Dredgers, Enquiries, and Wire Transfers

It’s a real boost to the legal ego when a foreign company chooses you to handle a major transaction or litigation in the US.  Even better, it’s a brand new client.  And just to be safe, you google them and confirm they are a legit company.

I hate to burst the bubble folks, but it ain’t real.  Here’s how it works:   You get an  email from someone (usually from a foreign country) who seeks a lawyer to assist with debt collection or a transaction and they your name from a bar association or our website.   After a brief communication, your are informed that the adverse party has sent a settlement check or deposit.  The unsuspecting lawyer then deposits the money and wires the proceeds to his “client,” only to later discover that the check was phony.  Of course, the firm’s money that he just wired out is not.

These and other email and telephone scams (often involving wire transfer requests) are becoming more prevalent and lawyers — including at large firms — are falling prey to them all the time.  Recently, a victimized lawyer lost his bid to shift responsibility to his bank.  And bar associations opinions are starting to weigh in as well, suggesting lawyers may have ethical obligations to inform other clients if they are victimized.

Here are some red flags that will tell you whether an unsolicited email is a phony:

*They come from what purport to be foreign companies (or individuals) seeking an attorney in the United States;

*The names of the companies and individuals are legit — but the emails are sent from a gmail, yahoo or similar domain;

*The emails identify no referral source;

*They grammar be not well; and

*They promise lots of money for little work.

If you receive one of these emails, you’re better off just deleting it.

For information on another scam that is making its rounds, please review the attached important tutorial.



Wasted on the Way

“[Crosby and I]  were in love with each other and in possession of something magical.”  Graham Nash, 1990.

“I don’t want anything to do with Crosby at all . . .  I’m done.  F**k you.”   Graham Nash, March 2016.

I could tolerate last year’s war of words between David Crosby and Neil Young.  And sure, there has always been tension with that hothead (but genius) Stills.  But for Crosby Stills & Nash fans, a  Crosby/Nash rift is a surprising and devastating turn of events.   After 47 years together, having weathered drug addictions, prison stints and liver transplants, I, for one, was unprepared for the split.  So much for “Love the One You’re With.”

Lawyers can’t afford to be caught off guard when their clients break with one another.  Whether it’s a husband and wife,  business partners, or a corporation and its employee, we are often asked to represent multiple clients in a single matter.  At the outset of the representation, everyone is seemingly on the same page and happy.  As the matter evolves though, interests can diverge and once agreeable clients can descend into the darkness while the seemingly helpless lawyer watches.

So what do you do when one client wants copies of your communications with the other?  Or when one client stops paying?  Or when one wants you to fire the other and continue to represent him or her?   You don’t have to cry; these questions can be really easy to answer — if you have a fully executed engagement letter with appropriate disclosures and consents.  Specifically:

Everybody I Love You: Have the clients confirm that their interests are aligned.

50/50: Be clear on the responsibility for payment of fees.  Are they split evenly or is one paying for all?

Yours and Mine: Explain the disadvantages of joint representation, including that there is no privilege as between or among joint clients.  In other words, if we learn something from one client that we think the other needs to know, we will disclose the information to the other.

See The Changes: Be clear on what happens if a conflict develops.  Are we going to withdraw from the representation?  Or will we withdraw from representing one (e.g., a corporate officer), but continue representing the other (e.g., the company)?

Turn Back the Pages: Make sure the letter is executed by each of the clients.

This way, if and when your clients go CSN on you, you’ll be able to carry on.

And, for what it’s worth, anytime CSN are ready to get back together,  they can count me in.


Enter Sandman, Exit Lawyer

Ok, so not everyone is an opera fan.  Thankfully, we at the Risk Tip enjoy a wide variety of musical tastes.   Unfortunately, that also means that we’ve had a lot of musicians to mourn in recent weeks:  David Bowie.  Natalie Cole.  Glenn Frey.  Dale Griffin (of Mott the Hoople).  Lemmy Kilmaster.   All of these talents are worthy of tribute.

Of course, there are those who make it their life’s work to pay to tribute to musicians.  And we’re not just talking Elvis impersonators.  Some tribute bands are made up of serious musicians who rival the band or performer they seek to emulate.  My favorites though, are the ones that introduce a bit of a twist on the original.  Have you ever wondered how Back in Black would sound sung by women?  Try AC/DShe.  Would you like to hear Like a Virgin sung by a baritone? Then the all-male Mandonna is for you.

Alas, tribute bands rarely get their due.  But one of them came out on top this week.  The Metallica tribute band Sandman (named for the song Enter Sandman) made news after it received a 41 page cease and desist letter from Metallica’s lawyer, threatening legal action over claimed trademark violations.  Fortunately for Sandman, Metallica’s members professed to know nothing of the letter and, as luck would have it, they are fans of Sandman.  They announced on their website that Sandman could throw the letter in the trash.   As the band explained:  “[N]either we nor our management were aware of [the letter] until it surfaced online. [It] turns out that we have a very overzealous attorney who sent this letter without our knowledge.”   Where is the attorney now?  He’s “catching a flight to go permanently ice fishing in Alaska,” said the band.

The erstwhile Metallica lawyer better hope that’s the last of it.  ABA Model Rule 1.2 makes clear that the client, not the lawyer, generally has the authority to make decisions (subject to legal and ethical limitations) regarding the representation.  Whether it’s accepting/making a settlement offer, agreeing on material transaction terms, or sending a cease and desist letter, it’s the client’s call, not the lawyer’s.  And unless you want to end up ice fishing in Alaska — or be subject to discipline or a claim —  it’s always best to document the client’s instruction.  Because if there is a dispute later on, you don’t want to end up like another Metallica song:  Broken, Beat and Scarred.

Heavy metal, like opera, is not for everyone.  But fear not, classical music fans.  This week’s clip features the soothing sounds of the San Francisco Symphony Orchestra.  And Metallica.  Together.  Enjoy.


Great Moments in Opera (No. 1)

As we enter a New Year, it seems appropriate to heighten the cultural level of the Risk Tip.  Sure, Dr. Seuss is fun.  And who doesn’t enjoy reports of the latest Kardashian exploits.  But perhaps it’s time to employ high culture over pop culture to convey risk management advice.

To that end, I went to the opera over the holiday break.  Though not my favorite, Rossini’s The Barber of Seville is an enjoyable romp with a suitably ridiculous plot characteristic of opera buffa.  The rich Count Almaviva falls for the beautiful Rosina, ward of the lecherous Dr. Bartolo who has his own designs on Rosina, whom he keeps under lock and key.  Wanting to be sure Rosina doesn’t just fall for him because he’s rich, Almaviva poses as the poor student Lindoro.  Almaviva/Lindoro and the wily Figaro hatch a series of schemes aimed at foiling Dr. Bartolo and uniting the two lovers.  Operatic hilarity (as oxymoronic as that may sound) ensues.

A minor, but pivotal, character is the notary who is brought in in the final scene to officiate at the wedding.   Here’s where I could no longer suspend my disbelief.  Il Notaio made no effort to verify the identities of Almaviva or Rosina.  Operatic license is one thing, but this was taking things a bit too far.

Every jurisdiction has its own rules applicable to when and how a document can be properly notarized.  But a basic requirement is that the notary verify the identity of the party signing a document.   Not only notaries, but lawyers who direct them, can face severe consequences for failing to comply with notarial requirements.  These include criminal penalties, sanctions, and attorney discipline.  As one federal court recently observed when sanctioning a notary and his law firm employer for improperly notarizing an affidavit: “The administration of an oath by a notary public and the notary’s attestation to the same is not merely a quaint custom mindlessly carried over from ancient precedents.”

In other words, no shortcuts.  Notaries need to know the applicable laws and should not notarize a document contrary to those laws — even if asked.  And lawyers and other professionals who utilize notaries likewise need to ensure that appropriate arrangements are made to comply with the relevant notary laws and defer to notaries on the limits of what they can and cannot do.

Thankfully, Rossini’s notarial transgressions had little impact on the success of Il Barbiere.  Indeed, the most difficult part of writing this Tip has been finding the most compelling performance to attach.  After wading through so many wonderful clips featuring Callas, Domingo and others, the attached seems most appropriate.


Tune in next week when we discuss Puccini’s La Boheme and the risk management lessons derived from Mimi’s battle with tuberculosis.  It’s sure to be a crowd pleaser.


The Unger Games

“On November 13th, Felix Unger was asked to remove himself from his place of residence.  That request came from his wife.  Deep down, he knew she was right.  But he also knew that someday he would return to her.”

It seems only fitting to mark the anniversary of Felix’s eviction (and the recent passing of Murray the Cop) with some sage legal advice courtesy of everyone’s favorite neat freak/hypochondriac/opera buff.  After his divorce, Felix had his share of dalliances; he even tried to rekindle his relationship with his high school sweetheart (“There’s nobody cleaner than Mildred Fleener”).  But he always held out hope that his ex-wife Gloria would welcome him back.  And indeed — SPOILER ALERT (if you can have such a thing for a show that ended 40 years ago) — she did.  Before it became fashionable to have a final episode, the series concluded with the second wedding of Felix and Gloria.  For as much as Gloria was always in Felix’s heart, he recognized the need to formalize the renewed relationship with new vows.

Lawyers, take note.  After our work for a client has concluded, we, like Felix, hope that the client will someday return.  We keep in touch with them, maybe take them out to dinner.  We forward them marketing material and do formal pitches.  And when they return we are happy.

But make no mistake — like Felix and Gloria, lawyers must formalize this renewed relationship.   If two years (or even less) have passed since you last did work for a client, don’t assume you can just pick where you left off.  Why not?  Felix answers that as well:

There are lots of issues to be addressed first:  Has the entity’s ownership changed?  Has a colleague undertaken a matter adverse to the erstwhile client?  Does the client expect to pay two-year old rates?  For all these reasons (and more) you must go through the new matter intake process, including running a conflicts check and issuing a new engagement letter, before undertaking new work for a former client.  This way there’s no confusion about who our client is, what waivers (if any) are required, and what are the terms of the engagement.

As good a lesson as we learn from Felix (and the above clip notwithstanding), Felix’s forays into the practice of law were generally less than successful.  So here’s another tip — if you choose to hire a commercial photographer (portraits a specialty) as your lawyer, let it be on your head.


Wooly Bully

Matty told Hatty about a thing she saw/Had two big horns and a wooly jaw/Wooly bully, wooly bully.”

Truer words have never been spoken.  Certainly, when Sam the Sham and the Pharoah sang Wooly Bully, they could not have foreseen the impact the song would have on the legal profession.

Ok, perhaps I overstate things a bit.  But it’s not an overstatement that bullying has become a real problem for lawyers.  Sure, lawyers are obligated to zealously advocate for their clients. But there’s a fine line between zealous advocacy and bullying and other unprofessional conduct (there’s also a fine line between clever and stupid, as another rocker, Spinal Tap’s David St. Hubbins, is fond of saying, but that’s for another Tip).

In an extreme, but true, example, a New Mexico lawyer was disciplined for trying to run over a judge with his car.  Talk about unprofessional.  But closer to home, two recent decisions have highlighted the issue and made clear that crossing that line can have serious consequences:

*A lawyer was sanctioned — and subsequently lost his job — for unprofessional conduct in his divorce proceeding, where he was appearing pro se.  As the Court explained:  “Rather than act in a constructive manner, plaintiff has done everything in his power to undermine the legal process and use his law license as a tool to threaten, bully and intimidate.”

*A law firm was recently sanctioned more than $135,000 for conduct in a deposition.  The judge in that case wrote:  “The litigation of these actions has been a heated affair to be sure, but that does not excuse unprofessional conduct.”

Sam the Sham apparently took all this to heart as well.  After his musical career, he became a poet and a motivational speaker for prison inmates.  Maybe he’ll speak to the guy who tried to run over the judge.




I’m not into text messaging and I’m certainly not a fan of the whole group chat thing.  My kids, by contrast, survive on a steady diet of group chats.  They even have a “group” consisting of everyone on their school bus.  “Why not just talk to each other during the ride to school,” I ask?  The response: “How else can we talk about the bus driver?”  Fair enough.  Still, as the attached clip, demonstrates, signing on to a group can introduce a host of problems.

Lawyers who are asked to represent a group can face even greater challenges.  There are lots of different kinds of groups that can become clients:  a trade association, an LLC, a group of investors, etc.   Some groups are well organized and financed (e.g., a well-heeled industry lobbying group); others, like a subdivision association, are more loosely put together and rely on the finances of its members.

Either way, unique challenges arise when representing a group.  These should be raised with the client at the outset and addressed in a detailed engagement letter.  For example:

Identify the Client: While lawyers know that the representation of a group isn’t the representation of its members, that may not be apparent to all of the members of the group.  It’s important to make clear up front precisely who is the client so you don’t inadvertently undertake obligations to specific members.

Identify the Decision Maker:  What happens when group members disagree on a course of action?  From whom do you take instruction?  Clarify at the outset who has the decision-making power.

Be Clear as To Payment Obligations:  For an independently financed group, this may not be a problem.  But in the absence of comfort with the existence of the group as an entity and with its funding and payment procedures (replenishing retainers, etc.), each member needs to  sign the engagement letter, with a clear understanding of responsibility for fees.  Otherwise, as each group member slinks off to the side, leaves the group, etc., the lawyer is left holding the bag.  And, if a third party is paying for the fees of a client, there may be disclosures you should make.

Address Conflicts:  Even where there is no conflict in representing the group, you want to be careful not to step into a conflict relating to the members, where you may have unrelated matters for or against them.  You also want to be careful not to undertake matters for an individual member that might conflict you from representing the group.  Where the group itself is not viable over time, you may want to preserve the ability to represent one or more individual members (usually, the one that introduced you to the group) adverse to another in matters not related to the group.  In all events, these issues should be spelled out.

Following these steps will ensure a good attorney/client relationship and help you avoid a different kind of group:  group therapy.



You’re busy working at your desk, and the receptionist calls.  “There are a pair of FBI agents in the lobby, and they would like to talk to you about a matter you worked on a few years ago.  They know they don’t have an appointment, but they promise it won’t take long and said it’s really important.  Can you come down and see them?”  Or maybe they call you directly.  Or show up at your home, while you’re having dinner.

Many of us have the entirely understandable urge to be cooperative citizens.  But hold on — you also have obligations to your clients and to the firm.   Have you thought through privilege issues?  Do you have a duty to notify your current (or former) client of the contact?  What do you do if the officers ask you to keep their inquiry confidential?  Will you have to testify in a grand jury?  What if there are national security overtones?  What if you say something, and later think that wasn’t quite right?

This is a lot to process on the spur of the moment.  And believe it or not, sometimes the law enforcement officials wouldn’t be too disappointed to catch you off guard — there are plenty of stories of folks who helpfully answered a law enforcement officer’s questions without counsel, then later found themselves indicted on felony charges.

So, what do you do?  Try this:  “Hi.  Thanks for coming.  While I appreciate you’ve come all this way, our firm has a procedure that I need to follow.  Can I have your card?  I or someone else will get back to you promptly.”   

Law enforcement agents (whether from the FBI, another federal agency or a state or local agency) can be persistent.  Stick to your position and just repeat the above without adding to it.  If you have to repeat it 5 or even 10 times before they leave, then so be it. Be polite but firm.  Then call a lawyer.

Not persuaded?  Click on the attached to see what happened to the last guy who met with agents without counsel present.



Ain’t It Over?

As we celebrate the life and mourn the loss of Yogi Berra, there probably isn’t a newspaper the country that hasn’t quoted (if not headlined) that most famous of Yogi-isms: “It Ain’t Over ‘Til It’s Over.”   For me, the quote evokes memories of 1981, when I painted it on a bedsheet and went with a friend to Banner Day at the old Shea Stadium to watch the then hapless Mets (that was then, this is now).  Ok, we weren’t particularly original; but it got us onto the field of a major league ballpark, where we proudly marched our banner between games of a double-header.

As I reflect on Yogi’s words today, I find them particularly thought provoking from a risk management perspective.  For when is an attorney-client relationship truly over?  Yogi’s wisdom underscores the benefits to clearly documenting that the representation of a client — even on just a specific matter — is in fact “over”:

*Defining expectations.  It may not always be obvious when a particular matter has concluded.  A disengagement letter prevents a client from claiming they believed that you continued to represent them and thus relied on you to advise them on a matter.

*Avoiding misunderstandings.  Even after a deal closes, there may be follow-up business tasks that the client needs to do.  If you are undertaking to advise the client on those, great.  If not, a disengagement letter makes clear that your role in the deal has concluded.

*Preventing conflicts.  Under the conflict rules, lawyers are usually precluded (absent consent) from acting adversely to a current client, even if the matter is unrelated to your representation.  In contrast, you generally can act adversely to a former client, unless the matter is substantially related to your prior work.

As always, Yogi spoke the truth.  If he didn’t, he wouldn’t say that he did.

Coming up next week:  We’ll study the ways in which another Yogi-ism — “If you come to a fork in the road, take it” — can be utilized to resolve conflicts of interests under Model Rule 1.7.  For now, enjoy the attached musical tribute.



The Smoot-Hawley (or Hawley-Smoot) Tariff Act of 1930 seemed like a good idea.  Raise tariffs, generate revenue for the federal government, and encourage domestic business.  But that’s not quite the way it played out — Our foreign trading partners retaliated, and the resulting trade wars helped lead the country into the Great Depression.

It didn’t have to be that way.  There were plenty of warning signs that the Act would fail:  hundreds of respected economists publicly pointed out the flaws; boycotts preceded the passage of the Act; and prominent business leaders such as Henry Ford and Abe Froman tried desperately to dissuade President Hoover from signing the bill.  Hoover signed it anyway.

As I look down on the Von Steuben Day parade from Chicago’s Willis Tower, it occurs to me that lawyers could learn a lot from Hoover’s mistake.  We often think our clients are righteous dudes and it’s easy to overlook warning signs that we might be better off (or even required) to withdraw from a representation.  While it is usually a course of last resort, there are some telltale signs that a prompt withdrawal might be the best, or even only, course:

*The client brags about his 1961 Ferrari GT250, yet the A/R is growing and, despite promises to pay, nothing has come in.

*The client ignores your advice and insists on pursuing a course that you believe is unwise.

*The client is repeatedly complaining about the bills, your work, and everything else.

*Joint clients disagree on a course of action or are otherwise at each other’s throats.

*The client is engaging in activity that you think may be questionable.

If you come across any of these warning signs, don’t just wait for things to get better; if you get too far down the road, it’s hard to dial back the odometer.  Give some serious thought to whether withdrawal is appropriate and, if so, how best to accomplish it.  While no one wants to let a client go, in the long run, you may say danke schoen that you did.  After all, life moves pretty fast. If you don’t stop and look around once in a while, you could miss it.

Need more convincing?  Check out this stirring analysis of the Smoot-Hawley Tariff Act:   https://www.youtube.com/watch?feature=player_detailpage&v=dxPVyieptwA

*Trivia — How many references to FBDO are there in this Tip?  And if you have to ask what FBDO stands for, you lose.