Ethics Question of the Month

Ethics Question of the Month - October 2019

Lawyer A is an attorney in a West Texas county . He knows all the lawyers and judges in the county, including the lone District Court judge, Judge B, who was a college roommate and has remained a close friend.

Lawyer A tried a case in Judge B’s court representing Client C, who was rendered paraplegic by an accident while working as a subcontractor on a construction project. Lawyer A sued the General Contractor on behalf of Client C, his wife, and their three young children. The jury failed to find that the General Contractor exercised or retained control over Client C, but it did find $18 million in damages. 

Applying Chapter 95 of the Civil Practice & Remedies Code, Judge B signed a take-nothing judgment in favor of the General Contractor. Lawyer A filed a lengthy motion for new trial challenging the jury’s failure to find control by the General Contractor, with extensive quotations from the trial transcript. 

While the motion was pending, Lawyer A and Judge B attended a birthday party for a mutual friend at his ranch. When they found themselves alone at the keg, Judge B said, “I spent the day poring over your motion for new trial. You did a solid job on that. Gave me a lot to think about. This one won’t be easy.” 

Lawyer A responded, “I appreciate that. Just trying to do the best job I can do for my clients. This means everything to them.” 

Judge B replied, “Of course it does, I get that. But you know I’m going to have to do what I think is right.” 

Lawyer A responded, “You always do. That’s what I respect about you.” They did not speak again the rest of the evening.

With respect to the rules prohibiting ex parte conversations, which is most accurate?

A:  Neither violated the rules, this was a harmless social conversation.
B.  Both Lawyer A and Judge B violated the rules.
C.  Judge B violated the rules, but Lawyer A did nothing improper.
D.  Judge B did nothing wrong because he was not addressing the merits of the pending matter, but Lawyer A violated the rules by trying to influence Judge B.

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Posted: 9/27/2019 12:00:00 AM by TCLE Editor | with 0 comments

Ethics Question of the Month - September 2019

Lawyer A has a corporate transactional practice at Law Firm X.  She announces to the firm that she is leaving the firm in two weeks to join Law Firm Y.  She lets the firm know which matters she will be taking with her to the new firm.  

Unbeknownst to anyone at Law Firm X, she photocopies some paper documents and downloads electronic versions of many other documents onto a flash drive. These documents are from client matters she handled for clients of law Firm X who are not going with her to Law Firm Y.  She intends to keep these documents in her personal files for use as forms in drafting documents for her new clients at Law Firm Y.  

Once she begins working at Law Firm Y, her new colleague, Lawyer B, asks Lawyer A for a form for a specific type of transaction.  Because Lawyer A only has a paper copy of that particular form, Lawyer A makes a photocopy of that document and gives it to Lawyer B.  Before she does so, she confirms that the client of Law Firm X identified in the document is not adverse to Law Firm Y. 

Lawyer B is so pleased with the form that he asks Lawyer A if she has any forms on another specific type of transaction.  Lawyer A replies that she does, but before giving him the document, she again checks conflicts and discovers that the client for whom it was prepared at Law Firm X is adverse to Law Firm Y.  Fortunately, the document is electronic and stored on her personal flash drive, so before providing it to Lawyer B she deletes all information that specifically identifies, or could reasonably lead to identifying, the client.  She provides the redacted document to Lawyer B.  

Which is most accurate? 

A.    Lawyer A has violated the ethics rules by not securing Law Firm X’s permission to take copies of documents from her matters at Law Firm X before leaving the firm.  
B.    Lawyer A violated the ethics rules by sharing an unredacted form with one of her new colleagues at Law Firm Y. 
C.    Lawyer A violated the ethics rules by sharing the redacted form with a colleague at Law Firm Y because the document was prepared for a client of Law Firm X and that client paid for its creation.    
D.    All of the above. 
E.    None of the above 

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Posted: 8/27/2019 12:00:00 AM by TCLE Editor | with 0 comments

Ethics Question of the Month - July 2019

Partner Y sued Partner X for breaching their partnership agreement when kicked Y out of the partnership.  X concedes kicking Y out of the partnership, but contends he was justified because Y was stealing company monies and acting contrary to the partnership’s best interest. Lawyer A represents Partner X, and Lawyer B represents Partner Y in the breach of partnership suit.  

Partner X has counterclaimed against Y for fraud and conversion of partnership monies.  The litigation has continued for months, and settlement discussions have gone nowhere.  In a conversation before trial, Lawyer A tells Lawyer B, “Look, let’s get real about what is going to happen next.  Your client faces significant liability at trial and has no real defenses to his misappropriation.  Plus, your client could end up in jail for stealing partnership money.  What am I missing here?”

Lawyer B responds by claiming that Lawyer A has violated a disciplinary rule by saying anything about the possibility of Partner Y going to jail during settlement discussions.  Lawyer B files a grievance against Lawyer A and hopes that the grievance will be enough to get Lawyer A to recommend that that his client come back to the negotiating table with a reasonable offer.  Lawyer A receives the State Bar notice of Lawyer B’s grievance by mail two days before a mediation between the parties.

Which of the following is most accurate?  

A.    Only Lawyer A has violated a disciplinary rule by threatening criminal prosecution in a civil matter; Lawyer B cannot violate a disciplinary rule because complainants have absolute and unqualified immunity in filing grievances
B.    Only Lawyer B has violated a disciplinary rule by filing a grievance against Lawyer A; Lawyer A’s conduct does not rise to the level of an actual threat 
C.    Lawyers A and B have both violated disciplinary rules.
D.    Neither A nor B has violated disciplinary rules.

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Posted: 6/27/2019 10:54:52 AM by TCLE Editor | with 0 comments

Ethics Question of the Month - June 2019

Client X hired Lawyer A to represent him in a tort case three months before the two-year statute of limitations expired.   Lawyer A’s investigation encountered some obstacles, and he was handling numerous other cases at the same time.  He calculated the limitations deadline incorrectly and missed it by two days, but he filed the suit anyway to see if the defendant would raise limitations.  She did, and the court dismissed the case.  Client X filed a grievance against Lawyer A.

Client X then consulted with Lawyer B about his malpractice claim against Lawyer A.  Lawyer B is a two-year family law attorney who has never handled anything other than family law matters; he has no experience with legal malpractice cases.  Further, Lawyer B has argued two motions in court and defended several depositions in family law cases.  He has yet to take a deposition because he has been working with experienced family law attorneys who handle most of the litigation in his matters.  Client X wants Lawyer B to file suit right away and move forward on the malpractice claim.  Lawyer B is worried about taking the malpractice case, but decides that he wants to help Client X because his client says that other lawyers won’t sue Lawyer A.

Which of the following is most accurate?  

A.    Both lawyers have legitimate grievance problems under the Texas rules.
B.    Neither lawyer has a legitimate grievance problem under the Texas rules.
C.    Lawyers A should be sanctioned, but Lawyer B should not. 
D.    Lawyers B should be sanctioned, but Lawyer A should not.
E.    Lawyer A should be sanctioned, but we don’t have enough information about Lawyer B to know whether he has a legitimate grievance problem.

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Posted: 5/29/2019 2:02:23 PM by TCLE Editor | with 0 comments

Ethics Question of the Month - May 2019

Lawyer A represents 33 homeowners in a suit against Company X, which does seismic testing for oil and gas.  The company uses underground dynamite blasts to generate seismic waves.  The homeowners have claimed structural damage to their foundations, walls, driveways, and sidewalks resulting from the seismic waves generated by Company X.  The damage experienced by individual homeowners varies according to the value of their property, the extent of the damage, and the cost of repairs.   

Lawyer A sent individual settlement demands to Company X for all 33 clients.  After initial negotiations, 11 of the clients agreed to accept Company X’s settlement offers.  The remaining 22 clients refused to accept Company X’s original individual offers.   Lawyer A and Company X’s lawyers go to mediation to resolve the remaining 22 claims.  At the end of the mediation, Company X offers a single gross settlement amount to resolve the remaining 22 claims and tells Lawyer A that, in return, it requires 22 releases or the overall offer will be withdrawn.  

Lawyer A decides to apportion the gross amount among her clients, but holds back 10% of the gross amount in case any clients don’t agree to their individual offers.  Two clients refuse their individual settlement offers.  Lawyer A uses most of the 10% that she held back to increase the offers to the two holdout clients, and they agree to the increased offer.  Lawyer A then redistributes what is left of the 10% to the remaining 20 clients involved in the mediation on a pro rata basis so that all of the gross settlement amount offered by Company X is now distributed to the 22 clients involved in the mediation.

Which of these statements is most accurate? 

A.    Lawyer A has done an admirable job of settling all of her clients’ claims in a complicated case and a difficult situation.  Although imperfect in some ways, the settlement method complies with the Texas disciplinary rules.

B.    We don’t know enough detail about the settlement method to judge whether Lawyer A has fully complied with applicable disciplinary rules.

C.    Lawyer A’s solution is permissible, except for holding back 10% of the gross settlement amount to disproportionately reward uncooperative clients.

D.    Lawyer A should not have reached a settlement on behalf of the first 11 clients until the claims of the remaining 22 were also resolved.  Therefore, none of the settlements are permissible under the Texas disciplinary rules.  

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Posted: 4/28/2019 12:00:00 AM by TCLE Editor | with 0 comments

Ethics Question of the Month - April 2019

Scenario 1: Lawyer A represents a long-time client, Client B, in various real estate transactions.  After several years, Lawyer A asks to invest in an upcoming real estate development project for which Client B needs investors.  Lawyer A also perceives that her interests are aligned with the client’s interests because both want the project to succeed.  Client B welcomes Lawyer A’s investment.  They agree that Lawyer A will invest $50,000, and contribute her legal services, in exchange for a 10% equity share in the development. As part of her contribution of legal services, the lawyer prepares the paperwork documenting the investment agreement.

Scenario 2:  A few months later, Client B decides to start a company to create and sell real estate development software.  Client B has enough investors and capital to start the company, but is concerned about managing the start-up’s legal costs and other expenses.  Client B offers the lawyer shares of stock in the new company in exchange for legal services.  Client B proposes a formula that awards two shares of stock for every hour of services spent by Lawyer A.  Lawyer A’s hourly rate is $250.  There is a risk that the start-up may fail and Lawyer A’s stock will be worthless; there is also the possibility that the start-up could be successful and that Lawyer A’s shares could be worth significantly more than the value of her legal services at her usual hourly rate.

Which statement most accurately addresses whether these Scenarios are acceptable?

A.    Both Scenarios 1 and 2 are acceptable, and are commonplace.
B.    Scenario 2 is acceptable, but Scenario 1 is not.
C.    Scenario 1 is acceptable, but Scenario 2 is not.
D.    Both Scenarios are per se unacceptable.
E.    We don’t have sufficient facts to know whether either Scenario is acceptable.

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Posted: 3/28/2019 12:00:00 AM by TCLE Editor | with 0 comments

Ethics Question of the Month - March 2019

Lawyer A represents Client B in a partnership dispute against Partner C.  After extensive discovery, the court orders the parties to mediation two months before the trial setting.   

At the mediation session, Partner C makes a credible settlement offer to Client B.  Lawyer A recommends that Client B accept that offer.  Client B refuses and demands to go to trial unless Partner C makes a substantially higher offer.

Lawyer A is concerned that Partner C came across much better in his deposition than Client B, and the documents seem to support Partner C’s position. Lawyer A thinks there is a good chance that Partner C will prevail at trial, or, even if Client B prevails, his damage model is weak, and the jury is very likely to award damages significantly less than Partner C’s current settlement offer. Of course, a modest recovery by Client B means a modest contingent fee for Lawyer A.  Accordingly, Lawyer A tells Client B that he will withdraw his representation unless Client B accepts the settlement offer.  

Lawyer A tells Client B that he can hire a new lawyer and take this case to trial if he wishes. He also tells the client that the court will grant a continuance of the current trial setting because this is only the second trial setting.   The likely continuance should provide Client B plenty of time to hire new counsel.

Which statement most accurately addresses whether Lawyer A can withdraw? 

A.    Lawyer A can withdraw, but only after he secures a continuance of the current trial setting.
B.    Lawyer A can withdraw unconditionally because his client is making the representation unreasonably difficult by not accepting a recommended settlement offer.
C.    Lawyer A cannot withdraw because, under these circumstances, withdrawal would have a materially adverse effect on the client.
D.    Lawyer A cannot withdraw because he cannot guarantee that he will be able to persuade the court to grant a continuance.
E.    We don’t have enough facts to know whether Lawyer A can withdraw.

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Posted: 2/27/2019 12:00:00 AM by TCLE Editor | with 0 comments

Ethics Question of the Month - February 2019

Lawyer A worked at Firm XYZ.   Firm XYZ represented Company Z in numerous litigation and transactional matters.  While at Firm XYZ, Lawyer A worked on several of Company Z’s employment litigation cases.  

Lawyer A then left Firm XYZ and moved to Firm JKL.  Firm JKL represents clients who are adverse to Company Z in breach-of-contract cases.  Firm JKL wants Lawyer A to be available to represent clients against Company Z, but, for the moment, it is content to have Lawyer A doing other litigation.  

Firm XYZ knows that Firm JKL is adverse to its client, Company Z, and that Lawyer A has joined Firm JKL.  Firm XYZ asserts a conflict and objects to Firm JKL being adverse to Company Z because Lawyer A is has joined Firm JKL.

Which of these statements is the most accurate?

A.    Firm JKL has a conflict in being adverse to Company Z because Lawyer A is a member of Firm JKL and is Company Z’s former attorney.

B.    Firm JKL would have a conflict in being adverse to Company Z, but Firm XYZ didn’t timely object when it learned that Lawyer A was joining Firm JKL.

C.    Firm JKL has a potential conflict, which can be cured by screening Lawyer A from any representation adverse to Company XYZ.

D.    Screening Lawyer A from Company Z won’t cure the conflict because the screen was not in place before Lawyer A arrived at Firm JKL; otherwise it would have worked.

E.    Firm JKL has no conflict arising from Lawyer A being adverse to Company Z in breach of contract cases because they are not substantially related to the employment litigation cases where Lawyer A represented Company Z while at Firm XYZ.  

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Posted: 1/30/2019 8:00:00 AM by TCLE Editor | with 0 comments

Ethics Question of the Month - January 2019

A lawyer represents Client A.  During the representation, the lawyer has access to Client A’s files, including documents regarding lawsuits in which the lawyer did not represent Client A.  Some of these documents are filings from lawsuits in which Client A was sued for fraud.  The lawyer’s representation of Client A terminates.  

The lawyer subsequently is asked to represent a new client, Client B, who is adverse to Client A.  This new representation would be factually unrelated to any of the matters in which the lawyer represented Client A. However, Client B has fraud claims against Client A that are similar to prior fraud claims that the lawyer learned of in reviewing Client A’s files during the prior representation.

The lawyer believes that the information that he learned about these prior fraud allegations against Client A could be relevant to Client B’s claims against Client A.  The lawyer wonders whether he could share information about Client A’s other lawsuits, find those filed pleadings at the courthouse, and potentially use that information to show that Client A has a pattern of committing fraud in the same way that Client B now claims.

The lawyer is aware that Rule 1.05(b)(3) of the Texas Disciplinary Rules of Professional Conduct states that a lawyer shall not knowingly “[u]se confidential information of a former client to the disadvantage of the former client after the representation is concluded unless . . . the confidential information has become generally known.”  

The lawyer thinks he can tell potential Client B about these other lawsuits because (1) the lawyer did not represent his Client A in those matters, and (2) the information that he knows is available to anyone who looks for it in the court’s files.  Which is most accurate?  

A.    The lawyer can share the information because he did not represent Client A in those matters, and Client A’s other suits are “generally known” because they were public filings.
B.    The lawyer can disclose to Client B what he remembers about Client A’s documents because he did not represent Client A in those matters. However, the prior fraud lawsuits are not “generally known” under the Rule 105(b)(3) exception.
C.    The lawyer cannot disclose to Client B what he remembers about Client A’s documents, even though he didn’t represent Client A in those matters. But he can direct Client B to the courthouse and suggest looking for other lawsuits against Client A.  
D.    The lawyer cannot reveal what he remembers from Client A’s files, nor can he direct Client B to the courthouse to search for other lawsuits.
E.    The lawyer should not represent Client B at all.  

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Posted: 12/29/2018 8:00:00 AM by TCLE Editor | with 0 comments

Ethics Question of the Month - December 2018

Lawyer A represents Client X in a family law case.  Client X has told Lawyer A he has struggled with substance abuse and continues to use cocaine occasionally.  

 Client X’s wife had similar substance abuse issues, but she appears to be in sustained recovery. Client X wants primary custody and appears reconciled to admitting his occasional cocaine use and seeking treatment.  

The wife’s lawyer takes Client X’s deposition and asks him if he still uses cocaine.  Client X denies any cocaine use since the couple separated.  Lawyer A asks no questions at the deposition, but later confronts his client about his denial of current drug use.  Client X promises not to lie about his cocaine use again.  Lawyer A does nothing further, and Client X does not correct his deposition testimony.

At trial, Lawyer A doesn’t raise cocaine use, but does ask Client X to generally tell the jury why he believes that he is a fit parent.  Lawyer A assumes that Client X will avoid talking about drug use, but Client X again says he has not used anything since the couple’s break-up.   Hoping that his client won’t continue to perjure himself, Lawyer A drops the subject and quickly wraps up his direct examination.

On cross-examination, opposing counsel is ready to pounce but doesn’t have any impeachment evidence that Client X is lying.  He can’t shake Client X’s repeated denials of drug use since the couple’s separation.  

The jury awards primary custody to Client X at the end of the first week of trial.  The trial will continue the following week with the property division tried to the Court without a jury.  Over the weekend, Lawyer A confronts his client and insists that he not further perjure himself during the second week.  

Which is Lawyer A’s best course of action?  

A.    Lawyer A has acted appropriately in preserving what he learned from privileged conversations with Client X and should do nothing to undermine the attorney-client relationship.
B.    Lawyer A should withdraw before the second week of trial so that he can avoid disclosing his client’s perjury when court resumes.
C.    Lawyer A cannot withdraw, but does not need to take further action as long as he doesn’t affirmatively encourage Client X to lie.
D.    Lawyer A cannot withdraw and must take steps to address his client’s lies, including disclosure to the court of the true facts.  

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Posted: 11/29/2018 7:00:00 AM by TCLE Editor | with 0 comments

About Ethics Question of the Month

Ethics Question of the Month is a regular feature of the Texas Bar Journal created and sponsored by the Texas Center for Legal Ethics.

DISCLAIMER: The information contained in Ethics Question of the Month is intended to illustrate an ethics issue of general interest in the Texas legal community; it is not intended to provide ethics advice that applies regardless of particular facts.  For specific legal ethics advice, readers are urged to consult the Texas Disciplinary Rules of Professional Conduct (including their official comments) and other authorities and/or a qualified legal ethics advisor.

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