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2 Applicability Effective 1/1/2014 Hawaii U.S. District Court L.R Federal Agencies Patent and Trademark Office (Part II, Subpart D) Securities and Exchange Commission (17 CFR Part 205)

3 Highlights Client consents must be in writing or confirmed in writing Concurrent conflict rule revised R. 1.7 Conflicts arising from lateral hires R Duties owed to prospective clients R Solicitation of prospective clients R. 7.3 Duties of counsel for organizations - R. 1.13

4 Highlights Inadvertently produced documents R. 4.4 Fee agreements R. 1.5 Extensive commentary accompanies rules

5 Revision of Concurrent Conflict Rule (Rule 1.7) Rule 1.7(a): Concurrent conflict exists if Representation of one client will be directly adverse to another client There is a significant risk representation of one or more clients with be materially limited by the lawyer s responsibility to another client, former client, third person, or lawyer s personal interest Direct adversity or material limitation

6 Revision of Concurrent Conflict Rule (Rule 1.7) Rule 1.7(b) Waiver/consent Lawyer reasonably believes he/she will be able to provide competent and diligent representation to each client Representation not prohibited by law Representation does not involve asserting claim by one client against another client lawyer represents in same proceeding before a tribunal

7 Revision of Concurrent Conflict Rule (Rule 1.7) Each affected client gives consent after consultation, confirmed in writing Rule 1.0(b) Confirmed in writing, when used in reference to consent after consultation, denotes consent that is given in writing or a writing that a lawyer promptly transmits, confirming an oral consent obtained after consultation.... If it is not feasible to obtain or transmit the writing at the time consent is given, then the lawyer must obtain or transmit it within a reasonable time thereafter.

8 Revision of Concurrent Conflict Rule (Rule 1.7) Rule 1.0(c) Consultation: communication of information reasonably sufficient to permit the client to appreciate the significance of the matter in question. Facts and circumstances giving rise to the situation, material advantages and disadvantages, and options and alternatives. Comment [2].

9 Revision of Concurrent Conflict Rule (Rule 1.7) Consultation must precede consent Options: Client gives written consent or lawyer confirms in writing Contemporaneous consent or confirmation within reasonable time thereafter Rule 1.0(o): Writing includes tangible or electronic record

10 Revision of Concurrent Conflict Rule (Rule 1.7) Rule 1.7(c) - Representation of multiple clients in a single matter Explain implications of common representations, including advantages and risks

11 Former Client Conflicts (Rule 1.9) 1.9(a) - Representation of client whose interests are materially adverse to interests of former client where matters are the same or substantially related 1.9(b) Representation of client whose interests are materially adverse to interests of client of lawyer s former firm where matters are the same or substantially related and lawyer acquired confidential information

12 Former Client Conflicts (Rule 1.9) Permissible if the former client consents after consultation and confirms in writing Compare Rule 1.7(b) - Each affected client gives consent after consultation, confirmed in writing

13 More On Former Client Conflicts (Rule 1.10) Lawyer s former firm represented person materially adverse to new firm s client Other lawyers can represent firm s client if: Disqualified lawyer did not participate in the matter and has no confidential information; Disqualified lawyer is screened and is apportioned no part of fee; and Written notice is promptly given to former client so it can ascertain compliance with rule.

14 More On Former Client Conflicts (Rule 1.10) Disqualification of an individual lawyer may be waived by the affected client under Rule 1.7 Former client? Staff? Screening required. R. 1.10, Comment 4.

15 Third-Party Neutral Conflicts (Rules 1.12) Third-party neutral s subsequent representation of a party Prohibited unless all parties to the proceeding consent after disclosure, confirmed in writing

16 Business Transactions With Clients (Rule 1.8(a)) Prohibited unless specific requirements met, including client consents in writing to the essential terms of the contract and the lawyer s role in the transaction, including whether the lawyer is representing the client in the transaction Kaye v. Rosefielde, 2013 WL (N.J.Super. A.D. 2013)

17 Aggregate Settlements (Rule 1.8(g)) Prohibited unless each client consents in a writing signed by the client after consultation

18 Fee Agreements (Rule 1.5) Prohibits charging or collecting fee or amount for expenses that is unreasonable Communicate scope of representation and basis or rate of the fee and expenses to client preferably in writing Communicate any changes in the basis or the rates of fees or expenses Client must sign contingent fee agreement

19 Duties owed to prospective clients (Rule 1.18) Duty of confidentiality treat as former client (Rule 1.9) General rule: Lawyer and law firm disqualified if lawyer received information from prospective client that could be significantly harmful to prospective client in the same or a substantially related matter

20 Duties owed to prospective clients (Rule 1.18) 2 exceptions to disqualification Affected client and prospective client give consent after consultation, confirmed in writing, or Lawyer did not receive more information than reasonably necessary to determine whether to represent prospective client; disqualified lawyer is timely screened; and written notice is promptly given to prospective client

21 Screening Screening Rule 1.0(l), Comments [8-10] Acknowledgment by screened lawyer Inform other lawyers in the Firm Denial of access to Firm files Reminders of screen Implement as soon as practical after lawyer or Firm reasonably should know of need

22 Duties of Lawyers for Organizations (Rule 1.13) Where lawyer knows constituent is acting or intends to act in violation of a legal obligation to the organization, or violation of law that might be imputed to the organization, and that is likely to result in substantial injury to the organization, the lawyer shall proceed as reasonably necessary in the organization s best interest.

23 Duties of Lawyers for Organizations (Rule 1.13) Unless lawyer reasonably believes it is not necessary in the best interest of the organization not to do so, lawyer shall refer the matter to higher authority in the organization.

24 Duties of Lawyers for Organizations (Rule 1.13) If highest authority insists on a clear violation of law or fails to address a violation in a timely and appropriate matter, and lawyer reasonably believes violation is reasonably certain to result in substantial injury to the organization, then the lawyer may reveal the information only if and to the extent lawyer reasonably believes necessary to prevent substantial injury.

25 Solicitation of Prospective Clients (Rule 7.3) No in-person, live telephone or real-time electronic solicitation for profit unless prospect has prior family, close personal, or prior professional relationship with lawyer Exceptions for first 30 days in personal injury/wrongful death cases Physical, emotional state, or mental state makes reasonable judgment unlikely

26 Solicitation of Prospective Clients (Rule 7.3) For other prospective clients, Advertising Material must appear on outside envelope and at beginning and ending of any recorded or electronic communication Unless in response to a request

27 Inadvertently produced documents (Rule 4.4) Lawyer who receives a document and knows or reasonably should know it was inadvertently sent shall: Not read the document further than reasonably necessary to determine its privileged or confidential nature and shall not disseminate except to supervisory lawyer or disinterested lawyer for legal advice re compliance with rule Promptly notify sending lawyer

28 Inadvertently produced documents (Rule 4.4) Reach agreement with sending lawyer re disposition or hold pending definitive court resolution Codifies Disciplinary Counsel Opinion 39 Clawback agreement FRCP 26(b)(5) Applicable to misappropriated documents? Cal. State Bar Formal Opinion ; Merits Incentives, LLC v. Eighth Judicial Dist. Court, 262 P.3d 720 (2011)

29 Inadvertently produced documents (Rule 4.4) Save Sunset Beach Coalition v. City and County of Honolulu, 102 Haw. 465, 78 P.3d 1, 22 (2003) (1) the reasonableness of precautions taken to prevent disclosure; (2) the amount of time taken to remedy the error; (3) the scope of discovery; (4) the extent of the disclosure; and (5) the overriding issue of fairness

30 Other Changes Disclosure requirements for lawyers serving as third-party neutrals (Rule 2.4) Prohibits starting sexual relation with client after lawyer-client relationship starts (Rule 1.8(k)) Additional guidance for dealing with a client under a disability (Rule 1.14)

31 Other Changes Lawyer may limit the scope of the representation if the limitation is reasonable under the circumstances and the client gives consent after consultation (Rule 1.2(c)) Nicols v. Keller, 15 Cal.App.4 th 1672, (1993) ( [E]ven when a retention is expressly limited, the attorney may still have a duty to alert the client to legal problems which are reasonably apparent, even though they fall outside the scope of the retention )

32 Other Changes Lawyer may disclose confidential information to secure legal advice about compliance with Rules of Professional Conduct (Rule 1.6(c)(3)) Lawyer must reasonably consult with client about the means of accomplishing the client s objectives (Rule 1.4)

33 Other Changes Preserving identity of client s and thirdperson s funds and property (Rule 1.15)

34 Unauthorized practice of law (Rule 5.5) Prohibits unauthorized practice of law or assisting or allowing unauthorized practice by another Fought & Co., Inc. v. Steel Eng. & Erection, Inc., 879 Haw. 37, 951 P.2d 487 (1998) (Oregon counsel did legal research, drafted and commented on briefs and other papers, and planned strategy for Oregon client involved in Hawaii lawsuit)

35 The End

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