john steele, attorney at law
TRANSCRIPT
John SteeleAttorney at Law
650-320-7662 (USA)© John Steele 2011
“The lawyer is exclusively occupied with the details of predatory fraud, either in achieving or in checkmating chicane, and success in the profession is therefore accepted as marking a large endowment of that barbarian astuteness which has always commanded men's respect and fear.”
Thorstein Veblen
“Parties prefer to deal based on trust because it lowers the transaction costs inherent in the alternative approach of bargaining based on mutual suspicion.”
G. Richard Shell, Opportunism and Trust in the Negotiation of Commercial Contracts, 44 Vand L. Rev. 221, 225 (1991)
Topics
1. What law governs?2. Roles3. Rules4. Fraud
Topics
5. Drafting Issues6. Competence7. Confidentiality8. Conflicts
1.What Law Governs?
Regulation: State JudiciaryCal. Supreme Court State Bar of California
04/18/23 8
California Legislative Control
04/18/23 9
State Bar Act(Business &
Professions Code §6000, et seq.)
American Bar Association
04/18/23 10
Model Rules of Professional Conduct
ABA Ethics Committee Opinions
2.Roles
Attorney-Client
Relationship
ACR Roles:Litigator; Advisor;
Negotiator; Evaluator
Roles
Roles running to non-clients
Evaluator
(Describe the client for the benefit of a third party)
Roles running to non-clients
Escrow(Crooks v.
State
Bar, 3 Cal.3d 346
(1970))
3.Rules
What law governs?
Rules Negotiator role
MR/CRPC (new) 1.1 1.2(a) & (d) 4.1 8.4 / B&P Code
§6068(d)
Rule 1.2: Limits of Lawyering
Rules “Card Sharp”
Shall not:counsel/assist
crime or fraud
Rule 8.4; B&P Code §6068(d)
Shall not lie or deceive
Rule 4.1
Wrinkles Negotiator role
No false statements
Fact or lawSome bluffing
OKMust disclose to
prevent crime/fraud
4.Fraud
Fraud
1. False statement (or silence + duty to speak)
2. Knowledge of falsity3. Reliance4. Causation5. Damages
Duty to speak: general rule
04/18/23 23
Caveat emptorNo duty to reveal
material factsRejects
continental tradition
Veblen: “achieving and checkmating chicane”
Duty to speak: exceptions
04/18/23 24
1. Legal duty (fiduciary)
2. Contractual duty3. Statutory duty
1. Securities law2. Environmental law
4. Once you speak . . .
5. Certain fundamental mistakes
Not disclosing hidden fact
04/18/23 25
1. Have a theory!
2. Counsel the client
3. Disclaim duty?
Fraud: lawyer speaks to 3rd party
Vega
121 Cal App 4th 282 (2004)
Fraud: lawyer speak to 3rd partyFavila v. Katten Muchin Rosenman, L.L.P.188 Cal. App. 4th 189 (2010)
Fraud: lawyer speaks to 3rd party
Ciconev.
URS183 Cal. App. 3d 194 (1986)(false statement of client’s
intent to perform)
Fraud: lawyer opines/evaluates to 3rd party
Roberts v. Ball, Hunt, 57 Cal.App.3d 104 (1976)
Home Budget Loans, Inc. v. Jacoby & Meyers Law Offices, 207 Cal.App.3d 1277 (1989)
Fraud: federal securities law (who “speaks” through the documents?)Central Bank of Denver, 511 U.S. 164
(1994)(no aiding and abetting liability)Stoneridge, 552 U.S. 148 (2008)(no
“enterprise liability”)Janus, __ U.S. __ (201_)(defining primary
and secondary participants)Thompson v. Paul, 547 F.3d 1055 (9th
Cir. 2008)(lawyers primarily responsible for their own statements)
5.Drafting
Issues
Taking advantage of poor lawyering
Rest. Contracts §161, cmt. d (generally may take advantage of poor lawyering)
ABA Eth. Guidelines for Settlement Negotiations, §§ 4.1.2, 4.3.5
Brown v. County of Genesee, 872 F.2d 169 (6th Cir. 1989)
Stare v. Tate, 98 Cal.Rptr. 264 (Cal. Ct. App. 1971)
Missing paragraphs & scriveners errors: let them know?
04/18/23 33
ABA Op 86-1518Rest. Contracts
§161(b)-(c) & illus. 8
Charter Comm. v. Irell & Manella
Inform client?
Deliberately ambiguous clauses
04/18/23 34
A species of fraud?
Intent to deceive?Risk to clientRisk to lawyerCounseling client
Invalid and iffy clauses?
04/18/23 35
A species of fraud?
Lawyer primarily responsible?
RiskCounseling client
Hiding Changes?
04/18/23 36
Intent to deceive? “Track changes” Henning v. Ahern,
601 N.W.2d 14 (Wis. Ct. App. 1999)(party made last minute change without alerting other party; reasonable jury could find fraud)
6.Competen
ce
Subject Matter Competence
04/18/23 38
Viner v. Sweet30 Cal.4th 1232
(2003)(DC-based lawyer
allegedly missed non-compete issue)
Competence: Execution of agreement
04/18/23 39
McCort Divorce Case
Post-nup had multiple versions
Different versions executed
Lawyer secretly reassembled “true” contract
2011 US Dist LEXIS 59661 (6/3/11)
Superior Seafoodv.Hanft Fride
2011 US Dist LEXIS 59661 (6/3/11)
Superior Seafoodv.Hanft Fride
Consent decree didn’t preserve plaintiff’s rights to use mark on other products
SJ affirmed for lawyers
7.Confidentialit
y
Confidentiality & Privilege: settlement discussions
Rules Limited protections?
Federal Rule of Evidence 404
California Evidence Code §§1152-1154
When a client intends fraud
04/18/23 44
ABA/SEC approach
Remonstrate Withdraw? Disaffirm? Must reveal if
“may” under ABA 1.6?
When a client intends fraud
04/18/23 45
California approach
Remonstrate Withdraw Disaffirm/reveal? New rule –
“must reveal” if permitted by new CRPC 1.6 or B&P §6068(e)
8Conflicts
Client Identity670 F. Supp. 2d 201 (SDNY 2009)
Merckv. Prothera(DQ granted)
2011 Mass. Super. LEXIS 60 (5/3/11)
Changv.Winklevoss
2011 Mass. Super. LEXIS 60 (5/3/11)
Changv.Winklevoss
Deposition witness
Accommodation client?
Claims against co-clients?
Left out of settlement?
2011 US Dist LEXIS 36382 (3/28/11)
Englandv.Feldman Law Group
2011 US Dist LEXIS 36382 (3/28/11)
Englandv.Feldman Law Group
Represented licensee
When third party sued, represented licensee and licensor
Didn’t get conflict waiver
Didn’t advise licensor of rights against licensee
John SteeleAttorney at Law
650-320-7662 (USA)© John Steele 2011