July 12th, 2010

Drivers, Renters and Conflicts of Interest (Graves Amendment Raises Lawyer Conflict Issues)

Five years ago, a conservative Congress and President expanded federal power by enacting the Graves Amendment. This federal legislation reached into state laws and granted immunity to car rental and leasing companies by overriding the laws of states that held the vehicle owners vicariously liable for the acts of their drivers.

But legislation has persisted against the rental car companies anyway, and conflicts of interest have been exposed as a result. Previously, after an accident involving a rental vehicle, New York attorneys would simply plead in the Complaint that the owners were vicariously liable under Vehicle and Traffic Law § 388. But with that law knocked out by the Graves Amendment (see: Car Rental Immunity Law Held Unconstitutional By Federal Judge (Updated – Reversed)) lawyers have been arguing that the owners were negligent in the way they entrusted the cars to the drivers or in the maintenance of the vehicle. If I were to rent a car with bad brakes from Avis or Hertz, for instance, and then rear-ended someone and was sued, the rental company might well be liable.

But when the defendants answer these suits, all too often there is just one law firm that represents both the driver and the rental company. This, as we say in legalese, is a big, fat no-no.

On June 25th, Supreme Court (New York’s trial level court) Justice Jack Battaglia took on the subject, without the plaintiff even raising the issue by motion. In Vinokur v. Raghunandan Justice Battaglia disqualified the firm of Shapiro, Beilly, Rosenberg & Aronowitz for trying to represent both owner and driver.

The issue arose when the leasing company sought summary judgment, based on the immunity that Congress gave them with the Graves Amendment. Not so fast, wrote Justice Battaglia, pointing out that:

An attorney who undertakes the joint representation of two parties in a lawsuit should not continue as counsel for either one after an actual conflict of interest has arisen because continued representation for either or both parties would result in a violation of the ethical rules requiring an attorney to preserve a client’s confidences or the rule requiring an attorney to represent a client zealously.

And when does this issue arise? Not when the issue is raised by the opposing party or the court, but rather, at the time the reasonable attorney should have been aware of it. According to Justice Battaglia, “in this case a reasonable lawyer should have been aware of the conflict of interest upon receipt of Plaintiff’s Complaint.”

The reason for the conflict should be clear, though it apparently wasn’t to the firms that have attempted the dual representation: If the leasing company is dismissed from the suit, the driver is left holding the bag for the entire verdict. The leasing company has an interest here in saying the car was in perfect working order, while the driver may be puzzling on why, for example, the car didn’t stop as quickly as s/he thought it should when the brakes were hit. Justice Battaglia wrote:

“…a law firm representing both the leasing company and the driver has an inherent conflict of interest where the law firm seeks to move for dismissal of the complaint only as against the leasing company since the driver would be left bearing full liability.”

And it doesn’t matter when the plaintiff raises the issue, or even if the plaintiff raises the issue. Because the driver may have a cross-claim against the leasing company that is completely independent of the plaintiff’s claim against the driver. How does the driver tell his lawyer that the brakes on the car rental didn’t work when the same lawyer represents the car company? How does the lawyers zealously represent the driver by doing adversarial discovery of the rental company’s maintenance records? Justice Battaglia:

In addition, even though a plaintiff may in some circumstances not assert any other basis of liability against a leasing company other than vicarious liability pursuant to Vehicle and Traffic Law § 388, a driver of the leased vehicle may assert, if appropriate, cross-claims against the leasing company for, among other things, having provided the driver with a vehicle with a mechanical defect.

The law firm could have been saved from this, perhaps, if they had the written consent of both of their clients. The court noted:

…the Law Firm may still represent both clients if conditions set forth in Rule 1.7(b) of the Rules of Professional Conduct are met. Rule 1.7(b) provides that, “Notwithstanding the existence of a concurrent conflict of interest under paragraph (a), a lawyer may represent a client if:

(1) the lawyer reasonably believes that the lawyer will be able to provide competent and diligent representation to each affected client;

(2) the representation is not prohibited by law;

(3) the representation does not involve the assertion of a claim by one client against another client represented by the lawyer in the same litigation or other proceeding before a tribunal; and

(4) each affected client gives informed consent, confirmed in writing.” (Rules of Professional Conduct [22 NYCRR 1200.0] Rule 1.7 [b].)

But, since this written consent was not obtained, the firm was disqualified from representing the driver as well as the leasing company. The court didn’t rule on whether the firm could continue to represent the leasing company, but it seems to me that a motion by the defendant-driver’s new counsel to disqualify his former defense firm could easily be made.

On a final note, the encroachment by the federal government on state laws is currently before Congress in the form of the Braley Amendment to undo the damage caused by the appropriation of power with the Graves Amendment. Ironically, people who claim to generally support state power over federal power are opposed, which tells you how political philosophy often takes a back seat to protecting the interests of Big Business from some on the right. Numerous consumer groups support the restoration or rights that had been stripped away by the Graves Amendment. The car rental and leasing companies, of course, want the continued immunity.

May 11th, 2010

Will Staten Island Ferry Crash Test NY Anti-Solicitation Rules?

A year ago I watched, and blogged, as law firms used the web to solicit victims of the crash of Continental Flight 347 in Buffalo, in apparent disregard of New York’s 30-day anti-solicitation rules. With the crash of the Staten Island Ferry this weekend, it appears to be happening again, with lawyer ads popping up on Google when “Staten Island Ferry Crash” is plugged into the search engine.

First, the definition of solicitation, from Rule 7.3 of the New York Rules of Professional Conduct:

For purposes of this Rule, “solicitation” means any advertisement initiated by or on behalf of a lawyer or law firm that is directed to, or targeted at, a specific recipient or group of recipients, or their family members or legal representatives, the primary purpose of which is the retention of the lawyer or law firm, and a significant motive for which is pecuniary gain. It does not include a proposal or other writing prepared and delivered in response to a specific request of a prospective client.

And what is the time frame for the anti-solicitation rule?

No solicitation relating to a specific incident involving potential claims for personal injury or wrongful death shall be disseminated before the 30th day after the date of the incident, unless a filing must be made within 30 days of the incident as a legal prerequisite to the particular claim, in which case no unsolicited communication shall be made before the 15th day after the date of the incident.

So let’s see what do you get when you Google “Staten Island Ferry Crash”: The first name you get in the Google ads is Kreindler & Kreindler, a pretty big firm in this town. This is the pdf of the search terms:Staten Island Ferry Crash. The keywords that they gave to Google for that to come up, of course, are known only the firm and Google. The magic words concerning the accident don’t appear in the ad. But when you add “lawyer” to the end of that search phrase, you see that Kreindler now has “Boat Crash Law Firm” in its ad heading, indicating that the ad was likely created directly for this (though, perhaps, they could have predicted the crash before it happened and had that as a long-standing ad).

You can contrast the Kreinder ad with this: If you add the word attorney to the search box, you find the Siskind Law Firm with this blatant Google ad (pdf:StatenIslandFerryCrashAttorney):

Staten Island Ferry Accident Lawyer
Injured on the Ferry? Call Us Today

Thus, with these two examples, you can see how electronic solicitation has a number of shades of gray. Some stuff may be hidden, and other stuff not. This is not meant as an exhaustive review of all the firms that may be soliciting, but of two contrasting examples of how firms may walk up to the line, go over the line, or leave it unclear as to whether they did or didn’t.

Ironically, it was the Staten Island Ferry crash of 2003 that killed 11 people, with the same boat, that was the impetus for the 30-day anti-solicitation new rule. Even before the carnage had cleared the site on the day of the accident, lawyers had rushed to the Staten Island Advance to place ads in the paper for the next day. It was, to say the least, unseemly.

Now there is one glaring problem with me writing about this subject: How do I write about it without others accusing me of using my blog to do what the others are doing with Google ads?

And yet, this stuff is right in my wheelhouse. The rules were directed toward my part of the bar. If I don’t write about it, when I have a blog of my kind, then who will? The answer, likely, is that no one will, and to me that is unacceptable.

The first time I did an analysis of the rule in the face of an actual accident, as opposed to writing about it in theory, was after the Hudson River splash landing in which physical injuries were few.

My objective here is to pull the curtain back on what conduct that continues despite the rule (though I suspect to a much less degree). Of course, this is only what I see in public, and doesn’t address the fact that some may get letters from lawyers, as had happened after the plane crash.

I’ve been tackling these rules since the time that they were created, so if you want to see my prior thoughts on it, even before last year’s plane crash in Buffalo, you can read many of the links I have at the end of this post: Do Attorney Anti-Solicitation Rules Work? (A Brief Analysis of Three Disasters). The “Attorney Ethics” tab will take you to many of those, and many more.

And in the ever-shifting world of gray when it comes to marketing and solicitation, what would happen to the “blog” that reports the accident and gives no commentary or analysis? And has “call me” call to action at the bottom? Or just a smidgen of commentary or analysis with the call to action at the bottom? The answer, of course, is that nobody knows since we are on ground that has never been plowed before.

April 5th, 2010

Is an April Fool’s Joke an Ethical Violation?

Just when I thought I’d put the April Fool’s fun behind me — and started to plot next year’s prank — comes this little nugget:

April Fool’s Day Isn’t For Everybody: Once again, Ethics Alarms will declare that it is irresponsible for anyone not pictured on his or her blog wearing a clown nose to put out false facts “just for fun” … yes, even on April 1.

Who the heck is this blogger and why is he such a killjoy? And more importantly, does his argument have even a grain of merit?

The blog is Ethics Alarms and appears to be the work of Jack Marshall, who claims to run an ethics consulting firm in Alexandria, VA and mixes seminars with music and theatre. Marshall, it seems, had me in mind for his posting. The giveaway was that he used my name. Let’s explore the post further:

Eric Turkewitz, a New York lawyer, has an astounding post on his blog ridiculing the New York Times ( as well as some blogs and websites) for believing and reporting his fake announcement that he had been appointed the official White House law blogger.

Well, I’m flattered he thought it was astounding. But there was no ridicule for blogs and websites (plural); only for the New York Times. And the ridicule was earned because the paper failed to do a simple fact check of its story. They didn’t even bother to call me until hours after it was posted, when they realized they’d been had. While the WSJ reporter was initially taken in by the joke, he didn’t write about the hoax until after he’d phoned both me and the White House. He did his job.

But let’s cut to the ethics part because, while I understand that some don’t like April Fool’s jokes, the issue of ethics is more important than the issue of whether such pranks are your cup of tea:

…lawyers like Turkewitz are forbidden by their ethics rules (Rule 8.4, to be exact) from engaging in intentional misrepresentation or dishonesty, and there is no April Fool’s Day exception. The Times and other trusted Turkewitz to behave professionally and ethically, and he did not; and he is criticizing them? Web hoaxes are unethical, always, every day of the week, and web hoaxes perpetrated by lawyers are professional misconduct,

Rule 8.4? OK, let’s run that one down. Rule 8.4(c) states that “A lawyer or lawfirm shall not…engage in conduct involving dishonesty, fraud, deceit or misrepresentation.”

Marshall claims that there is no exception for humor. I disagree. More importantly, I believe that the courts will stand behind me. And that is based on the recent legal battle over New York’s 2007 amendments to our attorney ethics rules in Alexander v Cahill. As it happens, I’ve written plenty of posts about this ongoing legal struggle over what can, and cannot be used in legal advertising.

And one of the things that the court had to decide was whether deliberate misrepresentations by a lawfirm were ethical when done with humor to make a point.

In Alexander v. Cahill, the State of New York took aim at the ads of Alexander & Catalano, as they claimed, among other things:

Lawyers being retained by aliens;
Lawyers having the ability to leap tall buildings in a single bound;
Lawyers stomping around downtown Syracuse, Godzilla-style.

The State Attorney General claimed the ads were unethical because they were literally false. They actually made this argument (not on April 1st) and you can read the State’s brief if you want. (My tax dollars at work, thank you very much.)

But the ads were upheld by the District Court when the rules were found unconstitutional, and more importantly, upheld again by the Second Circuit when it likewise found the rules unconstitutional. It was all about First Amendment protections of free speech.

The Second Circuit wrote that the use of humor was not only OK, even if a false portrayal took place, but that it might actually be beneficial in some circumstances:

Moreover, the sorts of gimmicks that this rule appears designed to reach — such as Alexander & Catalano’s wisps of smoke, blue electrical currents, and special effects — do not actually seem likely to mislead. It is true that Alexander and his partner are not giants towering above local buildings; they cannot run to a client’s house so quickly that they appear as blurs; and they do not actually provide legal assistance to space aliens. But given the prevalence of these and other kinds of special effects in advertising and entertainment, we cannot seriously believe — purely as a matter of “common sense” — that ordinary individuals are likely to be misled into thinking that these advertisements depict true characteristics. Indeed, some of these gimmicks, while seemingly irrelevant, may actually serve “important communicative functions: [they] attract[] the attention of the audience to the advertiser’s message, and [they] may also serve to impart information directly.”

So now we turn to blogs. Would a court rule that blogs such as this one are an advertisement to gain clients, or non-commercial speech? In our analysis, it wouldn’t matter. Though restrictions on speech are greater for commercial speech than non-commercial, the use of humor (even with false depictions) has already been upheld in the stricter (commercial) setting. An April Fool’s prank that can be immediately debunked with a single phone call or email is not one that could hold up for more than a day and not one that could be taken seriously.

Moving one step further along, though it really isn’t necessary, the April Fool’s hoax has a role in social commentary in that it was designed to root out people that act on a serious news story without fact checking. I wasn’t expecting The Times to fall for it, of course, but I did think that others would and that there was a good point to be made about people rushing to fall for stories, even on a day when they should be on the lookout for such things.

Thus, Rule 8.4 cannot be read in a vacuum. The claim by Marshall that “there is no April Fool’s Day exception” would seem to be pretty clearly wrong. There is an exception, and it’s called the First Amendment.

So, leaving aside the easy responses one might have to those that would criticize an April Fool’s prank such as the one I pulled with my co-conspirators, it would seem that, on the law, the First Amendment rules the day.

And the rules also wouldn’t apply here because the hoax wasn’t pulled in conjunction with the representation of any client. Thus, if you make the April Fool’s joke an ethical violation, then so too are misrepresentations surrounding surprise parties, Santa Claus and The Tooth Fairy.

Two final notes: First, the jester in the photo is me, circa 1995. Sorry I couldn’t find a photo with a clown nose. Second, same time next year?

(No clients were hurt in the perpetration of this hoax.)

March 12th, 2010

2nd Circuit Rejects Most of New York’s Attorney Advertising Rules

The case concerning the constitutionality of New York’s attorney advertising rules was argued over a year ago. And Sonia Sotomayor was on the the panel. Now she has gone up and the decision has come down by the two remaining judges of the panel regarding the rules that went into effect on February 1, 2007.

And the 2nd Circuit has upheld the lower court decision in holding that most of the content-based rules violate the First Amendment. A separate section, regarding a 30-day anti-solicitation rule, was upheld both in the court below as well as in the 2nd Circuit.

The decision is here: /Alexander-v-Cahill-2ndCirc.pdf. The case was brought by Public Citizen on behalf of upstate firm Alexander & Catalano. (Addendum: NY Lawyer Rules Are Unconstitutional)

The new rules had barred, among other things, testimonials from clients relating to pending matters, portrayals of judges or fictitious law firms, attention-getting techniques unrelated to attorney competence, and trade names or nicknames that imply an ability to get results. I had previously criticized some of those rules on First Amendment grounds.

The lower court had dumped those rules. The only part of the lower court’s decision that changes is the prohibition on portrayals of fictitious law firms, and that is just a minor modification.

These were the content based restrictions:

An advertisement shall not:

(1) include an endorsement of, or testimonial about, a lawyer or law firm from a client with respect to a matter that is still pending . . .
(3) include the portrayal of a judge, the portrayal of a fictitious law firm, the use of a fictitious name to refer to lawyers not associated together in a law firm, or otherwise imply that lawyers are associated in a law firm if that is not the case . . .
(5) rely on techniques to obtain attention that demonstrate a clear and intentional lack of relevance to the selection of counsel, including the portrayal of lawyers exhibiting characteristics clearly unrelated to legal competence . . .
(7) utilize a nickname, moniker, motto or trade name that implies an ability to obtain results in a matter.

Those rules, however, can result in some bizarre results if they were implemented. For instance, an attorney’s photograph on a web site clearly has no relevance to the legal competence of the individual. So if it has no bearing on competence, is it prohibited? (See: Is My Family Photograph An Ethical Violation in New York? and New York’s New Attorney Ad Rules and First Amendment Issues)

The catch-all prohibitions on false and misleading advertising remain in place.

Moving to the 30-day rule, of particular interest is that part of the decision regarding targeted Internet ads. Even before the plane crash in Buffalo last year, I had discussed the myriad ways that savvy marketers might try to circumvent the 30-day rules by targeting the victims with Internet ads and websites, instead of the more traditional types of ambulance chasing, in a post titled Solicitation 2.0. I followed up after the Buffalo crash showing how Google ads and websites were being used (this post has a round-up of numerous posts I did on the subject)

Anecdotal evidence that I collected showed that the 30-day rule was effective in curbing chasing.

So from the opinion comes this:

[W]e conclude that ads targeting certain accident victims that are sent by television, radio, newspapers, or the Internet are more similar to direct-mail solicitations, which can properly be prohibited within a limited time frame, than to “an untargeted letter mailed to society at large,” which “involves no willful or knowing affront to or invasion of the tranquility of bereaved or injured individuals and simply does not cause the same kind of reputational harm to the profession” as direct mail solicitations.
…

New York’s moratorium permits attorneys to advertise to the general public their expertise with personal injury or wrongful death claims. It thereby fosters reaching the accident victims, so long as these victims are not specifically targeted.

It’s a big victory for the First Amendment. But with that will also come more lawyer tasteless ads that embarrass the profession.

hat tip: New York Law Journal

Updated: More coming in:
Lawyer Free Speech Given a Second Chance (Greenfield @ Simple Justice):

As much as I believe that flagrant marketing is distasteful and unprofessional, bad for the profession and part of our race for the bottom, that doesn’t mean that I support legal restrictions or prohibitions. The former is bad. The latter is worse.

New York Advertising Rules Held Unconstitutional (Sorensen @ The Ethical Quandary):

So let’s recap: William Shatner in a judge’s robe? Allowed. Fifty foot lawyers terrorizing Midtown Manhattan? Allowed.

Jim “The Hammer” Shapiro apologizing that he cannot “rip out the hearts of those of have hurt you”? Ok that last one was a trick — already allowed: http://www.youtube.com/watch?v=Q5hn8bhEpMY — but good idea? Maybe that is the better question.

January 25th, 2010

Detroit Lawyer Fined For Chasing Buffalo Air Crash Victims

Detroit attorney Carl Collins III has paid a $5,000 fine for chasing victims in the wake of the February 2009 crash of Continental/Colgan Flight 3407 near Buffalo, according to The Detroit News. According to the US Attorney’s Office he sent letters out to victims’ families 12 days after the crash, in violation of federal law that bans solicitations within 45 days of air disasters. This is the second such settlement regarding the crash, with New Jersey attorney Richard Weiner having likewise been fined $5,000 for chasing clients with letters.

Both of these actions came from federal authorities. New York has its own 30-day anti-solicitation rule (for all mass disasters), which applies to out-of-state attorneys as well. New York has thus far been silent on the issue of whether anyone has been pursued for violations.

The chasing was a big topic for me early in the year, as I tracked a string of law firms that started to electronically chase clients by running Google Adwords, before pulling the ads after they were exposed. You can read those posts at this tag: Buffalo Air Crash. This air crash was the first true test of New York’s 30-day rule that went into effect in February 2007. The 30-day rule was not affected when other parts of the new rules were tossed out by a federal judge in July 2007.

Some of those ads had been run through various marketers, with the effect that lawyers had outsourced their ethics along with their marketing. I had discussed the concept of such ethics laundering to beat New York’s 30-day anti-solicitation rule a year ago.

As of today, I am not aware of any attorney having yet been sanctioned for such e-chasing (which I covered two years ago in Attorney Solicitation 2.0 – Is It Ethical?) but that day is surely coming.

My thanks to Buffalo attorney Roy Mura, of Coverage Counsel fame, for passing on the Detroit News story.