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Archive for the ‘California LPL’ Category

The Ethical Duty of Technology Competence – The Day is Coming in California

Posted on: December 5th, 2019

By: Renata Hoddinott

Recognizing the emergence of technology, its impact on the practice of law, and the importance of lawyers understanding technology, the American Bar Association modified its Model Rules in 2012 to make clear a lawyer’s duty of competence includes both a substantive knowledge of the law and the competent use of technology. ABA Model Rule 1.1 Comment 8 provides, in part, that, “to maintain the requisite knowledge and skill, a lawyer should keep abreast of changes in the law and its practice including the benefits and risks associated with relevant technology.”

Since then, 38 states* have now adopted some version of Comment 8. In 2016, Florida went even further and became the first state to require lawyers to complete three hours of continuing legal education on technology every three years. In 2019, North Carolina followed suit and requires lawyers to complete one hour of continuing education devoted to technology training every year.

But where California normally leads the nation in many areas, in this it is in the minority of hold-out states which have not adopted a version of Comment 8. While the State Bar of California’s Standing Committee on Professional Responsibility and Conduct has issued several opinions involving technology to date, California has not yet expressly referred to a technology component of a lawyer’s duty of competence in its Rules of Professional Conduct.

There are constantly emerging technologies to assist lawyers in delivering legal services to their clients. In the past, lawyers were deemed competent based on their experience and knowledge of a substantive area of law. As technology evolved, so too did the concept of competence. Types of  technology used  by today’s lawyers include the technology used to run a law firm and practice, case management software, billing software, and email, as well as data security to protect client confidentiality, technology used to present information to the court, electronic discovery, saving client information in the cloud and other third-party service platforms, and the use of social media such as Facebook, LinkedIn, and blogs. There is also the growing area of artificial intelligence or AI which is transforming the way lawyers and law firms perform legal research, due diligence, document review, and even more.

While these technologies offer many benefits to help increase efficiency, minimize mistakes, and decrease labor costs, there are also associated risks and pitfalls. Technology competence includes an understanding of the technology a lawyer currently utilizes in his or her practice, the additional technology available, and the technology that a client or prospective client uses or owns. Lawyers who are not technologically competent may be putting their clients and themselves at a disadvantage, as well as potentially risking a malpractice action in certain cases.

Attorneys must recognize the ways in which technology influences the practice of law in California. While it is not yet mandated as in many other states, that day is coming soon. And while technology continues to advance faster than developments in California law, lawyers should consider their duties of competence, diligence, supervision, and maintaining confidentiality when implementing and using technology.

*The states which have adopted some version of Comment 8 are: Alaska, Arizona, Arkansas, Colorado, Connecticut, Delaware, Florida, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Massachusetts, Michigan, Minnesota, Missouri, Montana, Nebraska, New Hampshire, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, South Carolina, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, and Wyoming.

If you have any questions or would like more information, please contact Renata Hoddinott at [email protected], or any other member of our Lawyers Professional Liability Practice Group, a list of which can be found at www.fmglaw.com.

One if by land, . . . ZERO if by sea? (Apologies to Paul Revere) The Trapdoor of COGSA

Posted on: November 18th, 2019

By: Jon Tisdale

Lawyers who represent businesses who ship goods around the world need to protect their clients (and themselves) from the congressionally-mandated trapdoor of the Carriage of Goods By Sea Act (COGSA).  We now live in a world where brick-and-mortar stores are increasingly a thing of the past and the majority of goods sold are purchased online.  And then they have to be delivered.  Until someone invents the Transporter from Star Trek to “beam” products across the globe, our businesses and lives would grind to a screeching halt without the ability to ship products and goods.

So critical is the shipping industry to our economy, the United States Congress has acted to protect the integrity of this industry.  The legislative history tells us that congress reasoned (probably correctly) that if every time a shipper of goods was held responsible when a third party acted negligently and damaged the goods the shipper was entrusted to transport, negligence actions and damage awards would cause the cost of shipping anything to skyrocket and completely paralyze the shipping industry.  Congress reasoned further that the sophisticated players engaged in international shipping should be free to negotiate their own terms and conditions for indemnification, rather than be at the mercy of 50 different tort law systems nationwide.  Hence, the Carriage of Goods by Sea Act was born.

COGSA establishes an indemnity protocol governing reimbursement for the damage or destruction of goods that are shipped by sea.  Importantly, it does not matter whether the damage is occasioned by an intervening negligent third party or the shipping company’s own employee, agent or subcontractor.  If a ship filled with Bentleys and Rolexes is (a) hijacked by terrorists or (b) sunk by a negligent sea captain, the COGSA-mandated damages for the loss or destruction of whatever is shipped is limited to actual market value of the goods up to a maximum of $500 per item shipped.  This is fine if you are shipping inexpensive items; not so fine if you are shipping cars, heavy equipment or more expensive products or goods.

Under COGSA, the person or entity that contracts with the shipper has the option of (a) accepting the risk of the $500 COGSA limitation of indemnity, or (b) declaring the true value of the item being shipped and paying a non-trivial fee to increase the coverage.

The takeaway:  If your clients are shipping expensive products across country by truck, they are protected by state law systems of subrogation recovery.  But if your clients ship by sea, be sure they are cognizant of COGSA limitations and negotiate around them.

If you have any questions or would like more information, please contact Jon Tisdale at [email protected].

California Lawyers Cannot Churn Files

Posted on: November 7th, 2019

By: Greg Fayard

Under the Rules of Professional Conduct applicable to California lawyers, attorneys are not supposed to do things where the substantial purpose is to delay, prolong, or cause needless expense. Under Rule 3.2, lawyers can be disciplined for churning a file for the substantial purpose of increasing legal fees. Examples of needless work would be lawyers spending time researching irrelevant issues, working on a case just to increase the legal fees, and seeking to continue a case for no valid reason, such as to extend a billing opportunity or delay a case simply to aggravate the opposing party.

Of course, the California State Bar might have trouble proving a violation of Rule 3.2, as most legal work has a motivation that is not based substantially on delay or increasing expenses.

That said, the best practice for all lawyers is to do what is necessary but which potentially advances the client’s interests.

If you have any questions or would like more information, please contact Greg Fayard at [email protected], or any other member of our Lawyers Professional Liability Practice Group, a list of which can be found at www.fmglaw.com.

Law Firms Under Increased Pressure, Increased Costs for Malpractice Claims

Posted on: October 31st, 2019

By: Gregory L. Blueford

Per a survey conducted by insurance broker Ames & Gough earlier this year, professional liability is becoming more and more expensive with big money payouts. In its 9th annual survey of top 11 professional liability insurance companies, Ames & Gough found that the number of claims resulting in multimillion dollar payouts increased from 2017 to 2018, with the majority stating that they had at least one claim payout of over $150 million and two had settlements which exceed $250 million.

The average cost to defend a malpractice claim, while varied amongst those insurance companies surveyed, increased from 2017 to 2018 for 10 of the 11 insurers surveyed. Two indicated the average cost to defend a claim exceeded $500,000; three stated their average defense costs were between $100,000 and $500,000, and the remaining six insurers all had an average cost between $50,000 – $100,000. 7 of 11 insurers said that the rates they are paying defense counsel to handle professional liability claims have risen from anywhere from 2 – 5%.

Further, conflicts of interest, including perceived conflicts, remain the most common alleged legal malpractice error, with 7 of the 11 insurers surveyed stating conflicts as one of their top two leading causes of legal malpractice claims. The largest number of claims stem from the following four practice areas: Business Transactions (cited by 63 percent of insurers surveyed), Trust and Estates (55 percent), Corporate & Securities (45 percent), and Real Estate (45 percent).

This survey demonstrates the importance of law firms ensuring that their conflict check system is functional and, most of all, practical in identifying potential conflicts, especially for large firms operating with multiple offices. Further, as stated in the survey, many attorneys handling business transaction matters often wander outside their area of expertise, as certain elements may appear quite different as the matter progresses. Thus, it is important for attorneys to make sure they are staying within their defined role for the particular matter they are working on and, if the issues stray outside that role, work with the client to bring in another attorney who has the necessary expertise.

The insurers participating in the Ames & Gough survey were: AXA XL, AXIS, Brit, CNA, Crum & Forster, Huntersure, Liberty, Markel, Sompo, Swiss Re, and Travelers.

You can read more about this survey or request a copy of the survey here.

If you have any questions or would like more information, please contact Greg Blueford at [email protected], or any other member of our Lawyers Professional Liability Practice Group, a list of which can be found at www.fmglaw.com.

California Lawyers Now Have Duties To Clients “Who Got Away”

Posted on: September 24th, 2019

By: Greg Fayard

Under Rule 1.18 of California’s Rules of Professional Conduct, lawyers must now protect the confidences of prospective clients–even if a formal lawyer-client relationship never materializes.

That is, confidential information conveyed by a would-be client to a California lawyer, but where the potential client does not retain the lawyer, must be protected and can impact other matters handled by another lawyer in the firm.

For example, in a law firm that does family law, if Wife consults lawyer A in a divorce case and says she has a secret bank account, but Wife does not retain lawyer A, and Husband then consults lawyer A, lawyer A would need the informed written consent from both Husband and Wife to represent Husband.

Lawyer B in the law firm could represent Husband, but only if lawyer A is screened from Husband’s case and written notice is provided to both Husband and Wife. Consent from Wife is not needed.

This is an example of duties to the prospective client, the Wife—the client “who got away.” Just know that in situations where prospective clients meet with a lawyer, but no official attorney-client relationship results from that meeting, for future matters, sometimes informed written consent is needed, and sometimes notice and screening is needed.

If you have any questions or would like more information, please contact Greg Fayard at [email protected], or any other member of our Lawyers Professional Liability Practice Group, a list of which can be found at www.fmglaw.com.