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Lawyers’ Duties Regarding Legal Files After a Client’s Death – June Newsletter

Lawyers’ Duties Regarding Legal Files After a Client’s Death

Courts uniformly have held that the attorney-client privilege survives the death of a client. Various courts and ethics opinions have also analyzed a lawyer’s responsibilities to former clients to preserve confidential information after the representation concludes. Many states have adopted the Uniform Probate Code (“Code”) that provides, upon the death of a person, the personal representative of the estate takes possession and control of the decedent’s real and personal property. The Code is silent whether personal property includes legal files held by a lawyer. Complex issues arise regarding the lawyer’s duties to her former client when the personal representative seeks files that are unrelated to the administration of the state.

Attorney-Client Privilege After Death and Other Recent Changes in the Law

A Colorado Supreme Court case decided in November 2020 addresses two seemingly inconsistent and long-standing legal maxims: (1) the attorney-client privilege survives the death of a client and (2) a decedent’s personal representative has a rite to take possession of all the decedent’s property. In In the Matter of the Estate of Louis Rabin (“Rabin”), the decedent’s personal representative asserted that she had a right to possession of all legal files in possession of the decedent’s former attorney regardless of whether the files were needed for the administration of the estate. In re Estate of Louis Rabin, 474 P.3d 1211 (Colo. 2020).

In Rabin, the attorney countered that the personal representative’s request would violate decedent’s attorney-client privilege, which survives his death. The personal representative subpoenaed the attorney for the decedent’s legal files and the lawyer moved to quash. The probate court quashed the subpoena, and the case eventually was heard by the Colorado Supreme Couty. The court held that personal representatives are not per se entitled to legal files from the decedent’s lawyers who were not involved in drafting the will being probated or who did not have files that were needed for the administration of the estate. The case was decided under Colorado’s probate code and the Colorado Rule of Professional Conduct 1.6, which is similar to the American Bar Association Model Rule 1.6.

The U.S. Supreme Court has held that the attorney-client privilege applies during the representation as well as following the death of a client. Swidler & Berlin v. United States, 524 U.S. 399, 404, 307 (1998) (Deputy White House Counsel met with an attorney about possible violations of law in connection with the firing of White House employees; the attorney took notes during the meeting, which were later sought by the government, after the Deputy White House Counsel committed suicide). See also, Restatement (third) of the Law Governing Lawyers, 60 cmt. (e) (2000). The Court noted that survival of the privilege after a client’s death is consistent with the policy of fostering candid discussions between client and lawyer so the lawyer may give advice regarding the matter. The Court noted there are certain exceptions such as the testamentary exception to allow disclosure of privileged information because “the privilege, which normally protects the client’s interest, could be impliedly waved in order to fulfill the client’s testamentary intent.” Id. at 405 (citations omitted). In other circumstances, however, the lawyer may not waive the privilege. Id. at 410-11 (Lawyer cannot reveal confidential information to federal agents after a client’s suicide).

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Client Trust and IOLTA Accounts: Managing Money and Avoiding Risk

Client Trust and IOLTA Accounts: Managing Money and Avoiding Risk

Introduction

Most lawyers will tell you that they prefer practicing law to managing the day-to-day operations of a law firm. Although many business-related tasks may be delegated to support staff and third-party vendors, lawyers must play scrupulous attention to, as well supervise both subordinates and outsourcing providers in a responsible manner in order to ensure that duties to clients are fulfilled and that the law firm may continue to function. One of the primary responsibilities that lawyers must consider when evaluating law firm operations concerns a lawyer’s responsibility to protect client funds and property. Commingling law firm funds with client funds and conversion of client funds constitute two of the leading causes of lawyer discipline and may lead to liability issues as well.  Therefore, if lawyers seek to continue to practice law, they must devote time and resources to instituting sound banking and trust accounting procedures and supervising the parties entrusted with the authority to handle client funds.

What types of bank accounts should law firms maintain?

Almost all jurisdictions require law firms to maintain three types of bank accounts: an operating account, a client trust account, and an Interest on Lawyer Trust Account (“IOLTA”) account. State supreme courts and state bar associations will designate the financial institutions in the jurisdiction eligible for law firm establishment of client trust accounts and IOLTA accounts. These selected financial institutions are obligated to alert the relevant bar disciplinary authority when a law firm’s client trust account or IOLTA account is overdrawn. Let’s review the type of funds that should be deposited in each account.

  • Operating account: Client funds that the law firm has earned and monies from others that are not being held in escrow should be placed in the law firm’s operating account. Funds from clients that have not been earned must not be placed in this account.
  • Client trust account: Client funds intended to pay the law firm’s fee that have not yet been earned should be deposited in a client trust account. For example, if the client pays the law firm a $5,000 retainer to work on a legal matter or on an hourly basis, and the law firm has only earned $1,000, the $4,000 balance should remain in the client trust account until earned or returned to the client.
  • IOLTA trust account: Client funds or funds of third persons, which are either nominal in amount or expected to be held for a short period of time, should be placed in and IOLTA account in the vast majority of jurisdictions. The interest generated from these accounts is used to fund charitable institutions, typically legal aid entities that serve indigent clients. No jurisdiction has defined “nominal” or “short term” pertaining to IOLTA accounts with any specificity. Generally, the determination of whether a the funds of a client or third party are nominal or short term rests within the discretion of the lawyer. If the lawyer exercises sound judgment, no disciplinary action will be taken against the lawyer.

In deciding whether to deposit client funds in a trust account or IOLTA account, lawyers should consider the anticipated amount of net interest such funds are expected to generate. If the net interest is expected to be nominal, due to either the nominal amount of the principal or the limited amount of time the funds are anticipated to remain in the account, the funds should be placed in the IOLTA account, If the net interest is expected to be more than nominal, the funds should be placed in the client trust account. Any interest earned in the client trust account should go to the client, rather than the law firm.

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You Missed a Deadline??? How to Avoid that Nightmare

You Missed a Deadline?? How to Avoid that Nightmare

Introduction

The foundation of the attorney-client relationship is providing competent legal advice. In this era, competent lawyering includes the use of “relevant technology.” See ABA Model Rule of Professional Conduct (“MRPC”) 1.1, comment [7]. Most courts now send notices of court actions by email and require attorneys to file documents electronically. What happens if you miss an email or fail to check an electronic docket? The scenarios in a recent case are similar to a bad dream, but the consequences are real and quite severe.

A “Cautionary Tale” Leading to Dismissal of a Case – Rollins v. Home Depot USA

Rollins v Home Depot USA, Inc., 8 F. 4th 393 (5th Cir. 2021), presents a “cautionary tale for every attorney who litigates in the era of e-filing.” The facts are simple. The parties agreed on a deadline for dispositive motions in a pending personal injury suit. The defendant filed the motion. Counsel for the plaintiff received an electronic notification of the filing, but he never saw it. Purportedly, the email was placed automatically in a folder the attorney did not regularly monitor. He never checked the docket and, therefore, never filed a response to the motion for summary judgment. The court granted the motion. Counsel for the plaintiff learned of that decision from his opponent about a week after the decision was entered. The lower court denied Rollins’ motion to alter or amend the court’s judgment under Federal Rule of Civil Procedure 59(e).

Rollins received no relief on appeal. The Circuit Court ruled that Rule 59(e) permits parties to “correc[t] manifest errors of law or factor presen[t] newly discovered evidence” or argue that there has been an intervening change in the controlling law. Those reasons for the application of the rule did not apply in this case. The failure to file a response was in counsel’s reasonable control. The Court cited a prior decision which upheld a district court’s grant of an unopposed motion to dismiss where the opposing party explained that its failure to respond was due to “defective antivirus software” that “diverted court emails into a spam folder.” Trevino v City of Fort Worth, 944 F.3d 567, 570 (5th Cir. 2019)

How Should Lawyers Avoid Errors Such As Those in the Rollins Case?

The Rollins case led to a terrible result for the client. The acts of the attorney essentially ended the case when additional court review otherwise may have been available. Opening and reading all court communications are imperative. Reading the text of all court orders – rather than relying on a description in an electronic notification – is essential. Having the case dismissed on summary judgment may have been completely avoided had the lawyer maintained simple but necessary docketing and monitoring systems.

Maintaining a reliable calendar system is critical. Of course, you should have appropriate calendar maintenance and install updates as they become available. You also should have a backup calendar, which would activate in the event that the primary system becomes unavailable. In addition, maintaining calendars in a confidential manner on personal data equipment such as cell phones can also serve as a back-up.

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Inside the Lines: Scope Limitations and Legal Ghostwriting

Scope Limitations and Legal Ghostwriting

Background

As financial pressure from the Great Recession becomes the new normal and even the least tech-savvy Americans tackle most errands from behind a computer screen, consumers have cast a critical eye toward the traditional attorney-client relationship. For many, the cost of a full-service representation creates a barrier to any legal services at all, resulting in a growing army of pro se litigants who frustrate lawyers, exhaust court personnel, and seldom achieve their goals.

Enter the limited scope representation (“LSR”), often referred to as “unbundling,” “limited legal assistance” or “discrete task representation,” where an attorney provides certain services and excludes others for a lower overall fee. This arrangement has long existed in the transactional realm but has become increasingly common in litigation, particularly in family law, landlord-tenant, and small personal injury and property damage claims.

In reality, the scope of every representation is limited to some degree. Every engagement letter should contain a provision on scope, whether it clarifies that a workers’ compensation lawyer will not advise on potential third-party claims, or that a divorce lawyer will not draft a qualified domestic relations order. An LSR in the context of a would-be pro se, consumer client, however, refers to a relationship where the attorney and client split tasks in the case, or the client agrees to handle the lion’s share.

A full-service representation typically consists of fact-gathering, legal advice, discovery, legal research, correspondence, document drafting and filing, negotiation, and in-court appearances. An LSR might include any one or combination of these duties, during a defined phase of the matter or as a one-time event. The LSR is a powerful tool that allows attorneys to generate business that they could not otherwise reach and clients to access a level of service that they could not otherwise afford. Attorneys must tread carefully however, especially in areas where these more severe limitations on scope have only recently taken hold.

Client and Case Selection

American Bar Association Model Rule 1.2(c) permits an attorney to limit the scope of a representation as long as the limitation is “reasonable” and the client gives informed consent. This rule,
which has been adopted in all but a handful of states, provides the basis, and defines the boundaries, of any LSR.

What is a “reasonable” limitation on a lawyer’s services? Two broad categories inform the reasonableness of a limitation: the complexity of the matter and the capabilities of the client. The
purposes behind easing ethical and court rules to allow for more LSRs—to help pro se individuals achieve their legal goals and ease the burden on the court system—are not fulfilled where a client is left stranded midway through an engagement with no reasonable chance for success.

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The Blurred Boundaries of Office Sharing: Officemate and Co-Defendant?

The Blurred Boundaries of Office Sharing: Officemate and Co-Defendant?

The daily practice of law comes with many challenges, not the least of which is the bottom line. Attorneys want to provide their clients with the best possible representation and still be able to pay their own bills. One of the methods to address this juxtaposition is sharing office space. In today’s legal market, attorneys share space with other attorneys, various types of professionals, or anyone able to rent the office next door. There are many benefits for practitioners in sharing office space beyond saving on rent. The shared office environment provides social interaction with other attorneys, cost-saving benefit of sharing office equipment and allowing attorneys to vent about challenges with clients or seek advice on how to deal with a client representation. However, with those benefits may come a heightened risk of legal malpractice claims from clients and from non-clients.

Consider the Client’s Perspective

Attorneys have a clear understanding that their law office is a separate business entity from the attorney in the law office next door in a shared space office. Attorneys know they have separate client trust accounts, operating accounts, employee payroll, and insurance. But what is clear to the attorneys likely is not obvious to a prospective or current client. It is the client’s understanding and perspective that will matter in a claim of legal malpractice. When taking steps to avoid any confusion as to who is representing a client, consider the client’s perspective and experience with the attorney representing them and other attorneys in the shared office space.

How did the prospective client come into contact with his/her attorney? Was it an advertisement that complied with ABA Model Rules of Professional Conduct 7.1 (Communication Concerning a Lawyer’s Services) and 7.2 (Communication Concerning a Lawyer’s Services: Specific Rules)? Did the client find the attorney on a consumer website that clarified which attorneys make up the law firm? Did the client find a unique website for the law firm that listed the attorneys in practice? When the prospective client called the law firm, was the phone answered with a generic “Law Firm” or with “Law Offices of Larry Lawyer”?

When the prospective client first visited the shared office space, did they see signage that clarified that separate law offices were in the shared space? Was there signage in the lobby that listed the separate entities rather than “Law Offices”? When assessing the image being presented to prospective clients, the attorneys need to “step into the shoes of the client” and consider what they see and experience when dealing with attorneys in the shared office space.

Shared Office Spaces May Implicate Several Model Rules of Professional Conduct

It is essential that clients understand who is and is not involved in their representation. A prospective client may look around a busy office and agree to representation due to their misunderstanding of who is representing them. The prospective client may feel more assured in hiring a law firm with multiple attorneys rather than a solo practitioner. It is the responsibility of the attorney to make sure the client understands who is representing them, and the terms of that representation should be documented in a clearly-written engagement agreement.

If an attorney goes beyond the engagement agreement and decides without express client authorization to discuss his or her client’s case with an unaffiliated officemate, “Paul down the hall,” the disclosing attorney is risking a lot of problems. Depending on the circumstances, unauthorized conversations with unaffiliated cotenant lawyers could waive the attorney-client and work product privileges, create a conflict of interest, or even violate the ABA Model Rules of Professional Conduct. For example, see ABA Model Rule of Professional Conduct Rule 1.6 (a lawyer generally may not reveal information about the representation without the client’s consent, and the lawyer must takes reasonable efforts to prevent inadvertent disclosure), and Rule 1.2 (a lawyer may take only such action as the client implicitly authorizes, and the client must give informed consent for any limitation on the scope of that attorney’s representation). The attorney also could be sending the client the wrong message about who really is involved in the case. For instance, if the attorney recommends a course of action and comments that s/he discussed that recommendation with “Paul down the hall,” who agrees, the client may be justifiably confused about Paul’s involvement in the case.

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Client Intake and Proper Client Selection

Are You Ready to Commit to Client Intake and Proper Client Selection?

Client intake should never be dismissed as an unimportant but necessary task when taking on a new client. Creating a thorough client intake process is essential in order to establish a strong foundation for an attorney-client relationship – whether the relationship lasts for weeks or years.

By investing the necessary time and effort at the outset, attorneys may save time, money and even help to avoid legal malpractice claims. When used appropriately, the client intake process may reveal a stark reality that a prospective client should not become a current client. View the full article from CNA to learn more…

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The Remote-Ready Law Firm: Managing Long-Distance Relationships

The Remote-Ready Law Firm: Managing Long-Distance Relationships

Good lawyers have their best suit at the ready, but may just as often don slippers and sweatpants. Seventy-two percent of lawyers telecommute at least some of the time according to the American Bar Association’s latest Profile of the Legal Profession. As legal technology grows more accessible and digital natives become the dominant group in the American workforce, one should only expect this percentage to rise.

Co-working spaces, cloud computing and virtual receptionists have allowed some law firms to ditch their offices entirely. Most lawyers, however, seek a middle ground: a practice capable of functioning remotely when convenient or necessary, but still anchored to a physical office. The benefits of creating a remote-capable business are well worth the investment, enabling a firm to maximize productivity when traveling, attract top-level talent, and maintain functionality during a crisis.

Minimizing Paper

If the firm does not currently have a system for doing so, digitizing client files may be the most burdensome aspect of a remote-work upgrade. Even with a system already in place, ensuring that lawyers can work remotely may require more extensive or consistent document imaging practices. All physical documents that comprise a file should be scanned, saved and, unless the original must be preserved, shredded. Lawyers should prioritize active files, with an emphasis on streamlining current and prospective workflows before tackling the mountain of closed files in storage. Remember: the goal is to facilitate remote work, not to devise a one-hundred percent paperless office, which is seldom realistic.

Depending on the volume of documents and the composition of the practice, digitizing paper files may be accomplished by in-house staff. Firms may instead consider using a third-party imaging service, especially if they intend on digitizing decades of old boxes. In any event, whether independently or in consultation with an outside vendor, lawyers must ensure that electronic files are properly labeled, organized, legible, and retrievable, which requires careful planning and the right equipment. For more on this issue, see the CNA resource Creating a File Retention and Destruction Policy.

Server Decisions

Digitizing files will reduce the cost and aggravation associated with keeping a forest’s worth of paper in a back room or offsite storage facility, but even electronic files must be stored somewhere. The default option for law firms has long been on-premise servers, which require major upfront hardware and installation costs, but allow for complete control over the security and privacy of firm data. The value of that control, however, depends greatly upon the firm’s IT expertise, which generally requires an outside consultant, as well as the firm’s commitment to its own security protocols. As the practice grows or as hardware becomes outdated, on-premise servers will likely require additional investment from the firm.

The alternative to on-premise storage, of course, is cloud storage. Most lawyers, 58 percent according to the ABA’s most recent Legal

Technology Survey Report,2 now employ cloud-based services in their practice. Undeterred and probably partially motivated by the lack of direct control over data privacy and security, lawyers opting for a cloud-based solution outsource those responsibilities to a third-party vendor. The cloud provider guarantees the integrity and accessibility of firm data, protects it from outside intrusion, and shoulders hardware costs for a monthly or annual fee. Vendors dedicated to the legal industry often provide document storage and practice management software as an all-in-one, fully integrated service.

Between firm-owned, privately managed on-premise servers and rented space within public, multi-tenant cloud servers lies a third option: a private cloud. Like more familiar public cloud-storage solutions, private clouds outsource the responsibility of owning and maintaining a server to a third-party vendor. In contrast to a public cloud, however, firm data in a private cloud is stored on a dedicated, single-tenant server, separate from other customers’ data. In addition to greater control over how firm data is managed, this allows the firm to host its software, documents and email on one platform, but at the same time places the burden of security largely on the firm itself.

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Best Practices for Law Firms During a Pandemic

Best Practices for Law Firms During a Pandemic

The COVID-19 pandemic continues to disrupt all aspects of everyday life. As the virus spreads throughout the United States and around the globe, the number of those infected will rise, as will the death rate. Governments have issued quarantines and shelter-in-place orders in an effort to combat the pandemic, and, as a result, several businesses, including law firms, have closed offices temporarily and instituted work from home measures for lawyers and support staff.

In this challenging environment with circumstances changing on a continuous basis, law firms must remember the fiduciary duties owed to clients and their ethical duties as defined by rules of professional conduct in the relevant jurisdiction. Law firms may limit their exposure to professional liability and other claims by identifying and responding to key issues that may arise during the crisis.

Client Communications

During these stressful times, clients may require more reassurance from their lawyers than usual, which may lead to an increased need for communication between lawyers and clients. In addition to promptly complying with reasonable requests for information, lawyers must keep clients reasonably informed about the status of their matters. If law firms have closed their physical law offices on a temporary basis, such information should be communicated to clients, including any updates contact information for the law firm. Law firms may be required to ensure that phone numbers and voicemail messages are routed to the appropriate law firm personnel working remotely. The same concern applies to regular and certified mail as well as packages sent to the law firm’s office.

Security in Remote Working Situations

Attorneys must be vigilant in maintaining the security and confidentiality of data/client files while telecommunicating. Working remotely presents certain cybersecurity risks such as accessing/sending information through unsecure WIFI networks, use of unsecure personal devices, phishing attacks, and many others. Recent media reports indicate a surge in cybercrimes against law firms as criminals attempt to exploit cyber security vulnerabilities with so many lawyers working remotely. It is important to follow firm security guidelines and policies, and review data breach response plans to ensure that each practice setting is prepared and able to respond quickly to any incident.

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Phishing Attacks Use Bar Complaints and HIPAA Audits as Bait

Phishing Attacks Use Bar Complaints and HIPAA Audits as Bait

Attorneys have access to sensitive information and large sums of money, and although they are experts in many areas, they are seldom on the cutting edge of new technology. It should come as no surprise, then, that a growing number of email scams are targeting attorneys and other similar professionals. By mirroring an email from a state bar, legal organization, disciplinary board or government entity, these scams take a narrower focus that scatter-shot emails offering a free cruise or a one-in-a-lifetime deal with a Nigerian prince.

This brand of phishing uses a victim’s trust (or sometimes fear) of an institution as a way of influencing that person to download a malicious attachment, click on a malicious link, or transmit sensitive information to a third party. While some phishing emails remain easy to detect, others have begun displaying an incredible attention to detail. “Spoofing”, a phishing tactic that involves the technical manipulation of the email header or IP address so that it appears to have been sent from a trusted source, is especially difficult to counteract.

The two examples below illustrate the targeted nature of newer phishing attacks and the level of sophistication they employ, but also present an opportunity to educate attorneys on what they can do to avoid becoming a victim.

Bar Complaint Scam:

Officials from state bars across the country continue to warn of fraudulent emails purportedly conveying notice of a disciplinary complaint. Attorneys in Alabama, California, Florida, Georgia and Nevada reports receiving the phony emails as early as last summer, but emails have continued to surface through 2017. A variant of the scam appeared in Florida alleging a past due invoice rather than a bar complaint, but the details have remained more or less the same.

Like most phishing attempts, the email appears to have originated from a trusted source, whether it is the state bar, bar association, or even the attorney general’s office. It includes an urgent call to action, typically a response within ten days, and prompts the recipient to download an attachment or follow a link to view the relevant complaint or invoice. Following these instructions, you may have guessed, triggers the introduction of malware onto your system.

This malware may directly extract data from your network, but with the growing frequency devices are instead infected with ransomware which encrypts the recipient’s hard drive. Only upon paying a fee, subject to strict, time-sensitive instructions, will the device by decrypted and restored. Failing to comply leaves your data unusable and likely compromised.

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Support Staff’s Role in Avoiding Legal Malpractice Claims

Law Firm Supporting Staff: Recognizing Their Role in Avoiding Legal Malpractice Claims

They hold various titles for their daily roles in the practice of law: paralegal, legal secretary, paraprofessional, law clerk, project assistant, docketing clerk, research assistant, and the list is ever expanding. Regardless of their title, members of law firm support staff serve a critical role in the daily practice of law. Their work, when performed with proper guidance and supervision, not only keeps a legal practice running but also helps to mitigate and avoid legal malpractice claims. Over the entire span of a client representation, law firm support staff is critical to supporting the development and maintenance of professional attorney-client relationships.

Notably, support staff has a serious impact on professional liability exposure. Data from the American Bar Association’s Profile of Legal Malpractice Claims shows that administrative errors (procrastination in performance; lost file, document or evidence; failure to calendar properly; clerical error; failure to file document – no deadline; failure to react to calendar) leading to malpractice claims peaked in the 2011 study at 30.13% of total errors claimed. In the 2015 study, however, the administrative errors had decreased to a more typical 23.15%.

Although no known specific cause was identified for the uptick in legal malpractice claims related to alleged administrative errors, it may have been related to the economic downturn. As attorneys adapted their law practices to survive the economic downturn, many ventured into new areas of practice bringing their law firm support staff with them. Without proper guidance and supervision, and lacking a mentor to address uncertainties about the new area of practice, errors were made related to proper filing of documents, clerical errors, failure to file documents among other issues, which involved steps completed by support staff. As the legal community recovered from the economic downturn, legal malpractice claims based on administrative errors returned to customary historical numbers, but still remained in the double digits. Thus, opportunities exist throughout all stages of the client representation for support staff to more effectively support law firm operations and thus reduce the risk of a professional liability claim.

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