Professional Responsibility & Ethics for FDIC Lawyers

Professional Responsibility & Ethics

for FDIC Lawyers

Kathleen Clark

Washington University in St. Louis

June 2015

1

2 Handouts:

Outline & Problems

Supplementary Materials

Goals

Topics

• Government Lawyering• Conflicts of Interest• Supervisory / Subordinate Lawyers• Standards for Whistleblowing Lawyers• Authority of Lawyers & Clients• Revolving Door• No-Contact Rule

Theme

howprofessional rules

apply togovernment lawyers

and . . .

meetCLE

requirements

Whois

yourclient

?

Identifying Joan’s client

assigned to assist DRR re FDIC’s appointment

as receiver for Bank 1

& Bank 2

Identify Joan’s

client(s)

PossibilitiesIndiv. receiverships for Banks 1 & 2

DRR

Deposit Insurance Fund

FDIC

Federal government

People of the United States

The public interest

PossibilitiesIndiv. receiverships for Banks 1 & 2

DRR

Deposit Insurance Fund

FDIC

federal government

people of the United States

the public interest

PossibilitiesIndiv. receiverships for Banks 1 & 2

DRR

Deposit Insurance Fund

FDIC

federal government

people of the United States

the public interest

PossibilitiesIndiv. receiverships for Banks 1 & 2

DRR

Deposit Insurance Fund

FDIC

federal government

people of the United States

the public interest

DC Rule 1.6(k)

govt lawyer’s client is

agency that employs lawyer unless

expressly provided by

law, regulation, or order

Moststate rules

don’t identifygovt lawyer’s

client

significanceof

client identity

control

confidentiality

individual v. organization

conflicts of interest

control

confidentiality

individual v. organization

conflicts of interest

Examinestructure of authority

in specific

governmentalcontext

Examinestructure of authority

re DRR &

receiverships forBank 1 & Bank 2

Whocan make decisions

about the objectives of

Joan’srepresentation?

explicitly different standards

forpublic & private sector

lawyers

explicitly different standards

forpublic & private sector

lawyers

Rule 3.8

Special Responsibilities

of a Prosecutor

explicitly different standardsbased onnature of

client

APossibleConflict

Bank 1 sold a 25%

participation interest in loan

to Bank 2

Borrower still owes $4mFDIC = Receiver for Bank 1Receiver for Bank 1 wants

to sell loan for $3m

FDIC = Receiver for Bank 2

Receiver for Bank 2 objects to sale for $3m

Joan assigned to represent

Receiver for Bank 1&

Receiver for Bank 2 objects to sale for $3m

May Joan represent

bothReceiver for Bank 1

&Receiver for Bank 2

?

Conflict of Interest Rules1.71.81.9

1.101.11

DC Rule 1.7(a)

DC Rule 1.7(a)

DC Rule 1.7(a)A lawyer

shall not advance two or more

adverse positions in the same matter.

DC Rule 1.7(a)no no

exceptionsno

informed consent

How wouldDC Rule 1.7(a)

apply to

Joan?

DC Rule 1.7(a)A lawyer

shall not advance two or more

adverse positions in the same matter.

Are theReceiver for Bank 1

& Receiver for Bank 2

separate clients?

DC Rule 1.7(a)A lawyer

shall not advance two or more

adverse positions in the same matter.

TX Rule 1.06(a)A lawyer shall not represent

opposing partiesin the same litigation.

TX Rule 1.06(a)no no

exceptionsno

informed consent

TX Rule 1.06(a)A lawyer shall not represent

opposing partiesin the same litigation.

How doesTX Rule 1.06(a)

apply to

Joan?

TX Rule 1.06(b)(b)

what = COI(c)

when COI permitted

TX Rule 1.06(b)(1) mmmmmmmmmmm

materially & directly adversesubstantially related

(2) mmmmmmmmmmmadversely limited by

responsibilities to other C

TX Rule 1.06(c)(1) mmmmmmmmmmmrepresentation will not be materially affected

(2) mmmmmmmmmmminformed consent

How wouldTX Rule 1.06(b) & (c)

apply to

Joan?

Supervisory&

SubordinateLawyers

Supervisorinstructs Joan to

representReceivers for Bank 1 & 2

despiteconflict of interest

Does supervisor’s instruction

insulate Joan from

professional discipline?

DC Rule 5.2(a)

DC Rule 5.2(a)Lawyer is

bound by Rules even if acting

at someone else’s direction.

DC Rule 5.2(b)subordinate lawyer

acting in accordance w/supervisory lawyer’s

reasonable resolutionof arguable question

DC Rule 5.2(b)subordinate lawyer

acting in accordance w/supervisory lawyer’s

reasonable resolutionof arguable question

How would

DC Rule 5.2apply

to Joan

?

Would analysis differ if

FDIC had formal policy that

“no managing attorney is engaged in practice of law”

?

Joan thinks hersupervisor is wrong.

What can Joan do?

Designated Agency Ethics OfficerGeneral CounselInspector Generalstate bar ethics hotlineanother lawyer

Maryland Rule 1.13

. . . then L shallrefer matter to higher internal authority. . .

• ask for reconsideration• suggest separate legal opinion• refer matter to higher authority within or

Maryland Rule 1.13. . . & L maydisclose externally if:–highest authority insists on/fails to address–clear violation of law–reasonably certain to result in–substantial injury to organization

DC Rule 1.6“confidence”

protected by A-C privilege

“secret” gained in professional relationship &:– C requested be held inviolate or– disclosure would be embarrassing or

detrimental to C

DC Rule 1.6(e)(6) mmmmmmmmmmmmmmmmmm

to secure legal advice about L’s compliance w/ law

(e)(2)(b) mmmmmmmmmmmmmmmmmIf govt L:

when permitted or authorized by law

(e)(1) mmmmmmmmmmmmmmmmmmwith C’s informed consent

Differencesbetween

government&

private sectorlawyers

TX Rule 1.05

Differencesbetween

government&

private sectorclients

conflicts of interestfor

lawyerspracticing

in a‘firm’

May Joan’s co-worker, Bob,

representReceiver for Bank 2

?

DC Rule 1.10(a)

If 1.7 or 1.9 prohibits 1 L in firm from rep’g C,

then all Ls in firm are prohibited from rep’g C . . .

DC Rule 1.10(a)

If 1.7 or 1.9 prohibits 1 L in firm from rep’g C,

then all Ls in firm are prohibited from rep’g C . . .

Shouldimputed disqualification

apply togovernment

lawyers?

DC Rule 1.0(c)

“firm”does notinclude

a government agency

DC Rule 1.0(c)

“firm”does notinclude

a government agency

Division of authoritybetweenlawyer

&client

DC Rule 1.2(a)

DC Rule 1.2(a)

C decides:objectives

whether to acceptsettlement / plea

DC Rule 1.2(d)

govt L’s authority & controlmay be expanded

beyond 1.2(a) limits

Is Bob required to pursue

the objectionstated by

Receiver for Bank 2?

Revolving Door

Seeking future employment18 USC § 208

“person or organization with whom he is

negotiating or has any arrangement concerning

prospective employment”

Seeking future employment18 USC § 208

“person or organization with whom he is

negotiating or has any arrangement concerning

prospective employment”

Seeking future employmentSTOCK Act

Notification & RecusalRequirements

negotiating or has any arrangement concerning

prospective employment”

3 Handouts:

Course Outline & Problems

Supplementary Materials

Appendix – Missouri Rule 4-1.6

Post-Employment Restrictions

Model Rule 1.11 (Texas 1.10)

18 USC § 207

Post-Employment Restrictions

18 USC § 207

Model Rule 1.11 (Texas 1.10)

18 U.S.C. § 207Trigger: – “participated personally and substantially”– under official responsibility during last year

in govt.Prohibition:

Don’t communicate or appear before federal government in connection with that matter

No imputation of conflict

Texas Rule 1.10Trigger:

“participated personally and substantially as a public officer or employee”

Prohibition:Don’t represent a private client in connection with that matter

• Imputation of conflict to firm unless L is screened & agency notified

Keepa list

of “particular matters

involving specific parties”

DC Rule 4.2(a)

No-Contact Rule

DC Rule 4.2(a)

don’t communicatew/ person

known to be rep’d

DC Rule 4.2(a)unless

other L’s consentor

authorized by law

DC Rule 4.2(b)

may communicate w/ nonparty employee

DC Rule 4.2(b)

must disclose L’s identity

&adversity

Samantha receives phone call from

Bank 3’s counsel & SVP

One week laterSamantha receives

phone call from Bank 3’s SVP

MaySamantha speak

directly withBank 3’s SVP

?

Six months laterSamantha receives

phone call from Bank 3’s SVP re:

Bank Secrecy Act

MaySamantha speak

directly withBank 3’s SVP

?

Isit

the samematter

?

Questions?

Professional Responsibility & Ethics for

FDIC Lawyers

Kathleen Clark

kathleen_clark@mac.com314-827-4081

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