We recently experienced an incident with a Plaintiff’s counsel in a bankruptcy Adversary Proceeding.  In a letter proposing a settlement, he threatened to file criminal charges against our client (which would have been totally unwarranted) and/or report our client to administrative regulatory authorities (which would have been equally unwarranted) if our client did not settle.  Doing research on whether such threats involve improper ethical conduct, I was surprised at what I learned.  I had gone into my research thinking that the answer was clear and that such conduct would be considered unethical.  What I found was counterintuitive.  The variety of approaches ranged from perspectives that such conduct was unethical to allowing such conduct as long as the threat is related to the client’s claim, the lawyer has a well-founded belief that both the civil claim and the criminal charges are warranted, and the lawyer making the threat is not misusing the criminal process. 

The following are informative sources that I have found:  A.B.A. Formal Op. 92-363 (1992) Use of Threats of Prosecution In Connection With a Civil Matter; A.B.A. ANNOTATED MODEL RULES OF PROFESSIONAL CONDUCT 438-439 (5th ed.) (surveying various approaches); Indiana State Bar Legal Ethics Committee, Op. 1 (2008) Attorney’s Threat to Report Adverse Party to Professional Licensing Commission, as reported in 51 RES GAESTE 34 (June 2008); Timothy D. Webb, Concomitant Negotiations of Civil and Criminal Claims, 63 BENCH & BAR MINN. 22 (2005); Kenneth L. Jorgensen, Ethics Advisory Opinions, 60 BENCH & BAR MINN. 12 (2003); Patrick Emery Longan, Ethics In Settlement Negotiations:  Foreward, 52 MERCER L. REV. 807 (2001); Debra S. Katz, Julie Chambers, Attorneys’ Ethical Responsibilities During Settlement Negotiations, ALI-ABA COURSE OF STUDY ADVANCED EMPLOYMENT LAW AND LITIGATION, SG047 ALI-ABA 1153 (2001). 

I would be curious to have responses from people who have experienced this, what you did about your situations with respect to reporting, and whether you are aware of any other authorities, to include bar association opinions, addressing this area. 

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Our law firm recently encountered a situation where a lawyer, who we know, had his son working for him.  The son took the lead in many of the activities between our firm and the plaintiff.  He was present at meetings; he ostensibly assisted the client.  In short, our lawyers thought that they were dealing with a lawyer.  In fact, one of our lawyers asked the individual where he had graduated from law school.  He told our lawyer that he had graduated from a particular law school, but he never indicated that he was a member of the State Bar. 

After some extensive dealings with this individual, one of our lawyers decided to check.  He learned that the individual was not a member of the State Bar.  He confronted the individual and was advised that the individual had graduated from a particular law school but was not “barred” in the state mentioned.  That was the term that he used.  We confirmed that the individual, who was the lawyer’s son, was not a member of the State Bar, but that he was a law school graduate.

Our dilemma was whether there were grounds to report the lawyer for having aided and abetted in the unauthorized practice of law.    Our internal debate centered around whether there was the unauthorized practice of law and whether there was sufficient information to have “knowledge of a violation of,” the criminal code which would provide grounds to report the lawyer for aiding and abetting an individual in the unauthorized practice of law.  After much consideration, investigation, and research, we concluded that we did not have enough information to “know” that there had been the unauthorized practice of law.  Assessing the son’s activities, we concluded that he had, in fact, done nothing more than what a paralegal might have done under many circumstances.  To our knowledge, he never held himself out to the public to be a lawyer.  He was not on the pleadings.  He never attended any court appearances as counsel.  There were simply facts created that allowed our lawyers to mistakenly infer that he was a lawyer. 

In the end, we concluded that he was not holding himself out to the public to be a lawyer.  While our lawyers had inferred that he was functioning as a lawyer, he had never done anything or said anything that would have held himself out, specifically, to be a lawyer.  While we did not know what his client felt, we concluded that there was not the unauthorized practice and, therefore, there was no duty to report the lawyer for aiding and abetting.

I would be curious to know if any of you have had any similar experience.  Frankly, it was discomforting, but, there was enough ambiguity in the dealings between our firm and that individual where we felt there were not sufficient grounds to move forward.  Regarding the duty to report, please see Doug Richmond’s article on our website titled:  Reporting Lawyer Misconduct, 50 FOR THE DEFENSE 76 (2008). 

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