ETHICS & THE NEW RULES

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1 ETHICS & THE NEW RULES THOMAS H. WATKINS, Austin Brown McCarroll LLP State Bar of Texas 19 th ANNUAL TEXAS MINORITY COUNSEL PROGRAM September 7-9, 2011 Austin, Texas CHAPTER 15

2 Thomas Watkins Brown McCarroll, LLP 111 Congress Ave. Austin, TX phone: (512) BACKGROUND, EDUCATION AND PRACTICE Tom Watkins is a Texas attorney specializing in complex business litigation. He is a Partner of Brown McCarroll, L.L.P. in Austin. Mr. Watkins received his BA in Government from the University of Oklahoma in 1962 and his LLB from the University of Texas Law School in 1964, Phi Delta Phi. He is Board Certified in Civil Trial Law by the Texas Board of Legal Specialization. Mr. Watkins is a Fellow of the American College of Trial Lawyers, Associate of the American Board of Trial Advocates, Chairman of the CLE Committee for the State Bar of Texas, Member of the State Bar of Professional Ethics Committee, Member of the Association of Trial Lawyers of America, Member of the Texas Trial Lawyer s Association, Member of the College of the State Bar of Texas, Member of the Austin Intellectual Property Law Association, Member of the Federal Circuit Bar Association, Member of the Texas Business Law Foundation, Member of the Texas Bar Foundation, and Chair of the Capital Area Public Affairs Committee for the March of Dimes. Mr. Watkins has formerly held the following positions: Chairman of District Nine Grievance Committee, Member of the Commission for Lawyer Discipline, Chairman of the Board of Disciplinary Appeals, President of the Texas Association for Mental Health, President of the National Association for Mental Health, President of the Austin Junior Bar, President of the Travis County Bar Association, Member of the Board of Directors for the State Bar of Texas, and Vice Chairman of the Litigation Section for the State Bar of Texas.

3 Best Practices Under the Current Rules Thomas H. Watkins 111 Congress Avenue, Suite 1400, Austin, TX office: mobile: fax: General conflicts 1.06 (1) involves a substantially related matter in which that persons interests are materially and directly adverse to the interests of another client of the lawyer or the lawyers firm; or (2) reasonably appears to be or become adversely limited by the lawyers or law firm's responsibilities to another client or to a third person or by the lawyers or law firms own interests. Not the ABA rule Not the rule in other states Not the rule in federal court 1

4 Taking a case against a current client The problem is with the second part of 1.06 (2) reasonably appears to be or become adversely limited by the lawyers or law firm's responsibilities to another client or to a third person or by the lawyers or law firms own interests What does: appears to be or become adversely limited mean? Best Practices 1. Draft a tight scope of representation in engagement letter 2.a.Get a waiver from both clients, or b. give notice to both clients of representation 2

5 General conflicts 1.06 disclosures (2) each affected or potentially affected client consents to such representation after full disclosure of the existence, nature, implications, and possible adverse consequences of the common representation and the advantages involved, if any. existence nature implications possible adverse consequences the advantages 1.06 Representing multiple clients appears to be or become adversely limited If so : (2) each affected or potentially affected client consents to such representation after full disclosure of the existence, nature, implications, and possible adverse consequences of the common representation and the advantages involved, if any. Very hard to do 3

6 Best practices Every time you represent multiple clients: 1. List the advantages: a. Save attorneys fees b. save costs c. save time 2. List the disadvantages: a. Cannot solve problems between them b. No confidential information between them c. If they have falling out, may have to withdraw 1.08 Conflict of Interest: Prohibited Transactions (a) A lawyer shall not enter into a business transaction with a client unless: (1) the transaction and terms on which the lawyer acquires the interest are fair and reasonable to the client and are fully disclosed in a manner which can be reasonably understood by the client; (2) the client is given a reasonable opportunity to seek the advice of independent counsel in the transaction; and (3) the client consents in writing thereto. 4

7 1.08 Business with client Best Practices 1. Make the disclosures in writing 2. Do not have the client sign it the same day it is received 3. Say only that the client had the opportunity to seek counsel Conflict of Interest: Prohibited Transactions aggregate settlements (f) A lawyer who represents two or more clients shall not participate in making an aggregate settlement of the claims of or against the clients, or in a criminal case an aggregated agreement to guilty or nolo contendere pleas, unless each client has consented after consultation, including disclosure of the existence and nature of all the claims or pleas involved and of the nature and extent of the participation of each person in the settlement. 1.Each party must know what other parties are getting 2. Class action may not protect? 5

8 1.08 Aggregate settlements Best practices 1. Plaintiffs should obtain court approved matrix 2. Each release should have matrix attached when executed 3. Each client should receive a letter explanation 1.14 SAFEKEEPING PROPERTY (A) A LAWYER SHALL HOLD FUNDS AND OTHER PROPERTY BELONGING IN WHOLE OR IN PART TO CLIENTS OR THIRD PERSONS THAT ARE IN A LAWYERS POSSESSION IN CONNECTION WITH A REPRESENTATION SEPARATE FROM THE LAWYERS OWN PROPERTY. (B) UPON RECEIVING FUNDS OR OTHER PROPERTY IN WHICH A CLIENT OR THIRD PERSON HAS AN INTEREST, A LAWYER SHALL PROMPTLY NOTIFY THE CLIENT OR THIRD PERSON. What is the lawyer s duty to third party? 6

9 1.14 SAFEKEEPING PROPERTY Best Practices 1. Get written representation from client 2. Review file for any mention of: a. Liens b. partnership or other entities c. spouse or other relatives d. other attorneys 7

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