Ten Pitfalls That Trip Up Otherwise Ethical Attorneys

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By Patrick Gregory

Feb. 1 — Spanking secretaries and microwaving cats are memorable ways attorneys have gotten in trouble with their state bars, but most disciplinary complaints stem from simple communication failures with clients, attorneys tell Bloomberg BNA.

But the “most common complaints against attorneys are lack of diligence and lack of communication,” Melvin Hirshman of Annapolis, Md., whose practice focuses on ethics and professional responsibility, told Bloomberg BNA.

Oftentimes it isn't that an attorney has “dropped the ball,” but that he “hasn't properly explained to the client what's going on,” Jonathan Coughlan of Kegler Brown Hill & Ritter, who formerly served as disciplinary counsel for the Supreme Court of Ohio, told Bloomberg BNA.

“How can someone who's otherwise ethical get in trouble? It's by not effectively communicating stuff to the client,” Coughlan said.

Communication-related pitfalls include not updating a client on a case's progress, not sending a termination letter and not putting fees in writing, attorneys told Bloomberg BNA.

Trust accounts can also trip up otherwise ethical lawyers because they are easy to mishandle and can be subject to automatic state bar inquiries, attorneys said.

A lawyer's failure to ask for help is another trap, attorneys told Bloomberg BNA.

‘Squeaky Wheels,' Neglect

“The most frequent topic for discipline is neglect,” Coughlan said.

At “least forty percent” of grievances filed with Ohio's disciplinary office allege neglect in some form, he said.

These client complaints often result from a “failure of communication,” Coughlan said.

There “may be a time window where nothing is going to happen” in a client's case, which the client misunderstands as attorney neglect, he said.

It's “a common scenario” for clients in “emotionally charged situations” such as a divorce, the death of a family member or a bankruptcy to mistakenly believe a lawyer isn't paying attention to their case, Coughlan said.

The “best thing a lawyer can do is write letters or e-mails to confirm, ‘Okay here's where we are—here's what's going on,' ” he said.

The miscommunication problem “is particularly acute for solo and small firm practitioners, who tend to have far less support staff than do lawyers in medium and large firms,” Ellen Pansky of Pansky Markle Ham LLP, South Pasadena, Calif., who specializes in the defense of attorneys in regulatory and licensure proceedings, told Bloomberg BNA.

Sometimes a “squeaky wheel” client “becomes an annoyance to the lawyer, who dreads and then avoids communications with the client even more,” Pansky said.

That can result in “a disciplinary charge based on failure to communicate” and/or “failure to provide thorough representation,” Pansky said.

In Wisconsin, “every time there is an issue with a lawyer” such as not returning a client's calls, the state disciplinary office will start an investigation, Nate Cade of Cade Law LLC, Milwaukee—who served on the American Bar Association's Standing Committee on Ethics and Professional Responsibility—told Bloomberg BNA.

Head in Sand

Attorneys should be proactive in dealing with clients and bar investigators, Cade said.

“I see it happen more often than not—lawyers bury their head in the proverbial sand,” Cade said.

They receive a phone call alerting them to a problem “and they either don't respond or they kind of blow off their response,” Cade said.

“There's lots of reasons for it—it could be the attitude of ‘how dare the client challenge me,' ” Cade said.

If an attorney is too busy to respond to a bar inquiry, they “can certainly call” an investigator “and say ‘Can I call you back next week; I do have a lot of things going on in the office,' ” Cade said.

“That's not unreasonable—they'll listen,” Cade said.

Where's That Termination Letter?

Not sending a termination of representation letter at the end of a matter is another communication mistake, Coughlan said.

It's “very, very important to effectively do a writing that acknowledges the representation is over,” Coughlan said.

“I've seen several cases recently in Ohio where lawyers have gotten themselves into trouble because the client comes back and says ‘Well you're still my lawyer' and the lawyer says ‘No, we're done' ” he said.

“Well where's the letter?” Coughlan asked.

Attorneys are understandably reluctant to tell a client “go away,” he said.

You “have to draft the letter in a very nice way,” Coughlan said.

That “letter can make a huge difference going forward,” he said.

“For example, just in a conflicts scenario” the “difference between a current client and former client is huge,” Coughlan said.

If an attorney's books don't reflect this distinction, “that's going to cause you trouble,” he said.

Fee Agreement Failure

Not putting fee agreements in writing is another pitfall, Coughlan said.

The need for good communication “includes fees,” he said.

Some states don't require that fee agreements be in writing, Coughlan said.

But all “fees should be in writing no matter what,” he said.

Going It Alone

When a problem arises, lawyers “assume that just because we have a J.D. that even when it pertains to us, we can handle it,” Cade said.

That's a big mistake, he said.

“We cannot be objective,” he said. “Get help,” he said.

“There are decent lawyers who wind up in worse disciplinary trouble than they need to because they don't get help,” Lucian T. Pera of Adams and Reese LLP, Memphis, Tenn., whose practice includes ethics matters, told Bloomberg BNA.

“You see this in lawyer discipline all the time” with attorneys receiving severe discipline after representing themselves, said Pera, who is the future president of the Tennessee Bar Association.

An attorney should ask for help when a problem first arises, “well before” an investigation, Pera said.

Pera emphasized that the problem isn't “that they don't hire me right away; it's that they don't talk with their law partner, or the lawyer they worked for as a young lawyer, or just the lawyer they have lunch with regularly,” Pera said.

For attorneys who lack support staff, help can come from a state bar association, Pansky said.

Some “are now making so-called ‘succession plans' available to lawyers, to provide for client protection in the event the lawyer becomes ill, disabled, or dies,” she said.

Attorneys who lack support staff can use these plans “to create a ‘buddy system' with one or more other lawyers who will be available in a pinch to field client calls on a temporary basis,” she said.

Lawyers with ethics questions should also take advantage of state disciplinary offices' attorney question hotlines when available, Coughlan said.

Trust Account Trap

Attorneys “who inadvertently wind up in trouble are often lawyers who don't have what you might call ‘good hygiene' about money,” Pera said.

“In other words, their trust accounting is a mess,” Pera said.

Such attorneys may “keep their own money in the trust account for unknown—sometimes unknown to them—reasons” or might not “put client money in the trust account in the first place,” Pera said.

“I think that ethical lawyers can get in trouble on trust accounts just because they're so tricky and often counterintuitive, and the rules differ” by state, Thomas E. Spahn of McGuireWoods LLP, Tysons Corner, Va., told Bloomberg BNA.

Trust accounts can get attorneys in trouble “even if you don't mishandle them,” Spahn, who has written extensively about ethics issues, said.

“Even if you just don't keep good records, you can be disciplined for that even if no one has lost a penny,” Spahn said.

Coughlan gives an example of a common trust account pitfall. An attorney receives a settlement and puts it in a “trust account as you're supposed to,” and then writes the client a disbursement check.

But “the check that you deposited for the entire amount, the full settlement check, hasn't cleared yet,” Coughlan said. So the attorney tells his client to wait a few days for the settlement check to clear.

A client who hears that they should wait to cash a check often interprets that as “uh-oh there's a problem with my money” and runs to the bank with their check, Coughlan said.

That check is “going to bounce,” Coughlan said.

Coughlan advises lawyers not to listen to a bank teller who says a check is cleared. “That doesn't mean the money was received,” Coughlan said.

In a “number of states,” an overdrawn trust account automatically gets reported to a disciplinary office, Coughlan said.

Lawyers should therefore “find somebody a little further up the food chain” at a bank to ensure that the money has been received, Coughlan said.

It's worth the extra effort because “it's a big pain” to be subject to a trust account investigation, Coughlan said.

Corporate Conflicts

Attorneys at large law firms are often insulated from disciplinary action because such firms are “more likely to police themselves,” Spahn said.

Large firms may also have the means to simply “make it up to the client” before a complaint is filed, he said.

Ethics charges involving big firm attorneys arise “mostly in the conflict of interest world,” he said.

“I think that the lawyers that are the most ethical and frankly sometimes the most prestigious get in trouble because they don't properly identify the client,” he said.

This is often a problem for in-house attorneys, he said.

“I will sometimes ask in-house lawyers, ‘Do you communicate on sort of a daily basis with employees of an affiliate of your corporate client,' ” he said.

Those attorneys will say “Of course I do,” he said.

“I'll say ‘well do you represent those companies, the ones that employ them,' and most of them don't know,” he said.

You “always have to know who the client is,” he said.

Undisclosed Fee Sharing

Failing to disclose fee-sharing arrangements to the client is another way “inadvertent screw-ups” can happen, Coughlan said.

If attorneys from different firms are working on a case and sharing fees, they must follow ABA Model Rule 1.5(e), Coughlan said.

That rule requires “letting the client know, getting the client's approval and letting the client know how each one is involved,” Coughlan said.

This pitfall “comes up—people just don't seem to know that's out there,” Coughlan said.

You can't get another attorney's help on a matter without telling the client because “then you're sharing confidential information” without client permission, Coughlan said.

Ex-Client Investment Partner

“Another area that creates serious ethical problems are financial transactions in which the lawyer and a former client invest together,” Pansky said.

Most attorneys are careful not to invest with current clients, or they at least obtain detailed conflict of interest waivers, Pansky said.

But “many lawyers erroneously believe that making an investment with a former client does not require the same degree of disclosure,” consent and counsel to get independent legal advice as investing with a current client, Pansky said.

This “is fraught with danger,” Pansky said.

The Model Rules presume that an attorney “has special skill and training that puts the lawyer in a superior bargaining position, and that the lawyer's special skills may give rise to overreaching,” she said.

If an investment with a former client goes badly and the attorney hasn't given the same advice required for a current client, “the lawyer quite often will be disciplined—even disbarred—for having put the client in an investment that failed,” Pansky said.

Notarizing No-No

Improper notarizing is another trap, Coughlan said.

“We see this with some regularity,” he said.

“A client asks the lawyer to notarize their signature when they aren't there” or will send in a signature and ask the attorney to sign their name for them, Coughlan said.

Attorneys “will do that as a favor to a client but it's a rule violation,” he said.

“That's one that people don't stop and think” about, Coughlan said.

Notarizing “means I saw them sign it, I'm sure that they are who they are, and they signed it—not me or my secretary,” Coughlan said.

Firm Names

Improper firm names can also run afoul of ethics rules, Coughlan said.

In “Ohio we have some pretty strict rules—you can't use a trade name in Ohio” though other states allow it, he said.

Other naming rules govern whether you can use the name of deceased partners or those who have left the firm, Coughlan said.

Those rules “vary from state to state, but those are ways lawyers can get in some trouble,” Coughlan said.

Cade, Coughlan, Hirshman and Pera are members of the ABA/BNA Lawyers' Manual on Professional Conduct's advisory board. Pansky formerly served on the MOPC board. The author of this story was an associate at McGuireWoods, Richmond, Va.

To contact the reporter on this story: Patrick L. Gregory in Washington at pgregory@bna.com

To contact the editor responsible for this story: Jessie Kokrda Kamens at jkamens@bna.com

Ten Common Pitfalls
1. Communication failures
2. No termination letter
3. No written fee agreement
4. Going it alone
5. Trust account mishandling
6. Corporate conflicts
7. Undisclosed fee sharing
8. Ex-client investment partners
9. Improper notarizing
10. Prohibited firm names