Risk Update

Conflicts and Ethics — DC Bar on Government “Deals,” Ethics and Client Conflicts, Land Regulator-Law Firm Ties Raise Conflicts Questions

P.E.I. Land Regulator’s Past Ties to Law Firm Representing Buddhist Groups Raise Questions” —

  • “As Prince Edward Island calls for an RCMP investigation into allegedly suspicious foreign land acquisitions, The Bureau has learned that the prominent lawyer now chairing the province’s land regulator — the Island Regulatory and Appeals Commission (IRAC) — previously spent more than 20 years with the same P.E.I. law firm that represented Buddhist organizations IRAC was mandated to investigate.”
  • “The Bureau’s review, based on legal correspondence and public records, sheds light on a growing political firestorm in Prince Edward Island, where lawmakers and citizens alike are questioning whether the province’s tightly knit legal and political community has prevented necessary scrutiny of land dealings that could threaten Canadian sovereignty — according to explosive allegations aired at an Ottawa press conference last week.”
  • “Former Canadian solicitor general Wayne Easter, joined by authors Garry Clement and Dean Baxendale and former MP Kevin Vuong, told reporters that the situation requires independent federal intervention.”
  • “‘There are too many interconnections within Prince Edward Island to really get to the bottom of the issue,’ Easter said. ‘You need a federal public inquiry that can subpoena witnesses, trace bank accounts, and bring in people internationally to get to the bottom of this.'”
  • “The core question, according to Easter and a growing community of concerned citizens, is whether allegations from Clement and Baxendale’s investigation — that Chinese Communist Party entities appear to be entwined with major land acquisitions through a network of Buddhist groups with an increasing footprint in eastern P.E.I. — are accurate, and whether provincial or federal authorities have for some reason turned a blind eye. Their claims echo findings raised in a significant Canadian Broadcasting Corporation investigation earlier this year.”
  • “In response to that CBC report, representatives of the Buddhist groups strongly denied allegations of ties to the Chinese Communist Party or any improper dealings. In a related controversy, CBC later issued a controversial correction to its explosive story — a move that, according to a statement from the government of Taiwan, occurred under pressure from Chinese officials. That development, in itself, underscores how the situation in Prince Edward Island has resonated internationally, even as most Canadians remain largely unaware.”
  • “Documents reviewed by The Bureau — and a 2016–2018 IRAC file that was supposed to probe the Buddhist land dealings but, following a subpoenaed response from P.E.I. lawmakers, was revealed last week to have been quietly ended without explanation — raise new questions about oversight and governance in the province’s land regulator.”
  • “Proof of IRAC leadership’s former ties to the law firm that represented the Buddhist groups while they were supposedly under IRAC review comes from public documents and private legal letters on the matter obtained by The Bureau.”

Law firm deals with government have ethical implications, DC Bar ethics opinion says” —

  • “Law firms that enter into agreements with the government that may limit or shape their law practices should consider the ethical implications, according to an October ethics opinion by the District of Columbia Bar.”
  • “The D.C. Bar’s Ethics Opinion 391 doesn’t directly reference deals made by nine firms with President Donald Trump to avoid punitive executive orders. The agreements require them to provide $940 million altogether in pro bono help to causes supported by Trump.”
  • “But those kind of deals are among those covered by the opinion, Bloomberg Law reports.”
  • “The issues include:
    • Potential conflicts of interest for representation that is adverse to the government. ‘A lawyer must represent her clients ‘zealously and diligently,’’ the opinion said. ‘This includes the right of each client to conflict-free representation because a conflicted lawyer may be tempted, consciously or otherwise, to pull her punches in advocating for or otherwise representing her client.'”
    • To continue the representation, the lawyer must disclose the conflict and obtain informed consent from the client. But a firm may not be able to give full disclosure of the conflict if it doesn’t know which of its actions might trigger adverse government action. ‘Obtaining a valid waiver may be difficult,’ the opinion said.”
    • Restrictions on a lawyer’s right to practice. Lawyers are prohibited from making agreements in which a restriction on the lawyer’s right to practice is part of the settlement of a controversy.”
    • Professional independence. Lawyers improperly limit the exercise of their professional judgment if they take third-party direction on whether to accept or decline a certain client or direction on the services to be provided.”
  • “Lawyers who agree to such deals aren’t the only ones who should consider the ethical issues, the opinion said. Ethics rules regarding restricting the right to practice and professional independence also apply to lawyers negotiating such deals on behalf of the government, the opinion said.”

NYT goes into more detail: “After Law Firm Deals With Trump, D.C. Bar Warns of Ethical Jeopardy” —

  • “Even though the committee’s opinions are not legally binding, they are considered authoritative and are often cited in disciplinary proceedings brought by the office that prosecutes legal ethics violations, which is overseen by the District of Columbia Court of Appeals. Allegations of a conflict can also be important if a law firm is sued for malpractice.”
  • “An earlier draft of the ethics opinion, a copy of which was seen in recent months by some outside lawyers, explicitly discussed Mr. Trump’s deals with law firms, according to people who described it on the condition that they not be named.”
  • “But at least nine struck deals with him, agreeing to provide millions of dollars in free legal services to causes he favors. The exact details of the arrangements are murky. Mr. Trump announced them on social media, but it is not clear whether those are formal written deals that detail the scope of the obligations the firms have agreed to, as opposed to vague handshake agreements.”
  • “At least two of those firms, Paul, Weiss, Rifkind, Wharton & Garrison and Kirkland & Ellis, are now working on a range of matters for the Commerce Department, The New York Times has reported. A personal lawyer to Mr. Trump has also connected a third, Skadden Arps, with the department about working on trade deals for the Trump administration.”
  • “In the spring, a group of legal ethics professors filed a friend-of-the-court brief in the lawsuits by a firm challenging the order, Perkins Coie, flagging the ‘intractable ethical issues’ raised by law firms that reach agreements with Mr. Trump.”
  • “‘A firm that can survive only by staying in the president’s good graces has incentives that conflict with its lawyers’ stringent fiduciary duties to remain loyal to the interests of their clients, exercise independent judgment, and be truthful and candid in all dealings with the courts,’ it said.”
  • “The brief also argued: ‘Lawyers who fail to fulfill their professional legal obligations to their clients and to the courts could be subject to bar disciplinary proceedings. They may potentially also be civilly liable to clients for breach of fiduciary duty if they accept a representation burdened by a conflict of interest.'”
  • “The opinion by the D.C. Bar legal ethics committee was styled as forward-looking, offering considerations for firms that may be weighing a deal with a government.”
  • “And if a firm that made a deal with the government and is trying to stay in the government’s good graces but also represents a client whose position is contrary to any of the government’s programs or policies, the deal would call into question whether the firm might pull its punches instead of zealously advocating its client’s interests, according to the opinion.”
  • “To avoid an ethics problem, the opinion said, such a firm must drop the client, pull out of its agreement with the government or obtain a conflict-of-interest waiver from the client. But, the opinion also stated, to validly consent to such a waiver, the client must be fully informed of all the ways in which a firm’s deal with the government might create a conflict and the potential consequences.”