Batting clean-up on 2016: Positional conflicts, settlements and your firm letterhead

​Jan. 5, 2017

By Karen Rubin

Batting clean-up on 2016: positional conflicts, settlements and your firm letterheadYou may have some holiday leftovers lurking in your fridge (potato latkes, Xmas goose, black-eyed peas, New Year’s Eve caviar), and we too have some interesting ethics topics that we didn’t have room for during 2016—so here’s a potpourri, touching on positional conflicts, coercive settlements and maybe how not to use your firm’s letterhead.

Arguing damage caps, pro and con

The U.S. district court for the Middle District of Tennessee in October turned back a disqualification motion aimed at Butler Snow, ruling that the firm could  continue representing a personal injury plaintiff who was potentially contesting the constitutionality of the state’s punitive damage caps, while at the same time asserting the caps defensively in at least one pending case for another client.

In its DQ motion, the trucking company defendant said those positions were inconsistent and raised a positional conflict in violation of Tennessee’s version of Model Rule 1.7 and its cmt. [24].

Not so, said the district court.  First, the trucking company waited until two months before trial to try to disqualify the law firm; it would cause severe prejudice to the plaintiff if she had to find new counsel.  Second, the firm retained separate counsel to represent the plaintiff on all post-trial issues challenging the damage caps, an arrangement that plaintiff agreed to at the beginning of her representation.  Third, there was no evidence that the potential conflict had actually affected the injury case, or was likely to compromise the firm’s representation of clients who simply asserted the caps to limit their liability rather than expressly defending their constitutionality.

On all these bases, the court held, the firm could stay in the case, part of which has now been settled.

Threat to publicize sexual allegations

In November, an Arizona lawyer who threatened to use press releases to alert the public to sexual allegations in order to obtain a settlement consented to a 30-day suspension.

In 2015 the lawyer filed a federal sexual harassment complaint on behalf of a client.  In a letter to the defendant, he announced he had created a specific website regarding the allegations, and said he would put up a public “shame on you” banner near the defendant’s restaurants.  He also told the defendant that he had scheduled meetings with police and the federal Department of Justice about the alleged hiring of undocumented workers.  In response to a settlement offer, the lawyer told the defendant’s lawyers that he “intended to destroy” the defendant’s businesses.

The judge in the federal case insisted that the lawyer stop his unprofessional behavior; the parties settled; and the state Disciplinary Judge accepted the lawyer’s admission that his conduct violated Arizona’s versions of Model Rules 4.4 (respect for the rights of others) and 8.4(d) (conduct prejudicial to the administration of justice).  The lawyer also agreed to two years probation and to pay costs.

The rules in my home jurisdiction, Ohio, include Rule 1.2(e), a specific prohibition against threatening criminal charges or professional misconduct allegations solely to obtain an advantage in a civil matter.  Interestingly, the Model Rules lack an express prohibition, although this case illustrates that disciplinary authorities can get there via other rules.

Using firm letterhead

Last, here’s a cautionary tale about using your firm letterhead for a personal legal dispute.

According to plaintiffs in a federal complaint filed in November, a Pepper Hamilton partner entered into a lease-to-own deal with a couple for a $750,000 house he owned.  The couple terminated the contract and moved out, and the lawyer claimed that they owed about $10,000.  The lawyer sent a demand letter for the money in September, using the firm’s letterhead.

That drew a suit from the couple against both the lawyer and the law firm for allegedly violating the federal Fair Debt Collection Practices Act.  “Once [the lawyer] sent the Sept. 19 letter … on [the firm’s] letterhead, he was no longer acting as an individual collecting his own debt, but rather a debt collector subject to the FDCPA,” the couple said in their complaint.

It remains to be seen whether that theory will fly—the case docket does not yet reflect any response to the complaint.  But it points to an issue that you should probably think about in your personal dispute before putting a piece of firm stationery in the printer.

Content courtesy of The Law for Lawyers Today: Ethics, Professional Responsibility and More blog. Ohio State Bar Association member Karen Rubin is an attorney for Thompson Hine.


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