Competence & Conformity to Law

Question 1

MR 1.1

Answer 1

A lawyer shall provide competent representation to a client.
Competent representation = legal knowledge, skill, thoroughness and preparation as reasonably necessary for the representation.

Question 2

Ways To Become “Competent”

Answer 2

(1.1 comments)
Can provide adequate representation through:
Adequate study
Association with lawyer of established competence

Question 3

MR 1.3

Answer 3

Lawyer shall act with reasonable diligent and promptness in representing a client.

Question 4

Restatement 52

Answer 4

(Competence; Malpractice)

Level of care: skill, knowledge, prudence, and diligence normally exercised by lawyers in similar circumstances.

Question 5

Mitigating Risk Associated With Competence

Answer 5

• Malpractice insurance
• Associate, consults per MR 1.1 and Horn v. Peckham
• Obtain client waiver part MR 1.8(h)

Question 6

MR 1.2(c)

Answer 6

A lawyer may limit the scope of the representation if the limitation is reasonable under the circumstances and the client gives informed consent.

Question 7

Engagement Letter

Answer 7

A contract between attorney and client
Not required but advisable
Covers: what tasks will be performed, price (billing rates or otherwise), record retention, etc.

Question 8

MR Competence

Standard/Consequences

Answer 8

Standard: legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation. MR 1.1
Remember: no free pass for novices per comment 2, limiting scope can help. MR 1.2 (c)
Consequences: bar sanctions against lawyer

Question 9

Malpractice

Standard/Consequences

Answer 9

Standard: level of skill, knowledge, prudence and diligence normally exercised by lawyers in similar circumstances. Restatement 52.
Remember: must also show CAUSATION.
No free pass for novices, per Horne.
Limiting scope can help.
Consequences: civil liability for the lawyer, $Judgment for client

Question 10

Competence in Criminal Cases

Answer 10

Strickland v. Washington
Must show:
Unreasonable performance under professional norms
– Strong presumption of reasonable conduct
Reasonable probability of different result
– Standard falls between “some conceivable of effect” and “more likely than not”
– Different standard when there is a CONFLICTED lawyer

Question 11

Ineffective Assistance of Counsel

Standard/Consequences

Answer 11

(Competence)
Must show:
-Unreasonable performance under professional norms
-Reasonable probability of different result
Remember: strong presumption of reasonable professional assistance
Consequences: criminal judgment overturned

Question 12

MR 1.2(d)

Answer 12

(Conformity to Law)
– can’t “counsel” or “knowingly assist” crime for fraud
– may “discuss the legal consequences”

Question 13

MR 4.1

Answer 13

(Conformity to Law)
TRUTHFULNESS IN STATEMENTS TO OTHERS
When representing a client, don’t knowingly:
– Make false statements of fact or law to third-party or
– Fail to disclose material fact when necessary to avoid a crime or fraud

Question 14

MR 8.4

Answer 14

(Conformity to Law)
MISCONDUCT
It is professional misconduct to:
– (b) Commit a criminal act that reflects adversely on the lawyers honesty, trustworthiness or fitness as a lawyer
– (c) Engage and conduct involving dishonesty, fraud, deceit or misrepresentation

Question 15

Tort of Fraud

Answer 15

(Conformity to Law)
– Material false statement
– Made with intent to deceive
– Reasonably relied on by plaintiff
– To plaintiffs detriment

Question 16

Perjury and Obstruction

Answer 16

(Conformity to Law)
Perjury = intentional falsehood, under oath
False statement to executive
Obstruction = impeding, etc., do you administration of law by officers of the court or federal agency

Question 17

Restatement 252

Answer 17

(Conformity to Law)
NEGLIGENT MISREPRESENTATION
Info suppliers are liable for false info:
– Provided in the course of defendants profession or business
– For the guidance of others in their business transactions
– Without reasonable care or competence in entertaining or communicating the information

Question 18

Third-Party Opinion Letters

Answer 18

Due diligence (roughly)
– Certifying borrower has taken all action necessary to complete transaction
– Certifying lack of action or proceeding pending or threatened that would adversely affect transaction

Question 19

Securities Fraud Historical Timeline

Answer 19

(Conformity to Law)
Central Bank: no aiding and abetting in investor suits
Kline: primary liability; third-party opinion letter, omitted facts relevant to opinions given
Klein: clarifying Kline, author/co-author test
Janus: Maker test

Question 20

Fraud by Omission

Answer 20

(Conformity to Law)
If fiduciary relationship (e.g., management to shareholders)
Half-truths (see Strouse)
Maybe manifest misapprehension at the heart of the bargain

Question 21

Janus Rule

Answer 21

(Conformity to Law)
THE MAKER TEST
For purposes of Rule 10b-5, maker of the statement is the person or entity with ultimate authority over the statement, including content and whether/how to communicate it
– Speech writer analogy
– Attribution within statement or implicit from surrounding circumstances

Question 22

MR 1.13 (Generally)

Answer 22

(Conformity to Law)
Organization as Client
–lawyer employed/retained by an org represents org
**Respects org hierarchy
–comments make clear applies to government as well

Question 23

MR 1.13(d)

Orgs

Answer 23

Triggers/responsibilities do not apply with respect to information relating to lawyers representation to investigate an alleged violation of law, or defend organization/constituent against the claim arising out of alleged violations

Question 24

MR 1.13 (e)

Orgs

Answer 24

If lawyer believes that he has been discharged or withdraws because of action taken,
Will proceed as reasonably believes necessary to ensure highest authority informed of the discharge or withdrawal

Question 25

MR 1.13 (f)

Orgs

Answer 25

In dealing with org directors, officers, employees, members, shareholders or other constituents, lawyer will explain ID of client when lawyer knows interests of org are adverse to that constituent.

Question 26

MR 1.13 (g)

Orgs

Answer 26

Lawyer representing an organization may also represent any of its directors, officers, employees, members, shareholders or other constituents, subject to provisions of Rule 1.7.
Consent to dual representation maybe required.

Question 27

MR 1.13 Triggers

Answer 27

Lawyer knows organization personnel will: 1.13(b)
–Violate legal obligation to org
–Violate law (in way imputed to org)
Violation is:
– Related to representation
– Likely to result in substantial injury

Question 28

MR 1.13 Responsibilities

Answer 28

1.13(c)
“Proceed as reasonably necessary in the best interest of the corporation”
– Presumably report up the ladder
– Permitted to break confidence if:
–Highest authority won’t act
–Reasonable certainty a substantial injury to entity

Question 29

SOX 307
&
Rule 205 SEC Final Standard of Professional Ethics

Answer 29

Scope:
– Attorneys practicing before commission
–(Securities related work; public company)
Trigger:
–”Credible evidence of an issuers material violation” of securities law, breach of fiduciary duty, or similar
Requires:
–”Up the ladder” reporting to”chief legal officer” and maybe higher
Allows:
Disclosure to the SEC

Question 30

Rule 205’s

“credible evidence of a material violation”

Answer 30

= essentially, violation is “REASONABLY LIKELY”

Question 31

SEC Potential Consequences

Answer 31

– Charge with aiding and abetting
– Impose fine
– Bar from practicing before the SEC

Question 32

“Aiding and Abetting”

Common Law Fraud

Answer 32

Requires:
– Just “substantial assistance” with knowledge
– No need to “dress-up” as direct claim
Limitations:
– For investor class actions, RELIANCE is hard to prove
– For investor class actions, federal law often PREEMPTS

Question 33

Most Viable Claims in Fact Patterns Involving Securities

Answer 33

– Primary violation of securities law (i.e. "maker" test under Janus) for class actions
– Primary violations of security law and aiding and abetting common law fraud for individual investor suits