Don’t publicly discuss confidential details of your representation of a client within earshot of others — particularly, reporters.
Don’t publicly discuss confidential details of your representation of a client within earshot of others — particularly, reporters.
More than once, the Risk Tip has been inspired by the Futility Closet blog. The Blog once commented about British stoicism during The Great War, which stereotypically tended to downplay the horrors of the conflict in favor of a “stiff-upper-lip” attitude. Wrote one officer: “Nothing is ‘horrible.’ That word is never used in public. Things are ‘darned unpleasant,’ ‘Rather nasty,’ or, if very bad, simply ‘damnable.” Other examples provided were from a General who reported that his daily constitutional was interrupted by shrapnel that “scattered a shower of bullets around me in an unpleasant manner” and a Private who wrote to complain about the “strafing and a certain dampness.”
One manifestation of this was a postcard provided by the British Army to wounded soldiers:
Soldiers were simply to strike out inapplicable text, and were thus hindered from writing things like “I’ve lost my leg.”
What does this have to do with Risk? Well, if you’re an attorney with the Department of Justice, you might have to display that same sort of stoicism regarding a recent order from a District Judge in Brownsville, Texas — at least until the inevitable appeal.
Yesterday, the Court concluded that DOJ attorneys appearing before him had failed to exercise their duty of candor to the tribunal. In a scathing opinion, the Court not only revoked the pro hac vice status of the DC lawyers (suggesting some regret he simply couldn’t disbar them), but also entered an order requiring “any attorney employed at the Justice Department in Washington, D.C. who appears, or seeks to appear, in a court (state or federal) in any of the 26 Plaintiff States annually attend a legal ethics course.” Going on, the judge ordered:
The Attorney General of the United States shall appoint a person within the Department to ensure compliance with this Order. That person shall annually file one report with this Court including a list of the Justice Department attorneys stationed in Washington, D.C. who have appeared in any court in the Plaintiff States with a certification (including the name of the lawyer, the court in which the individual appeared, the date of the appearance and the time and location of the ethics program attended) that each has attended the above-ordered ethical training course. That certification shall be filed in this cause during the last two weeks of each calendar year it covers. The initial report shall be filed no later than December 31, 2016. This Order shall remain in force for a period of five years (the last report being due December 31, 2021).
Those who practice the litigation arts know that few things are as unpleasant as a judge who has turned against them. The Tip is to recognize that the conduct of a single lawyer can have broad implications for one’s colleagues, no matter where they practice.
Shkreli is the “Pharma Bro” CEO whose company increased the price of one of its products from $13.50 to $750, a 5000% increase that caused the kind of internet outrage previously reserved for American dentists who kill large game in Africa without a license. Hillary Clinton tweeted that Shkreli’s “price gouging … is outrageous.” Donald Trump called him a “spoiled brat” who “ought to be ashamed of himself.”
Shkreli engendered another round of internet ire last week after it was revealed he paid $2 million for the only copy of an album by the Wu-Tang Clan, then told media that he had no plans to listen to it.
Yesterday, Shkreli was arrested on securities fraud charges. One internet commenter pointed out a valuable Risk Tip: “This investigation must have been going for a while and Shkreli must have known about it. So at some point he decided the best way to help his image before trial was … alienating every single human being in the country.”
But, Shkreli was not indicted alone. Criminal charges also were brought against a well respected corporate lawyer.
The indictment asserts that Shkreli and the lawyer schemed to engineer a series of fraudulent transactions to disguise the financial health of Shkreli’s enterprises. Among other things, the indictment alleges that they, in an effort to deceive company auditors, concocted several phony “consulting agreements” with individuals who had asserted claims asserted against Shkreli and his hedge fund, which were funded by assets of a company not responsible for those claims.
The indictment uses the email exchange between lawyer and client to paint an unflattering picture:
When SHKRELI suggested that the old agreements should be annulled, [the lawyer] responded that the auditor “didn’t like that idea.” When SHKRELI then admitted that “there were serious faults with the [settlement] agreements including lack of board approval” and that redoing the settlement agreements may be a good idea, [the lawyer] responded: “That will open up some very big issues. The current thinking is let rtrx pay, get a note from the fund[,] and if the fund cant [sic] fulfill the note[,] rtrx will write it off as a bad debt. It would be easier than the road you are referring to. Also, [the auditor] would get very spooked with what you are talking about (which could also spook your investors and counter parties).” In response, SHKRELI stated, “[o]n current thinking: that works for me.”
Later, the indictment alleges:
Initially, [the lawyer] sent an email to SHKRELI informing him that Investor 1 wanted 100,000 RTRX shares as part of his settlement and did not want to enter into a consulting agreement. When SHKRELI indicated that the proposal was acceptable to him, [the lawyer] stated, “Where will the 100k come from? If it’s from the company it would need to be in a consulting agreement.” SHKRELI questioned [the lawyer’s] approach and stated, “Why would it need to be a consulting agreement???! Have you heard of the term settlement?” In response, [the lawyer] explained, “We can call it a settlement agreement, but given [the auditor’s] recent behavior they may require it to be disclosed in the financials. I was trying to prevent that issue.”
Of course, these are only allegations, and the defendants are presumed innocent unless and until proven guilty.
The arrest of Martin Shkreli will likely find its place on anyone’s year-end top-10 internet-villain schadenfreude list, and it may be one of those rare times where there is more sympathy for the attorney. If there’s truth to the indictment, it serves to further underscore the principle that the Risk Tip has been talking about for years: the greatest risk of claims against lawyers arise in matters where the lawyer represents a bad client.
Lastly, we will end with an ethical take-home test: Model Rule 1.5 prohibits a lawyer from charging an “unreasonable” fee. Would it be ethical for a lawyer to increase his or her rates by 5000% before agreeing to defend Shkreli?
We’ve written before on the importance of good password practices. Using strong passwords, changing them frequently, and ensuring that they are not written down next to your computer (such as on the back of a desk blotter or keyboard) are all good starting points. A recent news story points out another best practice: namely, if you’re running for President, and have misplaced the password to your Facebook account, you are probably better off following the “lost password” protocols with the system administrator, rather than taking this approach:
Three inventions have revolutionized the practice of law in the twenty-plus I’ve been practicing: email, the post-it note, and those services that allow you to have a conference call at any time, without operator assistance, using the organizer’s individualized passcode. While all of these technologies present risks — we could talk about email forever, and post-it notes are great until they fall off — consider the conference call service.
Keep in mind that, once you’ve invited someone to a call, they will forever have a record of your dial-in number. What keeps that individual from dialing-in again, even if they’re not invited, to a future call? It’s that passcode, which can become known or, perhaps, guessed. As such, just as it is important to select a good computer password, and change it periodically, consider the following steps towards good conference call hygiene:
1. Be attentive to the number of “beeps,” and ask all attendees to identify themselves. If they don’t match or if beeps occur mid-call without identification, ask the group to reconvene and circulate a new dial-in.
2. Rotate use of passcodes, particularly for standing calls that occur the same time each week.
3. Don’t include your “Leader” passcode in meeting invites.
4. Where possible, review details from the call service provider identifying who joined the call.
After all, as Tommy Tutone reminds us, some numbers are difficult to forget.
In today’s conclusion of a two-part Risk Tip on the subject of mistakes, we look at what we can learn from mistakes.
Everyone knows about the 1912 sinking of Titanic, which resulted in 1,514 deaths among its 2,224 passengers and crew. A mistake or two can be found there, including the ship’s speed in an iceflow, single-hull construction, and only 20 lifeboats. Shipbuilders learned from these mistakes in Titanic‘s sister ship, Britannic, which was still being constructed when Titanic sank. A number of improvements were made before she was launched, including the addition of a double hull and a larger complement of 48 lifeboats.
Britannic needed them. In 1916, while in service as a hospital ship, Britannic hit a mine and sank even faster than her sister, becoming the largest ship lost during World War I. Due to the changes, 1,036 of the 1,066 passengers and crew of Britannic survived. One moral of this story is that it’s good to learn from past mistakes.
Interestingly, though, Britannic might not have met the same fate as its sister, but for a couple of new wrinkles. First, the improved double hull of Britannic would have kept the ship afloat, but for the number of open portholes (used to ventilate the hospital wards) that allowed water to stream in, causing an irreversible list. Second, the captain tried to make a run to shore in an effort to ground the ship, but the enhanced speed only increased the rate of flooding. Lastly, but for these new mistakes, even the relatively few fatalities might have been avoided. Two of the lifeboats were, without order, loaded and dropped while Britannic was still under power. The turning propellers crushed those lifeboats, leading to most of the fatalities. As such, if there another moral from the Britannic story, it is that it is not enough to preclude past mistakes, it remains vital to prevent new ones.
Bonus Trivia (with thanks to the wonderful Futility Closet blog): A stewardess named Violet Constance Jessup, pictured above, was in one of those Britannic lifeboats, but jumped out just in time before it was crushed by the propellers. You might understand her desire to leave the ship early, as she also was one of 710 souls rescued from Titanic. Indeed, Ms. Jessup also worked on the third sister ship, Olympic, during its inexplicable collision with a British warship, HMS Hawke. Notwithstanding these events, Ms. Jessup continued to work on ships, and retired after 42 years at sea, passing away in 1971.
“Too err is human,” goes the proverb. “Humans: Even when we cross our t’s and dot our i’s, we still run into problems,” goes the Liberty Mutual commercial. “Ooh human,” goes the Human League song in the background, “born to make mistakes.”
Everyone recognizes that humans make mistakes, even that subset of humans who practice law. Today, in the first of a two-part Risk Tip on the subject of mistakes, we look at the question of, what happens after a lawyer makes a mistake? Last month, the Connecticut Bar Association helped tackle that question. At issue in that case was a lawyer who made a mistake in a filing for a client. Upon learning of the mistake, the lawyer promptly met with the client, explained the error, advised the client to confirm the explanation with another lawyer, and offered to reimburse fees caused by the error. With that, the client wanted the lawyer to continue, and the lawyer wanted to know if the prior mistake created a conflict precluding future work. The CBA’s Professional Ethics Committee answered, no. Given the post-mistake conduct, the opinion concluded: “We see no indication that your mistake has interfered with or will interfere with your professional judgment or that you will fail to pursue appropriate causes of action on your clients’ behalf.”
These steps made all the difference to the Ethics Committee, but you can tell they also made all the difference to the client who — after all — wanted to continue with the lawyer who made the error. Malcolm Gladwell noted the importance of the post-error efforts in his book, Blink. In it, he opined that most people who have been injured by a negligent doctor do not sue “because they’ve been harmed by shoddy medical care. Patients file lawsuits because they’ve been harmed by shoddy medical care – and something else happens to them.” In Gladwell’s review of the data, what separated the doctors who made errors and got sued and the doctors who made errors and didn’t get sued, was the post-error actions. “What comes up again and again in malpractice cases is that patients say they were rushed or ignored or treated poorly.” Gladwell is not alone in noting this phenomenon in the medical field, but common sense suggests it has application in other professions as well.
The late, great James Coburn appeared in 173 movies and television shows, with a particularly strong run in the 1960’s and 70’s. My favorite of his is The Last of Sheila (1973), a terrific, campy murder mystery set in the South of France. Our Man Flint (1966), The President’s Analyst (1967 — if you like the film, be sure to read this story), and The Internecine Project (1974) all are worth at least one viewing.
Today’s Risk Tip involves pickpocket awareness, drawing from another Coburn flick, Harry in Your Pocket (1973). While pickpockets feature in many movies — Oliver Twist, The Sting, Casablanca (“This place is full of vultures.”) — few are wholly devoted to how they go about their work. The only other one I can think of is Robert Bresson’s Pickpocket (a rather tedious French film I care not to see again). While enjoying a great original score, Harry shows us a lot about pickpocket tradecraft, such as — in 70’s lingo — how “wire mobs” use a “steer” to select a “mark,” a “stall” to distract the victim, and a “cannon” to take the “poke.”
Additional tips on pickpocket avoidance can be found in a couple of recent articles. Among other tidbits therein, we learn that “[p]ickpockets tend to hang out near ‘beware of pickpockets’ signs, because the first thing people do when they read it is check they still have their valuables, helpfully giving away where they are.” Further, the articles also advise that, despite Hollywood’s take, many pickpockets aren’t particularly skilled; they’re just opportunistic. Some other common sense tips can be found here and here.
(Click here for appropriate musical accompaniment for this Tip.)
The Risk Tip has previously advised of the dangers of traveling with your laptop. But, leaving it behind can pose its own risks. What if you’re on the road with just a smartphone, and need to use a real computer or just print something? Can you pop by your hotel business center, and log on from there?
This past week, the Secret Service and the Department of Homeland Security’s National Cybersecurity and Communications Integration Center issued a warning to travelers and the hospitality industry about hotel business centers. In particular, several hotels in the Dallas/Ft. Worth area have had their computers infected with keystroke-logging malware, which has allowed crooks to obtain personally identifiable information; log-in credentials to bank, retirement, and personal accounts; as well as other sensitive data.
So, what to do? As one security guru opines:
The next hotel business center you visit may be completely locked down and secure, or it could be wide open and totally overrun with malware. The trouble is that there is no easy way for the average guest to know for sure. That’s why I routinely advise people not to use public computers for anything more than browsing the Web. If you’re on the road and need to print something from your email account, create a free, throwaway email address at yopmail.com or 10minutemail.com and use your mobile device to forward the email or file to that throwaway address, and then access the throwaway address from the public computer.
It’s easy to be wrong. Some well-respected prognosticators (though not your humble correspondent) thought Brazil would easily beat Germany earlier this week. A certain well-regarded national newspaper once claimed, in 1948, that Dewey defeated Truman. Yet, it’s hard to be more wrong than the Manchester Guardian, which editorialized 100 years ago: “It is not to be supposed that the death of the Archduke Francis Ferdinand will have any immediate or salient effect on the politics of Europe.”
Predicting the future is inherently difficult. Predicting future legal expenses is similarly challenging. Clients are certainly within their rights to have some idea about what things may cost, but attorneys also are on solid ground if they qualify their response based on known and unknown unknowns. A detailed caveat might state:
This estimate is being submitted pursuant to your request in order to help quantify anticipated fees and costs in the above matter. This estimate is not binding, is presented solely for planning purposes, and represents only our best analysis as to what the likely range of costs could be if the matter proceeds in accordance with our assumptions. It is neither a floor nor a ceiling on our go-forward fees and expenses.
As you are certainly aware, litigation is inherently unpredictable and that costs can be affected by a wide range of factors that are beyond our control, including but not limited to the aggressiveness with which the litigation is prosecuted by the other side, constraints imposed by the Court or the conditions of the Court’s docket, and facts subsequently revealed in discovery or otherwise. Accordingly, actual litigation expense may turn out to deviate significantly from the estimate, either favorably or adversely.
We will be happy to periodically update this estimate if requested to do so. However, in the absence of such a request, we undertake no obligation to update or revise this estimate as the case progresses or as actual costs are realized.
You can use a lot of words. But you can also make the same point in terms short and sweet: “Unless expressly stated otherwise, estimates we provide are subject to change and not binding on us.”