D E N V E R L A S V E G A S O R A N G E C O U N T Y P H O E N I X S A L T L A K E C I T Y T U C S O N
Nevada Ethics Updatefor In-House Counsel
Cynthia A. LeVasseur [email protected] | 702.784. 5234
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Topics to Be Covered
Recent Rule Changes
Recent Ethics Opinions
Implications for In-House Counsel
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Recent Rule Changes:Numbering System
Effective May 1, 2006, Nevada Rules of Professional Conduct (formerly Supreme Court Rules) were renumbered to conform with the ABA’s Model Rules
The new system is cited as “RPC”
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Recent Rule Changes:Whistle blowing by in-house counsel
Effective January 1, 2007, RPC 1.13 changed substantively to conform with the ABA’s Model Rules
RPC 1.13: Organization as a Client Governs lawyer’s actions when lawyer knows:
Someone in the organization is “engaged in action, intends to act or refuses to act in a way that will likely cause the organization civil or criminal liability,” and
The potential liability would likely cause the organization substantial harm
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Recent Rule Changes:Whistle blowing by in-house counsel (cont’d)
Old Rule (2006) Focus on minimum disruption and minimum risk of disclosure
Refer the matter to higher authorities in the organization (Go up the ladder until the top)
Must not disclose relevant information outside of the organization
Resignation if the highest authorities ignore the lawyer
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Recent Rule Changes:Whistle blowing by in-house counsel (cont’d)
New Rule (2007) New focus on the best interest of the client organization Refer the matter to higher authorities in the organization (Go up the ladder until the top)
May disclose the information if the highest authorities ignore the lawyer, the lawyer
But only if and to the extent the lawyer believes disclosure to be necessary to prevent substantial injury to the organization.
If the lawyer if fired or withdraws because of actions related to the rule, the lawyer must inform the organization’s highest authority what has happened
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Recent Rule Changes:Dual Representation of Organization and Employees
RPC 1.13: Organization as a Client When dealing with directors, officers, employees,
shareholders or other constituents Explain that the organization is the client Attempt to make sure the constituent understands that
the organization is the client
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Recent Ethics Opinions:Adverse Counsel’s Contact with Employees
RPC 4.2: Communication with Person Represented by Counsel
In representing a client, a lawyer shall not communicate about the subject of the representation with a person the lawyer knows to be represented by another lawyer in the matter, unless the lawyer has the consent of the other lawyer or is authorized to do so by law or a court order.
Textually identical to ABA’s Model Rule 4.2
Rationale: Prevent Overreaching Interference with lawyer-client relationship Uncounseled disclosure
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Recent Ethics Opinions:Adverse Counsel’s Contact with Employees (cont’d)
Nevada State Bar Eth. Op. 27 (revised and reissued Apr. 16, 2005). The “Manager-Speaking Agent Test”
Prohibits communication with anyone who: Is authorized to speak for the organization about the subject matter of
the litigation or dispute “The inquiry is whether the employee can bind the organization with
his or her statement.” Palmer v. Pioneer Inn Associates, Ltd., 59 P.3d 1237, 1248 (Nev. 2002).
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Recent Ethics Opinions:Adverse Counsel’s Contact with Former Employees
RPC 4.2 does not apply to former constituents. Palmer v. Pioneer, 19 F.Supp.2d 1157 (D.Nev. 1998).
• General rule in majority of states.• Adopted by Commissioner Biggar (1998).
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Recent Ethics Opinions:Adverse Counsel’s Contact with In-House Counsel
ABA Formal Opinion 06-443 (August 5, 2006) Contact with Inside counsel of an Organization regarding a Matter When the Organization is Represented by Outside Counsel
Rationale of RPC 4.2: Prevent Overreaching Interference with lawyer-client relationship Uncounseled disclosure
Generally not present with in-house counsel
In-house counsel presumed to be legally sophisticated
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Recent Ethics Opinions:Adverse Counsel’s Contact with In-House Counsel (cont’d)
Exception: Specific request for no contact (RPC 4.4)
Probable Exception: In-house counsel is a party in the matter and represented by some outside counsel.
This Opinion 06-443 relies on Alter Ego Test that was required by Nevada, so distinction can be made. The purpose of the protection of the Alter Ego Test and the Manager-Speaker Test are the same, however, so most likely such protection will be afforded in-house counsel considered to the parties.
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Recent Ethics Opinions:Inadvertently Disclosed Materials
Opposing counsel inadvertently produces confidential or privileged materials to you or your outside counsel. What do you do with them?
Ethics Professional courtesy Procedural law Substantive law
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FRCP:Inadvertently Disclosed Materials (cont’d)
FRCP 16(b) Pretrial Conferences: Requires lawyers to propose “provisions for disclosure or discovery of electronically stored information (ESI).”
FRCP 26(f)(4) “Claw Back”: An agreement that governs how opposing parties treat inadvertently disclosed materials.
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FRCP:Inadvertently Disclosed Materials (cont’d)
FRCP 26(b)(5)(B) “Claw Back” Codified: The sending party notifies the receiving party of an inadvertent
disclosureThe receiving party must:
“Promptly return, sequester, or destroy” the specified information Not use or disclose the information Try to retrieve the information if it has already been disclosedThe receiving party may:• Present the information to the court under seal for a
determination of the claimThe sending party must:• Preserve the information until the claim has been resolved
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FRCP:Inadvertently Disclosed Materials (cont’d)
Advisory Committee Note to Rule 26(b)(5)(B).
FRCP 26(b)(5)(B) does not address whether privilege or work
product protection has been waived.
Merely provides “a procedure for presenting and addressing
these issues.”
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Ethical Rules:Inadvertently Disclosed Materials
RPC 4.4(b)
A lawyer who receives a document relating to the representation of the lawyer’s client and knows or reasonably should know that the document was inadvertently sent shall promptly notify the sender.
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Preserving Information: Litigation Hold
Housing Rights Center v. Sterling (2005 WL 3320739 (C.D. Cal. Mar. 2, 2005): Litigation Hold:
Parties have a duty to preserve information: Potentially relevant to litigation Litigation is either current or probable In-house counsel should have a “litigation hold” plan in
place Possible adverse inference jury instruction
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Recent Ethics Opinions:Metadata
ABA Formal Opinion 06-442 (August 5, 2006) discusses the uses of metadata.
“Metadata” has been defined as “the history, tracking, or management of an electronic document.” Williams v. Sprint, 230 F.R.D. 640, 646 (D.Kan. 2005).
Examples:• Last date and time a document is saved and date on when it was last
accessed.• Name of owner of computer that created the document, date and time
of creation, name of person who last saved document.• Seeing of redline revisions.• Seeing of embedded comments.
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Recent Ethics Opinions:Metadata: How can it be used?
Do the Model Rules of Professional Conduct permit a lawyer to review and use embedded metadata contained in e-mail and other electronic documents, whether received from opposing counsel, an adverse party or an agent of an adverse party?
No specific rule prohibiting a lawyer from reviewing and using hidden metadata.
RPC 4.4(b) is analogous. It states:A lawyer who receives a document relating to the representation
ofa lawyer’s client and knows or reasonably should know that thedocument was inadvertently sent shall promptly notify the
sender.
• Opinion failed to address whether in receiving electronic materials, attorney knows or should know that production contains metadata that was produced inadvertently.
• Metadata mining permissible.
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Recent Ethics Opinions:Obligation of Truthfulness in Mediation
RPC 3.3(a)(1): Candor Toward the TribunalA lawyer shall not knowingly make a false statement of fact or law to a tribunal or fail to correct a false statement of material fact or law previously made to the tribunal by the lawyer.
RPC 4.1(a): Truthfulness in Statements to Others In the course of representing a client a lawyer shall not knowingly make a false statement of material fact or law to a third person.
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Recent Ethics Opinions:Obligation of Truthfulness in Mediation (cont’d)
ABA Formal Opinion 06-439 (April 12, 2006)Lawyer’s Obligation of Truthfulness When Representing a Client in Negotiation: Application to Caucused Mediation
Don’t lie about facts Representing an employer in labor negotiations and stating to union
lawyers that adding a particular employee benefit will cost the company an additional $100 per employee when you know it’s only $20 per employee
Representing that documentary evidence will be submitted at trial in support of a defense when the lawyer knows that such documents do not exist or will be inadmissible
Concealing client’s death
Puffing is not lying