The V-8 Moment with Regard to Insurance

Posted on August 5, 2014 04:36 by Steve Crislip

Wow, I should have had professional liability coverage.  I remain amazed at how many lawyers forego such coverage. I do not understand that rationale since they would never risk their assets with an uninsured car or house.  Yet, they think this cost of doing business is too high or it somehow is not needed.

Even a totally bogus claim costs real money to defend.  It takes time and work to get these dismissed, with no return of the costs. Lawyers always seem surprised at the legal costs for such work when they send out similar bills each day.  Then if there is a meritorious claim or even a colorable claim, coverage is very much needed.

When I last looked only one state required legal malpractice coverage as a condition of licensing.  Many states annually require you to disclose whether or not you have such coverage for consumer knowledge. I wonder how many clients ever really check that, or if they even care.  If you err in their case, they will sue you regardless. Do not think they will not, just because you have no insurance.  You certainly do not want to explain to family members that they now need to take the bus, since your cars were attached to pay a malpractice judgment.  Just treat this like a business expense and get coverage, and get the right coverage.

You should shop for coverage with brokers and agents as well as Bar groups.  Be totally forthcoming in any applications so there is no reason for any carrier to later deny coverage. Price varies with the amount of risk you are willing to take by way of the deductible.  Sometimes that is just cost pricing with lower annual premiums for higher retention levels by you. Sometimes in order to get big policy limits for some specialty work, you are required to have a big deductible.  Bigger firms are used to that, but smaller firms must always be mindful of the amount of risk they can absorb and how much they can promptly pay for a defense.  Usually the deductibles are for both losses and for the defense of the claim.

At one time, professional liability policies were like your auto policy — occurrence based.  Were you insured when you had the wreck or act of malpractice, or not?  By the 1970’s, that type of coverage disappeared and all are usually claims-made, eliminating the open-ended coverage concerns.  So, now a lawyer needs to be covered when a claim is made and must therefore avoid any gaps in coverage.

Since claims can arise well after the act or occurrence, prior acts coverage was needed to cover such matters forward when changing carriers or policies.  A tail (extended reporting endorsement) or an endorsement for prior acts must be considered carefully when charging firms.  Someone either closing a firm or making a lateral move needs to consider this carefully.  See, “A Primer on Prior Acts Coverage,” Mark Bassingthwrighte, ALPS 411, May 27, 2014.

For example, working in a mid-size regional firm, it made no sense to take in a lateral lawyer and provide them with prior acts coverage under the firm’s policy.  There had been no quality control by the firm and there were totally unknown risks involved with the lateral’s prior work.  With a large deductible, it was just bad business to assume that liability.  Accordingly, all laterals were told to look to their prior carriers or firms for coverage up to the day that they just started at our new firm.  Going forward they were covered, even when they left, as long as our firm was viable and still covered.  A tail may be needed by them from their prior work, but if they were likewise leaving a viable ongoing firm with good coverage, maybe nothing was needed.

Complicated to some degree, but it is just a part of doing business as a lawyer.  You need certain things to practice and this certainly is one of them.  Just like paying the rent on the office, paying for the coverage in a timely manner, and getting the right coverage is kind of important.  Don’t be the person who thinks they will not be sued by their clients. 

Be advised that most are loss and claim deductibles for any expended fees and costs, as well as claims payouts.  Also, it is customary for you to have to pay your full deductible before any carrier pays anything.  So pick a deductible you can afford and then escrow the funds for it as soon as a claim surfaces.  By the way, give notice of claims promptly, again to avoid coverage issues.  See ALPS 411, Claims-Made Reporting Requirement, February 15, 2012.

This blog was originally posted on the Lawyering for Lawyers blog on August 5. Click here to read the original entry. 

Bookmark and Share


President Obama signed an Executive Order that prohibits discrimination based on sexual orientation and gender identity in federal hiring and for federal contractors and subcontractors.  The Order requires that the US Department of Labor issues regulations to implement the order within 90 days. This Order takes effect immediately as to the hiring and employment provisions affecting over 2.5 million Federal employees. Contracts entered into on or after the regulations are promulgated by the Department of Labor must comply with the Order. Federal contractors will be required to maintain and/or amend hiring and employment policies against discrimination based on sexual orientation and gender identity.

Currently, there is no federal law that prohibits discrimination based on sexual orientation and gender identity that applies to all employers with 15 or more employees. The Employment Non-Discrimination Act (“ENDA”) would extend existing federal law protections to LGBT employees and was approved by the Senate, but has stalled in the House of Representatives. 21 states (NH and MA included) and the District of Columbia have passed laws prohibiting employment discrimination based on sexual orientation and 18 states (MA included) also prohibit discrimination based on gender identity.

This blog was originally posted in the Employment Law Business Guide on July 22. Click here to read the original entry. 

Bookmark and Share

Categories: Discrimination | Diversity

Actions: E-mail | Comments


Defendants often raise ascertainability when opposing class certification in food, beverage, and personal care products labeling litigation.  District courts in the Ninth Circuit, however, sometimes reach different conclusions regarding a putative class representative’s burden when it comes to establishing ascertainability.  Indeed, the subject has led to divergent decisions in the Northern District of California (often called “the food court”), with judges in that district commenting on the intra-district split.  Two recent decisions, however, bolster defendants’ arguments that ascertainability in contested class certification proceedings (as opposed to settlement classes) is a significant hurdle for such plaintiffs to overcome.  

Martin v. Pacific Parking Systems Inc., 2014 U.S. App. LEXIS 14200 (9th Cir. July 25, 2014), didn’t address consumer product labeling, but it addressed ascertainability.  The Ninth Circuit affirmed the denial of class certification of claims under the Fair and Accurate Credit Reporting Act.  While this is an unpublished decision and short on analysis, it may offer some insight regarding the Ninth Circuit’s leanings regarding ascertainability.  That district court concluded that the putative class was not ascertainable because there was no reasonably efficient way to determine which of the possible class members used a personal credit or debit card, rather than a business card.  That status was important because the claims purported to exclude anyone who used a business card for a transaction.  Id. at *2-3.  The Ninth Circuit agreed with the district court that the plaintiff “has not demonstrated that it would be administratively feasible to determine which individuals used personal, and not business, credit cards to purchase parking . . . .”  Id. at *3.  

Notably, the Ninth Circuit also included a footnote addressing “self-identification” and ascertainability.  We often see plaintiffs in product labeling class actions argue that self-identification is a viable way to identify class members—just have consumers provide affidavits attesting that they bought some quantity of the product during the class period.  But in Martin, the panel suggested that such efforts would not work in a contested class action:

Self-identification may suffice for some settlement-only classes.  But those classes need not satisfy Rule 23(b)(3)(D)’s “manageability” requirement.  “Confronted with a request for settlement-only class certification, a district court need not inquire whether the case, if tried, would present intractable management problems, see Fed. Rule Civ. Proc. 23(b)(3)(D), for the proposal is that there be no trial.”  Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 620 (1997).  

Id. at *4 n.3.  This footnote could be the beginning of the end for plaintiffs’ self-identification arguments in consumer class actions.    

The other recent decision is In re Clorox Consumer Litigation, No. 12-00280-SC (N.D. Cal. July 28, 2014).  Those plaintiffs challenged whether labeling on Fresh Step cat litter misleadingly suggested that product more effectively eliminated odors than products that do not contain carbon.  Several problems existed with the proposed class, but the district court began with its ascertainability analysis.  Judge Samuel Conti noted a split among courts in the Northern District of California regarding ascertainability, but he explained that he has followed Carrera v. Bayer Corp., 727 F.3d 300, 306 (3d Cir. 2013), in other consumer class actions.  In this instance, the plaintiffs did not propose any method for determining who purchased Fresh Step during the class period.  For example, none of the named plaintiffs kept their receipts.  Moreover, even the named plaintiffs had difficulty remembering whether they bought Fresh Step, what sizes, types, or quantities.  That type of uncertainty made it impossible to rely on affidavits from consumers (i.e., self-identification).  

The plaintiffs argued that various retailers’ records could identify class members.  Even those data, however, were incomplete and often depended on a customer participating in the retailer’s loyalty program.  In sum, those types of retailer programs would capture, at best, a tiny fraction of all transactions involving a specific product.  

While the thrust of the Clorox decision is ascertainability, Judge Conti also explained that predominance was lacking.  Fresh Step labeling varied considerably during the proposed class period—not all included statements about the product’s superiority to other cat litter without carbon—making it impossible to conclude that all or even most class members saw the representations.  While the plaintiffs pointed to “deceptive” television commercials, those commercials only ran for a limited part of the class period, so it was impossible to presume that most class members saw or relied on the advertising.  In addition, Clorox pointed to survey evidence indicating that only 11 percent of customers who read packaging at all even looked at the back panel where the allegedly misleading statements appeared.  The putative class also did not satisfy the superiority requirement, largely for the same reasons that ascertainability and predominance were lacking.

Whenever possible, defendants will want to cite Martin in the Ninth Circuit to explain why self-identification does not solve the ascertainability issues that permeate food labeling class actions. In addition, Clorox is another instance of a judge in the Northern District of California embracing a meaningful ascertainability requirement.  Clorox also provides a solid analysis of the lack of predominance in consumer product labeling class actions based on variations in packaging, the short duration of certain advertising programs, and survey data regarding consumer behavior.  

James Smith is a partner in the Phoenix office of Bryan Cave LLP.  He is a member of the Class & Derivative Actions Client Service Group and the Food and Beverage Team.  

Bookmark and Share


Actions: E-mail | Comments


Earlier this week, the Seventh Circuit rejected an attempt by the U.S. Department of Justice to rewrite a federal statute to suit the Executive Branch’s convenience.  In Bormes v. United States, No. 13-1602 (7th Cir. July 22, 2014), the issue was whether the United States can be sued for damages under the Fair Credit Reporting Act, which authorizes litigation against a  “person” who willfully or negligently violates the statute.  See 15 U.S.C. § 1681n(a).  The Act defines “person,” inter alia, as “any . . . government or governmental subdivision or other agency.”  Id. § 1681a(b).  In an opinion written by Judge Easterbrook, the court of appeals held that “[b]y authorizing monetary relief against every type of government, the United States has waived its sovereign immunity.”  Slip op. at 2.  

To support its contention that the Act does not waive sovereign immunity, DoJ essentially argued that the statute’s damages provision implicitly and necessarily excludes the United States.  According to the court, this was tantamount to  maintaining that  “the definition [of person] should not be given its natural meaning.”  Ibid.  The court explained that “Congress need not add ‘we really mean it!’ to make statutes effectual.”  Id. at 4 (emphasis added).  

The statute was originally enacted in 1970.  The damages provision, § 1681n, was broadened in 1996 to encompass “all persons,” but the already broad statutory definition of “person,” § 1681a(b), remained the same.    “Apparently no one in the Executive Branch asked Congress to revise the definition of § 1681a(b) when changing the category of entities for which § 1681n authorizes awards of damages.” Id. at 3.  The court indicated that “[t]he argument that a silent legislative history prevents giving the enacted text its natural meaning has been made before—and it has not fared well.” Ibid.

The Seventh Circuit did exactly what a court should do when interpreting a federal (or state) statute:  Give the statutory text its plain meaning, rather than rewrite it for policy reasons or the Executive Branch’s convenience.  The Constitution, of course, provides the proper remedy for a problematic federal statute—leave it to Congress to fix!             

Bookmark and Share

Categories: Federal Law

Actions: E-mail | Comments


An attorney's fees award to prevailing defendants under 42 U.S.C. 1988 is relatively uncommon, at least more uncommon than fee awards to prevailing plaintiffs.  But this week in Carter v. Inc. Village of Ocean Beach, the Second Circuit affirmed a fee award to certain defendants where the plaintiffs' claims were frivolous.

Plaintiffs are five former seasonal and part-time police officers who were employed - and terminated - by a village in New York State.  They filed suit against numerous village and county defendants, alleging a variety of federal constitutional claims as well as state law claims pertaining to their termination.  The plaintiffs voluntarily dismissed some claims, the district court dismissed other claims on summary judgment, and the court declined to exercise supplemental jurisdiction over the remaining claims, which were state law claims.  The plaintiffs re-filed their state claims in state court, which dismissed all claims against the county defendants.

In the federal action, the county defendants moved for, and were awarded, attorney's fees pursuant to section 1988, to the tune of almost $64,000.  Under fee shifting statutes like section 1988, prevailing plaintiffs are ordinarily awarded attorney's fees.  But prevailing defendants are awarded fees only if the action was frivolous.  At issue on this appeal was whether the action was frivolous, and whether the defendants could be considered prevailing parties given that the claims were disposed of in various ways.

The Second Circuit had no problem finding the action frivolous, making it abundantly clear to the plaintiffs that they never should have filed suit against the county defendants because the county had nothing to do with the village's hiring or firing practices.  As for the prevailing party aspect of the analysis, to prevail for purposes of attorney's fees, a party must have gained through the litigation a material alteration of the parties' legal relationship.  A voluntary dismissal with prejudice is such an alteration because the action cannot be filed again.  Here, the plaintiffs voluntarily dismissed some claims, had other claims dismissed on summary judgment by the district court, and had the remaining claims dismissed by the state court.  Since there was no chance for any of the claims to be relitigated, there was indeed a material alteration of the parties' legal relationship and thus the defendants were properly considered prevailing parties.

Bookmark and Share

Categories: Governmental Liability

Actions: E-mail | Comments


In a significant decision issued on Friday, July 18, 2014, involving a retail store, the Vermont Supreme Court has abolished the old premises liability distinction between “business invitees” (i.e., customers) and licensees (other visitors).  The Court has now formally adopted a general negligence standard of reasonable care applicable to both types of visitors.  The case is Demag v. Better Power Equipment, Inc., 2014 VT 78.  

This case involved a visitor who was on the defendant’s business premises not as a customer, but as a vendor providing a service to the business.  He fell into a storm drain in the business’s parking lot because the drain cover had been dislodged by a snowplow.  The owners of the business claimed not to know that the storm drain cover had been dislodged.  The visitor sued the business.  The trial court classified the visitor as a “licensee” (i.e., not a customer) – as opposed to an “invitee” (i.e., a customer) and granted summary judgment to the business, reasoning that the business owed a lower standard of care to a licensee.  In other words, because the visitor was a licensee, the owners owed him no legal duty to be aware that the storm drain cover had been dislodged and posed a danger to him.  The Vermont Supreme Court reversed, ruling that there should no longer be any distinction in Vermont between a licensee and an invitee.  

In 99% of cases, this decision will generally not affect retail or business establishments, because, with respect to customers, they were already held to the higher standard for “invitees.”  However, sometimes the person who is injured in or around a business establishment might be a vendor.  In such cases, the business establishment can no longer argue that it has a lower standard of care because the vendor was a “licensee.”  The legal standard will now be the same regardless of whether the plaintiff is a customer of the business or a vendor.  Obviously, this decision has implications for business establishments.  While vendors who are injured while on another business’s premises will typically be covered by their own employer’s workers compensation insurance, they can still bring a claim against the business establishment for negligence.  This decision will potentially make their claim easier to prove.

Bookmark and Share

Categories: State Supreme Court

Actions: E-mail | Comments


Yesterday, the Seventh Circuit ruled that Indiana’s statute regarding who may solemnize a marriage violates the Equal Protection Clause of the Fourteenth Amendment as well as the First Amendment, reversing the lower court’s decision. In Center for Inquiry, Inc. v. Marion Circuit Court Clerk, No. 12-3751, 2014 WL 3397217 (7th Cir. July 14, 2014), the Center for Inquiry filed suit under 42 U.S.C. § 1983 contending that Indiana’s marriage-solemnization statute violates the Constitution’s First Amendment, applied to the states through the Fourteenth Amendment, by giving some religions a privileged role. The statute specifies who may perform the final steps that unite persons who hold marriage licenses. The list includes religious officials designated by religious groups, but it omits equivalent officials of secular groups such as humanist societies. 

The Seventh Circuit wrote that three states (Florida, Maine, and South Carolina) authorize humanists to solemnize marriages by becoming notaries public, but Indiana does not (notaries cannot perform marriages in Indiana)—nor does it provide any other way for private secular groups to exercise this authority. Four states (Alaska, Massachusetts, Vermont, and Virginia) allow anyone to solemnize a marriage, and another six (Colorado, Kansas, Montana, Pennsylvania, New York, and Wisconsin) allow the couple to solemnize their own marriage, but neither option is available in Indiana. For hundreds of years, in the legal tradition that we inherited from England, the persons who could solemnize marriages included clergy, public officials, sea captains, notaries public, and the celebrants themselves. When Indiana codified the list in 1857 it left off captains, notaries, and the marrying couple, though it included some religious groups (and added some other religious groups later). 

The Center for Inquiry is a nonprofit corporation that describes itself as a humanist group that promotes ethical living without belief in a deity. The Center seeks to show, among other things, that it is possible to have strong ethical values based on critical reason and scientific inquiry rather than theism and faith. The Center maintains that its methods and values play the same role in its members’ lives as religious methods and values play in the lives of adherents. The Center would be satisfied if notaries were added to the list; nothing in humanism makes it inappropriate for a leader (or any other member) to be a notary public.

In the lawsuit, Indiana stated that a humanist group could call itself a religion, which would be good enough for the state. It also noted that a humanist celebrant could conduct an extra-legal ceremony, which the not-yet-married couple could follow up with a trip to the local court to have the clerk perform a legally effective solemnization. The Center and its Indiana leader, who is also a plaintiff, find these options unacceptable; they are unwilling to pretend to be something they are not or pretend to believe something they do not; they are shut out as long as they are sincere in following an ethical system that does not worship any god, adopt any theology, or accept a religious label.

The Seventh Circuit observed that the Supreme Court has forbidden distinctions between religious and secular beliefs that hold the same place in adherents’ lives. It also observed its own past holding that when making accommodations in prisons, states must treat atheism as favorably as theistic religion. What is true of atheism is equally true of humanism, it wrote, and as true in daily life as in prison.

The Seventh Circuit noted that the Supreme Court has addressed the long-established practice of opening legislative meetings with prayer, most recently in this year’s Greece v. Galloway, 134 S.Ct. 1811 (2014). But while these cases concern what a chosen agent of the government says as part of the government’s own operation, they do not concern how a state regulates private conduct. The Indiana marriage statute, by contrast, is regulatory. So although a government may, consistent with the First Amendment, open legislative sessions with Christian prayers while not inviting leaders of other religions, a state cannot limit the solemnization of weddings to Christians, while excluding Judaism, Islam, Buddhism, and—humanism.

Reversing the lower court decision, the Seventh Circuit remanded with instructions to issue an injunction allowing certified secular humanist celebrants to solemnize marriages in Indiana—to do this with legal effect, and without risk of criminal penalties. It wrote, however, that if Indiana amends its statute to allow notaries to solemnize marriages, the district court should be receptive to a motion to modify the injunction to minimize the extent to which a federal decree supersedes the state’s own solution to the problems the Seventh Circuit has identified.

Bookmark and Share


On June 23, 2014, the United States Supreme Court issued its widely anticipated decision in Utility Air Regulatory Group v. EPA concerning the U.S. Environmental Protection Agency’s regulation of greenhouse gas emissions (GHGs) from stationary sources. In a divided decision with a majority opinion written by Justice Antonin Scalia, the Court rejected EPA’s regulation of sources that would become newly subject to federal Clean Air Act permitting based only on their potential to emit GHGs.  The Court’s decision to remove a wide range of sources from EPA’s permitting jurisdiction raises the question of whether those sources are now more vulnerable to common law claims.

In the Court’s landmark 2007 decision in Massachusetts v. EPA—widely known as the “single largest expansion in the scope of the Clean Air Act in its history”—the Court rejected EPA’s position at that time that the Clean Air Act could not encompass GHGs. EPA then began the regulatory process mandated by the Court, resulting in the rules at issue in UARG.  In the same time frame, plaintiffs sought to obtain injunctive relief or damages under nuisance and other common law theories.  In American Elec. Power Co. v. Connecticut, 131 S.Ct. 2527 (2011), one of those common law suits, the Court held that the Clean Air Act’s authorization of EPA regulation displaced any federal common law right to seek reduction of GHG emissions under common law theories.  Id. at 2537.

In the rulemaking at issue in UARG, EPA interpreted the Act and its rules to mean that once GHGs were regulated under any part of the Clean Air Act, Title V and PSD permitting requirements would automatically apply to any stationary source with the potential to emit GHGs in excess of the respective 100- or 250-ton statutory air pollutant thresholds.  Recognizing the regulatory burden this interpretation would impose on smaller sources never before subject to PSD or Title V requirements—such as malls, apartment buildings, and schools—EPA attempted to “tailor” its program for those “new” sources by redefining the statutory threshold for GHGs to 100,000 tons per year, as opposed to the statutorily-required 100 or 250 tons.  

In its decision, the Court saw EPA’s attempt to “tailor” a clear 100- or 250-ton statutory threshold to 100,000 tons as an overstep in the Agency’s authority and an impermissible attempt to “tailor legislation to bureaucratic policy goals by rewriting unambiguous statutory terms.”  However, the Court supported EPA’s interpretation that sources already subject to PSD and Title V for conventional pollutants may be required to limit emissions of GHGs through conditions in their federal air permits.  As a result of these two primary holdings, federal air permitting controls on GHGs apply only to large sources, such as power plants, refineries and heavy manufacturing facilities, and not to a wide range of other sources.

Does this mean that displacement of federal common law no longer applies for those other sources?  For at least two reasons, the answer should be no.

First, the issues before the Court in UARG concerned certain federal permitting programs, not the entire Clean Air Act.  Other sections of the Act, particularly section 111, provide alternate pathways for regulating greenhouse gas emissions.  And the Court explicitly stated that its ruling on the permitting programs did not undercut EPA’s authority under section 111 to issue performance standards.  See UARG, slip op. at 14-15 n. 5.  Section 111 regulates by category, not by size.  Indeed, EPA recently issued its first set of performance standards for GHG emissions, which will cover fossil fuel-fired power plants.  Standards for other categories will very likely follow.  Consequently, sources excluded by UARG from PSD and Title V regulation could nonetheless be included in section 111 performance standards and be required to reduce GHGs at some point in the future.    

Second, even if EPA declines to issue performance standards for every category of sources, the displacement of federal common law remains intact.  

The critical point is that Congress delegated to EPA the decision whether and how to regulate carbon-dioxide emissions from power plants; the delegation is what displaces federal common law. Indeed, were EPA to decline to regulate carbon-dioxide emissions altogether at the conclusion of its ongoing § 7411 rulemaking, the federal courts would have no warrant to employ the federal common law of nuisance to upset the agency's expert determination.

AEP, 131 S. Ct. at 2538-39.  Thus, the regulatory process remains the exclusive avenue for federal limits on GHG emissions.

Bookmark and Share

Categories: Climate Change

Actions: E-mail | Comments


When a federal district judge issues an important interlocutory ruling, the options for immediate appeal are limited. Most lawyers think of certification under 28 U.S.C. § 1292(b). But certification is within the trial court's discretion, and as a practical matter, certification requests are usually denied. Further, even when an interlocutory order is certified, the court of appeals has to agree to hear the appeal. See Fed. R. App. P. 5. A "collateral order appeal" is another option for certain types of interlocutory rulings-orders that (i) conclusively determine a disputed question of law, (ii) resolve an important issue that is completely separate from the merits of the case, and (iii) would be effectively unreviewable on appeal from a final judgment. See Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541 (1949). But various categories of interlocutory rulings-including rulings involving application of the attorney-client privilege-do not qualify for collateral order appeal. See Mohawk Indus., Inc. v. Carpenter, 558 U.S. 100, 106-13 (2009).

That leaves mandamus, the most drastic method for challenging a federal district court's interlocutory ruling. Many lawyers consider filing a petition for a writ of mandamus under Fed. R. App. P. 21 to be a daunting, no-win situation. They are reluctant to seek mandamus out of fear of alienating (or further alienating) the trial judge, who presumably will continue to preside over the suit.

A recent D.C. Circuit case, however, In re Kellogg Brown & Root, Inc. ("KBR"), No. 14-5055, demonstrates that mandamus can be used successfully to challenge interlocutory rulings that meet the stringent criteria set forth in Cheney v. U.S. District Court for the District of Columbia, 542 U.S. 367 (2004). Under Cheney, the following three conditions must be met: (i) the mandamus petitioner must have no other adequate means for attaining the desired relief; (ii) the mandamus petitioner must show that its right to mandamus is clear and indisputable;, and (iii) the court of appeals, in the exercise of its discretion, must be satisfied that mandamus is appropriate under the circumstances. Id. at 380-81 (citing Kerr v. U.S. District Court for the Northern District of California, 426 U.S. 394, 403 (1976)).

In the KBR case, a federal district judge, presiding over a False Claims Act qui tam action, denied the protection of the attorney-client privilege to a company that had generated certain documents in connection with an internal investigation. The district court declined to certify its ruling for interlocutory appeal, so the company filed a petition for a writ of mandamus in the D.C. Circuit. Applying the Cheney factors, the court of appeals held that the denial of the privilege was clear error, and issued a writ of mandamus vacating the district court's document production order. First, the court indicated that in an attorney-client privilege case where an order to disclose documents is being challenged, mandamus (in the absence of § 1292(b) certification) is often the only adequate means to obtain relief since even in light of Mohawk, appeal after final judgment "will often come too late." Second, the court explained that if denial of attorney-client privilege is not merely erroneous, but instead, "a clear legal error," the right to mandamus is "clear and indisputable." Third, the court held that although the requirement that mandamus be appropriate under the circumstances is "broad and amorphous," it is satisfied where a district court's broad and novel privilege ruling "would have potentially far-reaching consequences," such as creating widespread uncertainty within the business community, and even among other trial courts.

Be forewarned, however, that issuance of a writ of mandamus does not necessarily mean that the errant judge will be taken off the case. In the KBR case, the court of appeals indicated that "we will reassign a case only in the exceedingly rare circumstance that a district judge's conduct is 'so extreme as to display inability to render fair judgment'" (quoting Liteky v. United States, 510 U.S. 540, 551 (1994)). The court held that the KBR case did not reach "that very high standard."


Bookmark and Share

Categories: Federal Law

Actions: E-mail | Comments


Those Pesky Clients- Part Deux

Posted on July 9, 2014 02:53 by Steve Crislip

You may have heard me say how much fun the practice of law would be without dealing with clients.  (See June 2013 Post).  They always seem to need something from you right now and, by the way, don’t always want to pay full price for on-demand services.  Well, perhaps clients as the consumers of legal services have a point.  Currently there are plenty of good lawyers around, even more than there is of good legal work to do. Perhaps there are now more lawyers than there is demand and the clients have experienced a shift in this balance.

More companies use inside General Counsel who act as the new trusted advisors to the companies, but with a business budget line to control.  So, many trends and changes are afoot in the delivery of legal services and firms need to adapt.  Things that can be done cheaper than using lawyers are simply outsourced.  Young lawyers cannot be billed in some cases until they have some experience.  More and more technology is required by clients to meet their needs, and the costs of that are not recoverable by the law firms.  As they say, “it is what it is” and lawyers who want to be successful in the future must adapt and improve the delivery of their services to be competitive.

Routinely advocating change and the ability to adapt, I still push back at the commodity procurement driven approach of many companies — buying legal services like buying pipes. Cost cutting driven by the Finance and HR portions of companies sometimes result in “guidelines” that seem written by non-lawyers and have more restrictions than the professional rules.  Caution is urged at this point, regardless of the market.  

One speaker at the 40th ABA National Conference on Professional Responsibility referred to these company-imposed guidelines as a source of private regulation.  He pointed out two main areas of concern:  (1) client identity and (2) conflicts of interest.  Some corporate guidelines say you will represent all of our affiliates and a conflict would exist as to each. Often we lawyers do not know and cannot determine who these hundreds of related parties may be.  The guidelines views of what they say is a conflict may exceed both the case law and the professional rules.  

Watch also these corporate guidelines for other hefty duties such as:

          • Data security audits and other type random audits.

          • Different file destruction requirements.

          • Disaster recovery plans for firms.

          • Breach notifications procedures and damages.

          • Personnel background checks on all employees.

          •  Indemnity clauses that can cause coverage issues.

There is no cookie cutter response to these.  I very much advocate a measured discussion and written exceptions to the guidelines when needed and possible.  Some will throw their weight around and put the firm in a take-or-no take situation.  Generally however, reasonable discussions can produce workable exceptions.  Since the firm’s engagement letter is intended to meet its professional responsibility where it practices, a procedure that states the General Counsel and the firm’s designated lawyer agree to resolve any differences between the guidelines and the engagement letter seems fair.  Placing the various affiliates in the firm conflict base for information and discussion purposes, but only representing the defined client in this matter may be a good compromise on the one-equals-all problem with regard to conflicts.

Despite being an advocate of law firms changing to adapt, there have been times when the guidelines were just so bad or unreasonable that I have said:  “We do not deserve to be your lawyers.”  Most however are workable.  Just be very aware of what you are agreeing to by way of guidelines since a court may well conclude they were contract terms, despite being more than required in the law or rules.  

This blog was posted on July 7 on Lawyering for Lawyers blog. Click here to read the original entry. 

Bookmark and Share

Categories: Life/Work Balance

Actions: E-mail | Comments


Submit Blog

If you wish to submit a blog posting for DRI Today, send an email to with "Blog Post" in the subject line. Please include article title and any tags you would like to use for the post.

Search Blog

Recent Posts




Staff Login