Risk Update

Risk Roundup — Disqualification Denied, Indigenous Client Conflicts Concerns, Client Disclosure Ethics Opinion

Posted Dan Bressler

“Judge Tosses BofA Bias Suit And Bid To DQ McGuireWoods” —

  • “A Georgia federal judge on Monday permanently dismissed a discrimination suit filed against Bank of America stemming from a foreclosure case and rejected the plaintiff’s bid to oust the bank’s attorneys at McGuireWoods LLP from the case, finding there is no basis for disqualification.”
  • “Judge William M. Ray II of the U.S. District Court for the Northern District of Georgia said in an order that plaintiff Keith Thomas’ argument that McGuireWoods and the law firm Rubin Lublin should be disqualified because they were also defendants in the case did not pass muster, noting that it did not appear that the relevant Rule of Professional Conduct applies to entire law firms.”
  • “‘In addition, it does not appear Rule 3.7 applies at this stage of the case,’ Judge Ray said of the relevant rule. ‘The rule states only that a lawyer may ‘not act as advocate at a trial in which the lawyer is likely to be a necessary witness’ … but this case has not progressed to a trial.'”
  • “Thomas, who is representing himself, initiated the case in August, arguing that McGuireWoods helped Northstar Mortgage Group LLC, mortgage database company Mortgage Electronic Registration Systems Inc. and Bank of America engage in mail fraud and in violating the Civil Rights Act of 1866 and various federal regulations.”
  • “Judge Ray further found that Thomas didn’t show that either law firm or any of their lawyers are likely to be a necessary witness. And the court rejected Thomas’ argument that McGuireWoods should be disqualified for allegedly engaging in fraudulent activity that it didn’t disclose to the court, saying Thomas ‘wholly fails to cite any evidence that McGuireWoods in fact knew about any supposed fraudulent activity,’ as required by Rule of Professional Conduct 3.3.”

“The financial arrangements between lawyers and Indigenous clients” —

  • “Recent decades have seen an explosion of Indigenous case law in Canada, with precedent-setting decisions like R v. Sparrow and Delgamuukw v. British Columbia vastly increasing activity in what used to be a specialized field.”
  • “More cases mean more opportunities for conflict between lawyers and their clients over financial arrangements. The past few decades also have seen a significant number of those conflicts make their way to court — disputes over hourly fees, retainers and contingency fees, arguments over who has the right to act for a particular First Nation.”
  • “Some professionals in the Indigenous law field say those conflicts are the result of a power imbalance between Indigenous communities and the lawyers they hire. They’re calling for reforms to the model code of conduct to protect Indigenous clients from bad actors in the legal profession.”
  • “Lafond said the IBA [Indigenous Bar Association] is partnering with the Federation of Law Societies of Canada to review and modify the model code to protect Indigenous clients — starting with changes to the way contingency agreements work.”
  • “Contingency fee agreements can get cases off the ground for cash-poor clients, but unless their lawyers are transparent about the work’s nature, they can lead to unfair outcomes.”
  • “University of Windsor law professor Noel Semple says one sensible way to protect vulnerable clients is to develop standards for time-based billing, a practice he said is largely unregulated in Canada.”
  • “‘And there are ways retainer agreements themselves can be structured to prevent a First Nation from retaining another law firm to examine the fees charged by another,’ said Lafond. ‘In some cases, these retainer agreements prevent the client from hiring another firm until the original firm has been made whole on the bill it sent the client.'”

“D.C. Opines On Disclosure Issues” —

  • “In April 2022, the Legal Ethics Committee issued Opinion 383 finding that, absent informed consent, a lawyer generally may not disclose to a client or prospective client information about another client or prospective client that is a protected secret or confidence under Rules 1.6 or 1.18. Such protected information often includes (1) the identity of another client or prospective client and (2) the nature of the other person’s matter.”
  • “LEO 383 cautions that even requesting or agreeing to a commitment to make such disclosures pursuant to an outside counsel agreement or otherwise may constitute a prohibited attempt or inducement to another to violate the Rules. The opinion also concludes that Rules 1.7(d) and 1.16 — and not an advance agreement between one client and outside counsel — govern whether a lawyer must or may withdraw from her representation of another client if a ‘midstream’ conflict arises. Finally, a lawyer may not permit a client to access the lawyer’s records if such access might disclose confidences or secrets of other clients. Read the full opinion here.”