Hot Potato Conflicts

I recently taught about successive conflicts in my ethics class, and there could be no better timing than the Fish & Richardson case to explain the hot potato scenario.  The “hot potato doctrine” means that firms are generally prohibited from dropping smaller clients (like hot potatoes) in order to pick up more lucrative clients.

Apparently, Fish & Richardson represented, until recently, headset maker Aliph in its regulatory work out of Fish’s D.C. office.  Aliph is now suing to have Fish & Richardson disqualified from representing a direct competitor against it in a patent case.  As the Recorder explained:

Aliph Inc. moved to disqualify Fish from representing Bluetooth rival Plantronics in the patent case two weeks ago, arguing that the firm shouldn’t be allowed to sue its own client or get out of the mess by suddenly disowning Aliph at 8:30 p.m. the night before . . . .

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Dollars and Sense

I was scanning the Legal Writing Prof Blog this afternoon, and I noticed a post stating that, in an effort to save money, one large law firm is now requiring its attorneys to use Loislaw, rather than Lexis or Westlaw, for some of their research.  Evidently, the firm has imposed a three-part policy:

  • All non-billable legal research involving case law, statutes, or regulations at both the state and federal level should first be performed using Loislaw.
  • Loislaw should also be used for billable research where appropriate, resulting in a much lower cost to the client.
  • If additional research is required on Lexis or Westlaw, that research must be billed to a client/matter.

This post raised two issues for me.  First, it made me think about what sources I should be including in my first-year courses.

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Client Fraud and the Lawyer

 

As the disaster in the financial markets continues to unfold, greed and avarice – the usual suspects – are being overshadowed by pervasive fraud as a prime mover.  We have, of course, the infamous Bernie Madoff and now the “mini-Madoffs” upon whom we can heap large helpings of blame, but deceit, misrepresentations, and fraud seemingly resonate throughout the markets, as illustrated by the subprime scandal, the mortgage mess, and the flood of worthless consumer debt.  And what was the role of lawyers in all this?  Financial transactions of this sort inevitably involve lawyers at some stage.  Investigations and lawsuits may soon give us a clearer picture of the role lawyers may have played in exacerbating the nightmare, but the question for today is whether lawyers could have, or should have, acted to prevent any of this.  And my focus is not Sarbanes-Oxley or securities regulations, but on the fundamentals of lawyers’ professional responsibility.

Lawyers are not permitted to “assist” or “further” crimes or frauds committed by their clients.  To do so – provided anyone finds out – eviscerates the venerable lawyer-client privilege and exposes both lawyer and client to civil and criminal remedies. This is comfortably familiar and uncontroversial.  But what of the lawyer who is aware of a client’s fraud but who arguably has done nothing to assist or further it?  Assume further that the fraud is on-going and not a past act.  What is the lawyer’s duty or professional responsibility, especially considering that lawyers are enjoined not to disclose client confidences or privileged communications without client consent (and the reality is that few clients will approve of their lawyer’s whistle-blowing)?

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