Monday, May 30, 2005

Mechanical Ethics

In a recent posting, Carolyn Elefant took issue with Maryland Disciplinary Committee's recent Ethics Decision, Ethics Docket 05-11, Participation in For-Profit Referral Organization with Non-Attorneys. That opinion concluded that it was unethical for a lawyer to join an organization that was designed to facilitate cross-referrals among lawyers and non-lawyers.

Carolyn quite correctly criticized not only the ruling itself, but the general approach of the ethics committee. As she said "Sometimes a bar association issues a decision that's so impervious to the realities of legal practice that you have to wonder whether those who drafted it ever practiced law." Unfortunately, the simplistic and mechanical approach that the committee took in Ethics Docket 05-11 is typical of the committee's general approach to questions that come before it.

For instance, in Ethics Docket 2005-03, the committee was asked to opine as to the ethics implications of a paperless office. Rather than either (i) answering the question directly, (ii) setting forth specific guidance with respect to paperless record keeping that would satisfy the various ethical considerations pertinent to document retention, (iii) suggesting that an ad hoc committee be formed to study the issue, or (iv) asking the individual making the inquiry to outline precisely how he or she proposed to maintain the system and what safeguards against loss of records were built into the system, the committee merely restated the general principles involved with respect to record retention. The opinion then blandly stated, without any discussion, that "We also point out that in view of [the pertinent record keeping standards and principles], we are not as confident as you that the use of a paperless storage system for all files that are more than three (3) years old would be permissible."

The issue before the committee, however, was not their "confidence," but whether the details of the precise system to be used by the inquirer actually allowed the pertinent ethical principles to be effected.

I am currently maintaining my records pretty much on a paperless basis as to ongoing work. (I have not gone back to archive older records, which continue to be retained in paper.) I am willing to bet that I meet and exceed the applicable standards in every respect. Specifically, seven of the eight standards deal with when documents can be destroyed, how they can be destroyed, etc. My system addresses all of the concerns to which these seven principles or standards are directed quite simply: I never destroy documents.

All documents are scanned and saved to a client's file on my computer. Every day the files on my computer are backed up to (i) my firm's server and (ii) my portable hard drive. The server is backed up periodically, I believe weekly. My hard drive is backed up to my laptop every week or so. Thus, generally at the end of every two week cycle, all client files are in up to five different locations. Short of a nuclear attack on Baltimore, they're safe. Try doing that with paper.

But the mindlessness of the committee is deeper than just technological illiteracy. Lawyers are supposed to attempt to provide service to the greatest number of people at the lowest possible cost. My paperless record retention costs about $100.00 a year. Not only does it beat the out-of-pocket costs of paper document retention by a multiple of at least 10, but it has the additional benefit of reducing the labor and time lag involved in record retrieval. In short, electronic record retention has "ethical benefits" that the committee never bothered to examine, since cost savings ultimately redound to the benefit of clients.

This is not merely a rant with respect to the benefits of a paperless office, however. The point is that the committee's decision in Ethics Docket 205-03 is typical of its general approach to problems.

By way of example, the committee regularly disregards the economic consequences of its decisions. Thus, in Ethics Docket 05-11, the committee essentially handicapped potential new entrants into the legal market by putting outside the pale a particular type of networking. The rationale of that opinion only makes sense if (i) the members of the committee don't have any clients or (ii) like Tom Hagen, they all "have a special practice; [they] handle one client." Traditional sorts of networking, (everything from college and law school alumni associations, to country club, church, or synagogue membership, to participation on charitable boards, all well-known networking devices) are apparently okay, but novel methods of networking are not. The result is that the "ins" can retain a competitive advantange against potential new entrants to the market.

The committee's approach descended into absolute arrogance in Ethics Docket 2005-04. There, the committee was asked about the propriety of a solo practitioner, whose practice was concentrated in estate planning and tax advice, partnering with a financial services firm to provide referrals of the attorneys' clients. The attorney would receive a commission based upon the investments the attorneys' clients made with the financial services firm. Apparently, the arrangement would be exclusive, that is, the attorney would not refer to any similar firm.

There is no question but that the arrangement lends itself to potential conflicts of interest at a number of points. However, rather than addressing the substantive issues, the committee simply dismissed the inquiry as merely outlining the inquiring attorney's "many arguments or debating points as to why [the attorney felt] that [his or her] professional independence would not be impaired by forming an association with" the financial service provider. The committee then stated "we [do not] engage in written debates with inquirers over our interpretations of the rules, trying to justify our opinions to the inquirer. "

Why not? One of the purposes of, for instance, judicial opinions is for courts to lay out the intellectual underpinnings of their decisions. This allows those opinions to be discussed and criticized. As a consequence, the judicial decision making process contains within it a potential corrective against the perpetuation of error. This is necessary because judges are mere mortals. I am not certain, but I think that the members of the MSBA Ethics Committee are as well.

The question of whether lawyers should be able to also engage in selling securities, insurance, act as business brokers or real estate brokers, etc., is one about which reasonable people can differ. I think a reasonable argument can be made that by forcing lawyers to "sell" only services, the cost of those services will, over time, escalate so that many people will not have access to legal counsel. (I think that this process is actually ongoing now and is accelerating.) I also see the conflict of interest potential inherent in "cross-practicing." The committee, however, not only sees but one side, it refuses even to discuss whether there is another dimension to the question before it.

The great battle in legal theory of the twentieth century was whether the tenents of law were already in existence and the task of lawyers and judges was to discover them or whether law was a constantly evolving and developing process. Oliver Wendell Holmes' famous dictum in 1898 ("The life of the law has not been logic, it has been experience") summarized the victory of the legal realists that law was a dynamic process, not a static set of a priori assumptions. Since Holmes wrote those words in 1898, one would think that by now the MSBA Ethics Committee would have figured out what they mean.

1 comment:

Anonymous said...

"That opinion concluded that it was unethical for a lawyer to join an organization that was designed to facilitate cross-referrals among lawyers and non-lawyers."

But what of an organization designed to facilitate the cross-referral of lawyer/non-lawyer for the cross gender facilitation of the permissive joinder of reproductive organs? Non cross gender referral, ie. same gender referrals, must obviously await the decision of Guv. Bobby in the medical decision making veto. However, one can be sure that the Guv. believes in self-joinder.