RECENT DEVELOPMENTS IN THICS...organizational client communicates with the organization’s lawyer in that person’s organizational capacity. •Ex.: if an organizational client requests

Copyright © 2019 Bradley & Riley PC - All rights reserved.

May 31, 2019Mitch Plimmer

[email protected]

RECENT DEVELOPMENTS IN ETHICS

Matt [email protected]

BRADLEY & RILEY PCATTORNEYS AND COUNSELORS

www.bradleyriley.com

Recent Developments in Ethics –Including updates on Iowa Ethics

Opinions, Upjohn/Corporate Miranda Warnings, and Going Beyond

Attorney-Client Privilege: The Duty of Confidentiality



Outline

1. Recent Developments in Iowa1. Insurance in-house counsel representation of

insureds2. Lawyers recording conversations without consent

2. Upjohn/Corporate Miranda Warnings Refresher

3. Going Beyond Attorney-Client Privilege: The Duty of Confidentiality

1. Duty of Confidentiality vs. Duty to Report Corporate Wrongdoing



Recent Developments in Iowa



Insurance In-house Counsel

• Question:

– Should Ethics Op 88-14 regarding the representation of an insured by the insurance company’s in-house staff counsel be modified because it was decided under the prior Code and is based in part on the “appearance of impropriety” which was eliminated by the Rules in view of ABA Formal Opinion 03-430?

• Currently under consideration by Iowa Ethics and Practice Guidelines Committee



Insurance In-house Ethics

• Issue: Representation of insured by insurance company’s in-house counsel

• Iowa Ethics Op 87-16– Answer to Question: NO

• Iowa Ethics Op 88-14 (01/12/89)– Answer: YES, with conditions

• “Appearance of impropriety”

• Generally improper, unless certain conditions are met and disclosed by written agreement.




• ABA Formal Opinion 03-430 (07/09/2003)

– Answer to Question: YES

– Notes:

• Disclosure of relationship to Insured

• Resolution of conflicts by gaining Insured’s consent or withdrawing

• Independent professional judgment




• Question up for discussion by Committee:

– Keep conditions required by Iowa Ethics Opinion 88-14 or relax the standards according to ABA Formal Opinion 03-430?



Should a Lawyer Be Permitted to Record Conversations without Consent?

• Ethics Opinion 83-16



• Three contexts: clients, other attorneys, the public.

• Currently being considered by the Iowa State Bar Association Ethics Committee.



Upjohn/Corporate Miranda Warnings Refresher



Upjohn/Corporate Miranda Warnings

• Purpose: dispel doubts regarding representation and holder of confidentiality/privilege

• Minimum requirements

• Best practices

• Applicable Rules of Professional Conduct.

• Consequences of inadequate warning



Refresher: Minimum Requirements

• The attorney is there to conduct a privileged and confidential interview of the employee.

• The attorney represents the company, not the individual.

• The company has the attorney-client privilege with the attorney, not the individual.

• The company may—in its discretion—disclose the employee's information and statements to third parties (including the government).



Applicable Rules of Professional Conduct

• 1.7—Concurrent conflicts of interest

• 1.13(a)(b)(f)(g) —Identity of client.

• 4.1(b)—Truthfulness to others.

• 4.3—Don’t imply disinterest; duty to correct misunderstanding.



Best Practices

• Be conscious of how perceived by employee (chilling effect of warning).

• Document on both ends (e.g., U.S. v. Ruehle, 583 F.3d 600, Fed. Sec. L. Rep. (CCH) P 95365 (9th Cir. 2009)).

• Some constants, but be flexible.



Consequences

• Ethical Sanction• Civil Liability (e.g. Mansur v. Podhurst Orseck, P.A.,

994 So. 2d 435, 436 (Fla. Dist. Ct. App. 2008))• Unintentional trigger of attorney/client relationship

(e.g. Matter of Bevill, Bresler & Schulman Asset Mgmt. Corp., 805 F.2d 120 (3d Cir. 1986); (In re Grand Jury Subpoena Duces Tecum, 112 F.3d 910, 923 (8th Cir. 1997))

• Loss of control over contents of interview (e.g., U.S. v. Ruehle)



Going Beyond Attorney-Client Privilege: The Duty of Confidentiality Update



What is the DOC?

• ABA Model Rule 1.6

• Generally, it is the ethical duty of a lawyer not to affirmatively disclose information related to the representation of a client.

• The duty of confidentiality encompasses all information relating to the representation.

• Like the ACP, information protected under the rule remains confidential and that protection survives the termination of the lawyer-client relationship and even the death of the client.



ACP vs. DOC

• Evidentiary vs. ethical

• Unlike the ACP, the DOC is in effect at all times, not just in the face of legal demands for client information.

• If the info is validly requested—through a discovery request, for example—that info must be disclosed unless covered by a privilege.



Application to In-house Counsel

• The DOC applies when one of the constituents of an organizational client communicates with the organization’s lawyer in that person’s organizational capacity.

• Ex.: if an organizational client requests its lawyer to investigate allegations of wrongdoing, interviews made in the course of that investigation between the lawyer and the client’s employees or other constituents are covered by the DOC.



DOC vs. Reporting of Corporate Wrongdoing

• ABA Model Rule 1.13

• Obligation to report an organizational client’s wrongdoing to prevent substantial injury to organization

• Similar to requirements under Sarbanes-Oxley and Dodd-Frank

• Process:

– Report wrongdoing to highest authority within organization

– If inadequate, report wrongdoing to necessary authorities outside organization



Dilemma…

• The fundamental duty of confidentiality owed to the corporate client (Model Rule 1.6) vs. the obligation to report an organizational client’s wrongdoing (Model Rule 1.13).



Trends

• 2017– Trend towards protecting in-house counsel for reporting

corporate wrongdoings• Wadler v. Bio-Rad Labs., Inc., 2017 U.S. Dist. LEXIS 16522 (N.D. Cal.

Feb. 6, 2017)

• Trzaska v. L’Oreal USA, Inc., 865 F.3d 155 (3d Cir. 2017)

• Generally, Iowa courts have found that discharging an employee for “whistleblowing” violates public policy.– Tullis v. Merrill, 584 N.W.2d 236 (Iowa 1998).

– Dorshkind v. Oak Park Place of Dubuque II, L.L.C., 835 N.W.2d 293, 308 (Iowa 2013).



Case: Digital Realty Trust, Inc. v. Somers

• Digital Realty Tr., Inc. v. Somers, 138 S. Ct. 767 (2018)

• Muddied the water on a federal level

• Background:– Dodd-Frank and SEC regulations provide whistleblower

protections to those employees reporting securities violations of employer

• Facts: Employee fired for internally reporting wrongdoing

• Held: Whistleblower protections do not extend to employee who does not report to SEC



Case: Digital Realty Trust, Inc. v. Somers

• Internal reporters only eligible for protections “as soon as they also provide relevant information to the [SEC].”



Consequences

• Commentary: Comments to SEC Amendments to Whistleblower Program Rules [Release No. 34-83557; File No. S7-16-18]

• Currently only applies to securities law violations

• Concern regarding widespread implications on all corporate compliance



Best Practices

• For securities law violations:

– Report internally AND to SEC authorities simultaneously

• For any other corporate wrongdoings

– Continue to follow process required under Model Rule 1.13

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Follow up questions can be directed to Matt Barndat [email protected] and Mitch Plimmer at

[email protected]

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RECENT DEVELOPMENTS IN THICS...organizational client communicates with the organization’s lawyer in that person’s organizational capacity. •Ex.: if an organizational client requests