Risk Update

Insurance & Malpractice Matters (Spoiler Alert: Conflicts Count & Cost)

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The folks at Ames & Gough have published their annual “Lawyers Professional Liability Insurers 9th Annual Claims Survey” —

  • “In it’s ninth annual survey of lawyers professional liability claims, Ames & Gough examined the trend by polling 11 of the leading lawyers’ professional liability insurance companies that on a combined basis provide insurance to approximately 80 percent of the AmLaw 200 firms.”
  • “The survey found the number of claims resulting in larger multimillion dollar payouts – as well as the dollar amounts involved – has surged in the past year; 2018 became the first year ever in which the majority of insurers surveyed had a claim payout of over $150 million. Furthermore, at least two settlements exceeded $250 million.”
  • Conflicts remain the biggest malpractice error. Year after year, the insurers surveyed have singled out conflict of interest (including perceived conflicts) as the most common alleged legal malpractice error. This year, seven of the 11 insurers surveyed cited conflicts either as the first or second leading cause of legal malpractice claims.”
  • “Conflicts are especially problematic as more law firms seize opportunities for growth and expansion either through mergers or by bringing in lateral hires. According to the survey, there are times when a lawyer who changed firms can contaminate the new firm with what he or she learned at the old firm.”
  • “‘To get control of this risk more firms are centralizing their conflicts of interest screening and managing the client intake process,’ Ms. Garczynski noted. ‘While that’s a step in the right direction, law firms still need to do a better job of flagging potential conflicts early and training their legal professionals on this issue. Firms unsure of how to properly screen a lawyer might consider working with an attorney who specializes in professional responsibility.'”

And for those who prefer to live on the edge: “Washington State Bar Decides Against Malpractice Insurance Mandate” —

  • “The Washington State Bar Association’s board recently rejected a recommendation that it require the state’s licensed lawyers to obtain malpractice insurance.”
  • “Washington’s decision last week came not long after the State Bar of California’s board also decided against moving forward with a malpractice mandate.”
  • “Oregon and Idaho remain the only two states with a malpractice requirement for attorneys.”
  • “While some board members agreed with mandate supporters that the percentage of uninsured lawyers was a consumer-protection issue, they suggested there were other ways of addressing the matter. One proposal was to examine the “South Dakota model.” In that state, lawyers who do not carry a minimum of $100,000 in insurance must disclose that information at the formation of the attorney-client relationship.”

It appears these issue are in the air, including in Georgia, where John Watkins from Thomson Hine opines on a proposed rule: “Malpractice Insurance Proposal May Require Changes in Current Insurance” —

  • “Proposed Rule 210(a) states: ‘All active members of the State Bar of Georgia engaged in the private practice of law in Georgia must be covered by a policy of professional liability insurance, in an amount no less than $100,000 per occurrence and $300,000 in the aggregate, the limits of which are not reduced by payment of attorney’s fees or claims expenses incurred by the insurer for the investigation, adjustment, defense, or appeal of a claim.'”
  • “There are many views pro and con about the State Bar’s proposed rule requiring lawyers have malpractice insurance. But there is a bigger problem with the proposed rule as written—if you have malpractice insurance, it almost certainly does not comply with the proposed rule and you probably cannot buy insurance that does.”
  • “Thus if a large law firm has a professional liability policy underwritten by Lloyd’s syndicates on a typical policy form with $100 million per claim/$100 million aggregate policy limits, it would not comply with the proposed rule because the limits are not “per occurrence” and defense costs erode limits. I am quite certain that this is not what the State Bar had in mind when it proposed the rule, but the law firm with the hypothetical policy (and its lawyers) would technically be in breach if the proposed language is adopted.”
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Risk Update

Technology and Ethics Conflicts (Hey, Alexa… Hey, Google… And One More Alleged Judicial Conflict)

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A few interesting technology-related risk and compliance stories of note.

I confess I’m personally waiting for the first report of Outside Counsel Guidelines that establish rules preventing any matter discussion within earshot of a smart device (including a phone). I suspect it’s only a matter of time, though my science-fiction forecasting sometimes leans a little dark.

But I’m not the only one thinking along these lines, as stories have surfaced of “accidental” monitoring by big tech (and just the general ethics and implications of the how these are designed and used). For lawyer specific analysis, see: “Lawyers’ Digital Assistants Raise Ethics, Privacy Concerns” —

  • “Is my Amazon Echo spying on me? Recent years have witnessed the growth and proliferation of voice-activated virtual assistants like the Echo, Google Home and Apple Home Pod, which have picked up where Apple’s Siri left off: streaming music, scheduling appointments, sending texts, checking weather and preparing grocery lists, all without so much as the flip of a switch.”
  • “Amazon’s Alexa, once activated by voice command, digitally records the owner’s instructions, which are then stored in the cloud until erased by future use. This has raised privacy issues, prompting at least one commentator to refer to digital assistants ‘as Trojan horses in the age of digital surveillance.'”
  • “But there are ethical concerns for lawyers as well. The ethics rules require lawyers to preserve and maintain the confidentiality of client information, particularly in digital format… The risks associated with transmission of client confidential information electronically include disclosure through hacking or technological inadvertence. A lawyer’s duty of technological competence may include having the requisite technological knowledge to reduce the risk of disclosure of client information through hacking or errors in technology where the practice requires the use of technology to competently represent the client.”
  • Attorneys who do use digital assistants may find it prudent to unplug or disable the microphones during client meetings or phone calls, and may seek to restrict their linkage to other sensitive databases. For example, attorneys might decide not to sync up their client databases with their digital assistants. The Amazon Alexa app has privacy functions which permit users to block the transmission of recorded messages to Amazon employees.”
  • “One thing is for certain: Lawyers must continue to keep abreast of new developments in professional responsibility in addition to keeping up with evolving technology and the security risks that accompany new technology.”

On another technology note, a few readers noted this development, covered nicely by Karen Rubin: “Military prosecutor sent “bugged” e-mail to defense lawyers, says motion” —

  • “But first, how does ‘web-bugging’ work? It involves placing a tiny image with a unique website address on an Internet server, and dropping a link to that image into the bugged e-mail. The image might be invisible or it might be disguised as a part of the document. It works by transmitting specified information to the sending party when the recipient opens the ‘bugged’ document.”
  • “Three jurisdictions (Alaska, New York and, most recently, Illinois) have issued opinions pointing to the ethics issues that can arise when lawyers use such tracking devices surreptitiously to get a leg up on an opposing party.”
  • “The latest web-bug development comes not in a staid ethics opinion, but in military proceedings in which a Navy lieutenant is charged with conduct unbecoming an officer, with connections to a high-profile war crimes court-martial involving a Navy SEAL and an Islamic State prisoner. The circumstances sound straight out of a thriller.”
  • “As reported in the ABA Journal, earlier this month defense lawyers for Lt. Jacob Portier filed a motion accusing a military prosecutor of sending “bugged” e-mails to thirteen lawyers and paralegals, plus a reporter with the Navy Times. According to reporting by the Navy Times, Portier is accused of holding a reenlistment ceremony for a Navy SEAL next to the corpse of an Islamic State prisoner allegedly stabbed to death by the SEAL.”
  • “The SEAL has pleaded not guilty to a charge of murder in the stabbing death, which occurred in Iraq in 2017, and the military case has drawn much attention, including from President Donald Trump, said the Navy Times.”

I confess that if you’re reading this by email, and click “download images,” your client will load an image from my mailing list provider, who will generate an aggregate report telling me that folks out there are reading these. (This is recommended and encouraged, as that knowledge is what’s keeping me going here.)

Next, noting Karen’s apt “straight out of a thriller” characterization. See also: “Judge in war crimes case against Navy SEAL weighs dismissal motion” —

  • “The judge in the court-martial of a Navy SEAL platoon leader accused of war crimes in Iraq is weighing defense motions to dismiss the charges or otherwise remove the lead prosecutor and possibly the judge himself from the case.”
  • “The hearing comes 11 days before Special Operations Chief Edward Gallagher is due to go on trial charged with killing a helpless, wounded Islamic State fighter in his custody and of shooting two unarmed civilians, a schoolgirl and an elderly man.”
  • “The defense specifically has accused Navy lawyers of conducting illegal surveillance of defense attorneys and news media by way of electronic tracking software secretly embedded in emails sent to the defense.”
  • “In court, prosecutors have said the email “auditing tools” they used were designed merely to detect the flow of emails without revealing their content, and were aimed at pinpointing the source of leaks from case files sealed by the judge.”
  • “Timothy Parlatore, a civilian lawyer leading Gallagher’s defense, also said the Navy’s Judge Advocate General’s Office undermined fairness of the proceedings by issuing a statement last week saying the government was acting ‘as part of a lawful, authorized and legitimate investigation.'”
  • “The case, being conducted at U.S. Naval Base San Diego, has attracted the attention of President Donald Trump… Trump said he was considering pardons for two or three American servicemen charged with war crimes, but might wait until they stood trial before deciding.”
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Risk Update

Judicial Conflicts (Part 2) — Docket Clerk Imputation and Other Relations

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Continuing our miniseries on judicial conflicts with a hat tip to the Legal Profession Blog for noting a few recent opinions, first from the South Carolina Advisory Committee on Standards of Judicial Conduct: “Docket Clerk’s Relationship Not Imputed To Judge” —

  • “A municipal court judge’s docket clerk is in a relationship with a law enforcement officer for the same municipality. The docket clerk is responsible for scheduling cases and documenting events that occur in cases while in open court. The docket clerk is also responsible for case management, including recording final dispositions in Municipal Court cases and following instructions from the municipal judge(s). The docket clerk appears in court regularly and may be present at the same time that the law enforcement officer the clerk is dating appears to prosecute traffic cases. The municipal court judge inquires as to whether he or she must disclose to all parties the relationship between the docket clerk and the law enforcement officer, or if the docket clerk should be recused from handling those cases.”
  • “In this case, the judge is not actually involved in a relationship with the law enforcement officer, and there is no cause to question the judge’s impartiality. Furthermore, the docket clerk merely performs ministerial duties regarding case scheduling and management. Thus, there is no need to recuse the docket clerk from cases in which the law enforcement officer appears. Likewise, there is no need for the judge to disclose the relationship of the docket clerk and the law enforcement officer to all parties.”
  • Full text of opinion.

Next from the Florida Judicial Ethics Advisory Committee: “A Judge’s (Ap)parent Conflicts” —

  • 1. Whether a judge whose lawyer-parent is no longer associated with former law firm must continue recusing from the law firm’s cases. ANSWER: No.
  • 2. Whether judge whose parent owns building leased to a law firm must enter automatic recusal when the firm has a case before the judge. ANSWER: Yes, unless the parent’s interest can be classified as de minimis.
  • Full text of opinion.
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Risk Update

Judicial Conflicts (Part 1) — Insurance Recusal, Homeless Advocacy

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Several interesting stories and updates touching judges and courts have caught my eye recently. Thought readers would find them interesting as well. First up something you don’t see every day: “Judge rips insurance company for ‘immoral, barbaric’ cancer denials” —

  • “A federal judge blasted UnitedHealthcare last month for its ‘immoral and barbaric’ denials of treatment for cancer patients. He made the comments in recusing himself from hearing a class-action lawsuit because of his own cancer battle — and in so doing thrust himself into a heated debate in the oncology world.”
  • “The case that came before US District Judge Robert N. Scola was brought by a prostate cancer survivor who alleged that UnitedHealthcare wrongfully denied him and thousands of others coverage of proton beam therapy.”
  • “In his recusal, Scola cited his own battle with prostate cancer and how he consulted ‘with top medical experts around the country’ about treatment options. Scola said that he ultimately opted for surgery but that ‘all the experts opined that if I opted for radiation treatment, proton radiation was by far the wiser course of action.'”

Calif. Cities Say Judge In Homelessness Case An ‘Advocate‘” —

  • “Three cities in Orange County, California, on Friday asked a federal judge overseeing a case about their treatment of homeless residents to step aside, saying that the judge took on the role of an “advocate” in a similar case, calling his impartiality into question.”
  • “[Saying] Judge David O. Carter had taken steps in resolving a lawsuit against other Orange County cities that called into question his ability to be fair in the current dispute, including touring a homeless tent city multiple times, taking ex parte meetings with city officials and generally pushing the parties towards the resolution he preferred.”
  • “The motion said that the judge’s actions were not unethical in the prior case since he was acting with the blessing of the parties, but did not reflect well on his ability to be unbiased against the cities in the new suit.”
  • “In addition to his repeated visits to homeless encampments in the county and his efforts to work directly with the cities in the Catholic Worker suit, the motion to disqualify said, Judge Carter had criticized the cities that had not attended a meeting he organized, including the cities filing the motion. Moreover, at a recent hearing he had acted as though an injunction in the case were a foregone conclusion, before he’d had a chance to hear any legal arguments, the motion said.”
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