is concerned about disclosing this situation to the client because it would undermine inquirer’s relationship with co-counsel, but the inquirer also believes it is in the client’s best interests to disclose the facts as soon as possible.

It is already established in New York (and several other jurisdictions, including New Jersey) that lawyers must report their own significant errors or omissions to clients. This requirement is based partly on Rule 1.4 and partly on Rule 1.7, each of which the Committee discussed in its opinion.

Rule 1.4 requires lawyers to keep clients informed about any material developments in their representation, and to explain issues "to the extent reasonably necessary to permit the client to make informed decisions regarding the representation." A client may decide not to continue to retain a lawyer who makes significant errors or omissions, and the client cannot make an informed decision on this issue unless the lawyer self-reports his own errors. Accordingly, clients must self-report their own significant errors or omissions to their clients. The Committee held that this rationale applied equally to lawyers reporting significant errors or omissions committed by co-counsel because the decision facing the client in both situations was the same — whether to continue to retain the lawyer who committed the errors or omissions — and the client cannot make an informed decision on that issue without full disclosure.

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Refer(ral) Madness: Court Nixes Fee Sharing For Lawyer Who Referred Case To Lawyer Who Referred Case To Lawyer Who Handled Case

by: Peter J. Gallagher (@pjsgallagher) (LinkedIn)

Under New Jersey law, lawyers can, in some instances, share fees with lawyers at a different firm to whom they refer a case. But what happens when Lawyer A refers a case to Lawyer B who then refers the case to Lawyer C? Can Lawyers A and B share in the recovery that Lawyer C achieves for the client? This was the question the Appellate Division faced in Weiner & Mazzei, P.C. v. The Sattiraju Law Firm, PC. The answer, in that case, was "no," but there are instances where this type of three-way sharing would be appropriate.

In Weiner & Mazzei, a lawyer was contacted by a family friend in need of advice on a possible workplace injury/change of employment case. The lawyer advised the family friend that he appeared to have a valid claim and referred the family friend to an attorney who specialized in that area of law. The first lawyer claimed that he told the family friend that the second lawyer would take the case on contingency and that the first lawyer would be paid a referral fee. The family friend denied ever being told about the referral fee.

After speaking with the first lawyer, however, the second lawyer also refused the case but agreed to refer it to defendant, a law firm with at least one certified civil trial attorney. The second lawyer had a standing referral agreement with defendant and defendant agreed to abide by the usual one-third referral fee contained in that agreement.

Defendant prosecuted the client's employment case and eventually reached a confidential settlement with the client's former employer. Plaintiffs — the first and second lawyers — sued, claiming they were jointly entitled to one-third of defendant's fee. Defendant moved for summary judgment, which was originally denied, but was later granted upon reconsideration. Plaintiffs appealed.

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As If You Needed Reminding: Don’t Violate Protective Orders!

by: Peter J. Gallagher (@pjsgallagher) (LinkedIn)

The Appellate Division recently reminded all lawyers of the importance of complying with protective orders. In Rotondi v. Dibre Auto Group, LLC, the Appellate Division affirmed a trial court's decision to disqualify plaintiff's counsel from continuing to represent plaintiff because she violated such an order.

In Rotondi, plaintiff purchased a new car from defendant car dealership. One year later, she attempted to refinance the car with the dealer, but ended up filing a class action lawsuit against the dealer and various other entities involved in the refinancing for alleged improprieties in the refinancing process. She alleged violations of the New Jersey Consumer Fraud Act and various other statutory and common law causes of action. Although filed as a putative class action, plaintiff's attempt to certify the class were eventually denied and the case, in the words of the trial court, "ultimately became simply a claim by [plaintiff] against the dealer."

As part of that lawsuit, the trial court entered a protective order that allowed the parties to designate materials as "Confidential" or "Attorneys' Eyes Only." Under the order, documents designated as "Confidential" could only be used by the "receiving party for purposes of the prosecution or defense of [the] action," and could not be used "by the receiving party for any business, commercial, competitive, or other purpose." Documents designated as "Attorneys' Eyes Only" could only be "disclosed [ ] to outside counsel for the receiving party and to such other persons as counsel for the producing party agrees in advance or as ordered by the court."

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New Jersey Supreme Court To Hear Appeal In Case Involving Defense Counsel That “Friended” Plaintiff On Facebook

by: Peter J. Gallagher (@pjsgallagher)

Earlier this year, I posted about an ethics grievance that was filed against a defense attorney whose paralegal "friended" a plaintiff on Facebook, which allowed the defense to gain access to information that could be used to impeach the plaintiff at trial. (Click here for my original post.) The Appellate Division decision that was the subject of that post had less to do with the substance of the grievance — whether it was unethical to do what the paralegal did — and more about the strange procedural history of the grievance.

The Secretary of the local Ethics Committee originally refused to docket the grievance (which the Secretary is allowed to do if the Secretary, in consultation with a public member of the Ethics Committee, makes an initial determination that no ethics rules were violated), but plaintiff then went to the Director of the Office of Attorney Ethics ("OAE") with more information and convinced the OAE to investigate. Defense counsel argued that this violated the so-called “no appeal” portion of the New Jersey Court Rules, which prohibits appeals from decisions declining to docket ethics grievances. Defense counsel made this argument in a complaint that he filed in the Chancery Division, but the complaint was dismissed for lack of jurisdiction because, according to the trial court and the Appellate Division, the New Jersey Supreme Court has exclusive jurisdiction over matters involving the disciplining of attorneys.

Now the New Jersey Supreme Court has agreed to hear the case to resolve the following question:

Does the Director of the Office of Attorney Ethics have the authority to proceed with a grievance after a District Ethics Committee Secretary (with concurrence by a designated public member) has declined a grievance, pursuant to Rule 1:20-3(e)(3)?

As I mentioned in my prior post, it seems like the more interesting question is whether defense counsel's conduct was unethical, but we will not get an answer to this question until the New Jersey Supreme Court clears up this procedural issue.And, we will not get an answer at all if the New Jersey Supreme Court agrees with defense counsel and finds that it was improper for the OAE to investigate the grievance after the Secretary of the Ethics Committee refused to docket it.

Stay tuned for more on this case.

Ethics Grievance Against Defense Lawyer Who “Friended” Plaintiff Will Continue

by: Peter J. Gallagher (@pjsgallagher)

Recent reports have suggested that Facebook is no longer seen as “cool” among teens and other millennials because, among other things, their parents are on Facebook, so how can it possibly be “cool”? Well, with all apologies to Mark Zuckerberg, this post may be the death knell for Facebook’s coolness because this is the second time in the past few months that I am writing about Facebook. (The other article, which discussed the implications of judges being “friends” with attorneys, can be found here.) If parents being on Facebook is reason enough for it not to be “cool,” a lawyer blogging about it somewhat regularly probably removes any last vestiges of coolness.

With that being said . . . A recent Appellate Division decision, Robertelli v. The New Jersey Office of Attorney Ethics, will allow an ethics investigation involving a law firm employee’s use of Facebook to obtain information about a plaintiff in a pending personal injury lawsuit to continue. The issue faced by the Appellate Division – which is discussed below – did not involve the question of whether using Facebook to investigate another party in a pending lawsuit is unethical. But, since the case will now continue, we might get a decision on this underlying issue soon, so this case is worth watching. Other jurisdictions have dealt with similar issues and have usually found the conduct to be violative of the Rules of Professional Conduct. For example, the Philadelphia Bar Association found, in a similar situation, that the attorney’s conduct violated RPC 8.4 (conduct involving dishonesty, fraud, deceit and misrepresentation) and RPC 4.1 (truthfulness in statements to others). Similarly, the San Diego Bar Association found that an attorney’s use of Facebook to “friend” potentially dissatisfied high-ranking employees at an employer that his client was suing violated RPC 4.2 (communicating with a person represented by counsel). With the grievance in Robertelli, New Jersey’s Disciplinary Review Board and Supreme Court may soon weigh in on the issue as well.

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