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Attorney E-Newsletter

October 2009

No White Flag on “Red Flags”: ABA Challenges FTC on Identity Theft Rules

The American Bar Association has filed suit in the United States District Court for the District of Columbia to block the Federal Trade Commission (FTC) from implementing its “Red Flags Rule,” 72 Fed. Reg. 63,718 (Nov. 9, 2007). The complaint is posted online here.

The “Red Flags Rule” was adopted by the FTC as part of its implementation of the Fair and Accurate Credit Transactions Act of 2003 (“FACTA”), 15 U.S.C. §§ 1681-1681x (Supp. I 2007), which was intended to improve the accuracy of credit transactions and to curb identity theft. The regulations will require financial institutions and other businesses identified as “creditors” to adopt procedures to identify and respond to warning signs, or “red flags,” of possible identity theft.

In April, the FTC concluded that the definition of “creditor” encompasses all businesses that regularly permit deferred payments for goods or services. The FTC further determined that this definition applies to lawyers who accept payment for fees for work performed over time.

The ABA contends that: Congress never intended the Act to apply to lawyers; the practice of billing for fees as they are incurred is not an extension of credit; there is no evidence of cases of identity theft arising from the fee practices of lawyers; and the FTC’s position is “arbitrary, capricious and contrary to law." The ABA estimates that implementation of the proposed rule could cost law firms as much as $3.8 billion in billable time.

After filing of the suit, the FTC delayed implementation of the rules until November 1, 2009.

The case has been docketed to 1:09-cv-01636-RBW in the United States District Court for the District of Columbia. On September 23, 2009, the ABA filed a Motion for Partial Summary Judgment, and the FTC filed a Memorandum in Opposition on October 13, 2009. The American Association for Justice has filed an amicus brief in support of the ABA position.

Putting the “Bar” in Disbarred

Lawyers are often known for their persistence, but when is it time for a lawyer to stop practicing law?

When you’re not a lawyer anymore, it’s probably time.

Nonetheless, the Disciplinary Board has had to take extraordinary steps to stop Allen Feingold, a former Philadelphia attorney who was disbarred in 2008, from practicing law. Feingold was disbarred after several disciplinary cases, five years of suspensions, and numerous complaints, including one case in which the Disciplinary Board found that he physically attacked a 74-year-old judge pro tem after an adverse ruling, and testified, “I figured hell, if I’m going to lose my license, at least let me get my one punch in.”

The Disciplinary Board determined that after his disbarment, Feingold continued to pursue civil claims on behalf of himself and former clients as “co-plaintiffs;” failed to advise clients of his inability to practice; and, created and used a letterhead bearing the name of a licensed attorney without the latter’s knowledge or consent.

In August, the Disciplinary Board filed a civil complaint in the Court of Common Pleas for Philadelphia County, asking President Judge Pamela Pryor Dembe to enjoin Feingold from practicing law. On September 2, 2009, Judge Dembe issued an order prohibiting Feingold from: practicing law; using any kind of legal stationery or cards that identify him as a lawyer or from using the legal stationery of another attorney; and, even from “entering any courtroom, tribunal, arbitration hearing, deposition and/or to function in any capacity in a legal proceeding other than as a witness, party or spectator." Feingold was further ordered to hand over the keys to his office in Philadelphia, and the Office of Disciplinary Counsel was ordered to change the locks. In a subsequent order, Dembe appointed former state Supreme Court Justice Russell M. Nigro as conservator to handle the proper notification and transition of Feingold's current and former clients.

Full story here.

PA Bar Committee Examines Metadata (Issue)

The Committee on Legal Ethics and Professional Responsibility has addressed the issue of lawyer’s responsibilities regarding metadata in Formal Opinion 2009-100, “Ethical Obligations on the Transmission and Receipt of Metadata.”

Metadata, as regular readers of this newsletter know, is information hidden in the files of electronic documents by word processing and other computer programs. If not properly filtered out of electronically transmitted documents, metadata can reveal embarrassing and potentially harmful information, such as what changes have been made in documents, who has edited or composed them, dates when the documents were prepared, and information which has been deleted from the documents. Major law firms have suffered serious prejudice when confidential information was found by opponents in electronically transmitted or disclosed documents.

Formal Opinion 2009-100 addresses the responsibilities of both sending and receiving lawyers.

The opinion puts particular emphasis on the duties of the sending lawyer to take reasonably diligent steps to prevent the transmission of potentially confidential information. This duty is grounded in Rules 1.1 (Competence) and 1.6 (Confidentiality) of the Rules of Professional Conduct. Comment 4 to Rule 1.6 states, “This prohibition also applies to disclosures by a lawyer that do not in themselves reveal protected information but could reasonably lead to the discovery of such information by a third person.” The Committee states:

This Comment is particularly pertinent to metadata, which may contain source material, work product, references or other content that may reveal protected information, thereby underscoring the obligation of the lawyer to take all available steps to avoid the transmittal of metadata and to ensure that the lawyer is promptly advised of the receipt of any inadvertently transmitted metadata.

The opinion also addresses the responsibilities of lawyers who receive documents with metadata. The Committee’s examination starts with Rule 4.4(b):

(b) A lawyer who receives a document relating to the representation of the lawyer's client and knows or reasonably should know that the document was inadvertently sent shall promptly notify the sender.

The Committee notes that the receiving lawyer must first determine whether the metadata received was included inadvertently, which might involve an assessment of the potential effects of disclosure of the metadata on the case. The Committee considers other aspects of the question, such as whether client consultation about the use of the metadata is required, and examines several opinions from other states in which the use of such metadata was considered, including a controversial New York opinion that the use of software to examine received documents for metadata is ethically improper. After a review of these issues and opinions, the Committee reaches the following conclusions as to the receiving lawyer’s obligations:

If the receiving lawyer concludes that the disclosure of metadata was inadvertent, the lawyer must promptly notify the sender of the receipt of the materials containing metadata; and,

The receiving lawyer:

(a) must then determine whether he or she may use the data received as a matter of substantive law;

(b) must consider the potential effect on the client’s matter should the lawyer do so; and,

(c) should advise and consult with the client about the appropriate course of action under the circumstances.

As always, this brief examination cannot do justice to the Committee’s careful research and extensive analysis, and all interested in the subject should review the original Formal Opinion.

Picky, Picky: Courts Hammer Lawyers

It’s been a bad month for lawyers who tick off courts.

The highest profile case of a court going off on a lawyer is that of controversial California lawyer-dentist-realtor[1] Orly Taitz, in a lawsuit which sought to block the deployment of her client to Iraq on the basis of President Obama’s alleged ineligibility for the presidency. U.S. District Court Judge Clay Land[2] was so annoyed by Taitz’s conduct of the case that he issued a preliminary order requiring Taitz to show cause why she should not be fined $10,000. Undaunted, Taitz responded by filing a motion to disqualify the judge, to which she attached an affidavit from one who claimed to have seen Attorney General Eric Holder in a coffee shop across the street from the courthouse, and implied that improper influence was being brought on Judge Land. Alas, Holder’s published schedule showed he was in California on the day in question. In a 43-page order filed October 13, Judge Land doubled the fine to $20,000, and referred a copy of the order to the California Bar. We suspect we have not heard the last of this.

Taitz may have incurred the highest price tag of the month for annoying a court, but a Missouri lawyer faces more severe consequences – a jail term of 120 days. Attorney Carl Smith was convicted by a jury of criminal contempt after filing a pleading in which he alleged that events in the case pointed to "personal interest, bias and purported criminal conduct" among a judge, prosecutor, and other court officials. Later he alleged that grand jury proceedings contained “an appearance of impropriety and, at most, a conspiracy by these officers of the court to threaten, instill fear and imprison innocent persons to cover-up and chill public awareness of their own apparent misconduct using the power of their positions to do so." Smith has asked the Supreme Court of Missouri to intervene, and the Missouri Association of Criminal Defense Lawyers and the American Civil Liberties Union of Kansas and Western Missouri have both filed friend-of-the-court briefs with the Supreme Court supporting Smith.

An unidentified Wisconsin lawyer was chided (and docked a C-note) by the Wisconsin Court of Appeals after a defective citation to an unpublished case led the court on a scavenger hunt for his case. The lawyer’s attempt to cite an unpublished decision regarding the income of vending machines led instead to a case by newlyweds against their wedding photographer. After some diligence, the court[3] discovered that the lawyer had given the docket number rather than a reporter citation, and eventually found the correct case, in a different district to boot. For putting it through the extra effort, the court imposed a $100 sanction on the attorney. But they read the case, which might have been more than the lawyer had a right to expect.

At least that attorney had the cover of anonymity. Not so for David W. Glasser of Daytona, Florida, who filed a motion[4] so full of spelling and grammatical errors that U.S. District Judge Gregory Presnell denied his motion for “failing to comply with Local Rule 3.01(g), for failing to secure a stipulation of dismissal from Defendant pursuant to FED.R. CIV. 41(a)(ii), and for otherwise being riddled with unprofessional grammatical and typographical errors that nearly render the entire Motion incomprehensible.” For good measure, Judge Presnell ordered Glasser to “re-read the Local Rules and the Federal Rules of Civil Procedure in their entirety” and to provide proof he had personally delivered the Court’s order to his client.

Finally, the award for most imaginative way to annoy a court has to go to Michigan lawyer Lawrence Radden, for naming a police dog as a defendant in a civil rights action. The Macomb County Circuit Court dismissed the action on grounds of lack of evidence and sovereign immunity[5] and fined Radden $500.[6] The dog, named Liberty,[7] could not be reached for comment.[8]

Link of the Month

Apropos of our lead story on the FTC’s attempt to regulate lawyers as a business providing credit, this article by Penn State Dickinson School of Law Professor Laurel Terry, originally published in the Journal of the Professional Lawyer, should be of interest:

The Future Regulation of the Legal Profession: The Impact of Treating the Legal Profession as “Service Providers”

Prof. Terry's "Presentations" webpage has Powerpoint slides about some of the developments she describes in her "Service Providers" article.

Got a Tip?

Or a question, a comment, an idea you’d like to see addressed? We are always glad to hear from you. Write us at comments@padisciplinaryboard.org.

[1] We are waiting for a claim that discovery in the case is “like pulling teeth.”

[2] Clay Land – certainly a name for one who is well grounded.

[3] Or, most likely, the judge’s clerk.

[4] To us, the motion screams “dictated but not read.”

[5] In addition, it appears the dog had yet to reach the age of majority.

[6] That’s $3500 in dog dollars.

[7] The American Civil Liberty Union did not intervene on behalf of either party.

[8] Reportedly the dog found other uses for the legal papers.