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.

Att. to Time Entrys

My eighth-grader just showed me his homework.  His assignment is to write a paper describing what he did over Spring break.  Here is what he wrote:

Day 1 – Baseball.  TV. Spoke with people. More TV.
Day 2 – Baseball.  Textd friends.  Textd Sam.  Dinner.
Day 3 – Baeball. Did stuff.
Day 4 – Baseball.  More stuff.  Also did PLSTN.
Day 5 – Ball and Watched TV
Day 6 – Baseball, rd book a little
Day 7 – Dd more of stuff I did on Day 4. Oh, and baseball too.

He thinks his teacher will be very impressed.  I’m not so sure.

See where I’m going with this?  Time entries should include narratives that convey to the client the value that you are contributing each day.  Descriptions should explain the services provided, how the assignment relates to the engagement, and why the time of a professional at your level was needed.

Proofread for accuracy, punctuation, and spelling.  Each time entry should be treated with the care appropriate to any other important communication with a client.

Back to my son.  Not surprisingly, his paper was not well received and he was made to stay after school and complete another task.  A good lesson for us all.

Bart Simpson

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.


5000% More

MSThere is one thing that unites Democratic and Republic presidential candidates these days:  a dislike of Martin Shkreli.

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?

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.