Looking Out for Our Profession
The Association actively monitors proposals that affect how we practice law
By Lee Smalley Edmon
Lee Smalley Edmon is president of the Association.
This President's Page was originally published in the March 1999 issue of Los Angeles Lawyer.
I am often asked how this Association safeguards our members' interests when the legislature or other administrative bodies seek to impose requirements on attorneys that would have a significant impact on how we practice law. You would probably be surprised to learn how numerous these proposals are-from the legislature, the State Bar, the ABA, the Judicial Council, the courts, and others. To say the least, there are far too many for any one of us to keep track of, much less respond to. I therefore have come to believe that one of the most important services provided by this Association to the lawyers of Los Angeles County is its monitoring of these proposals. The Association itself and its dozens of sections and committees are vigilant about speaking out when it is the right thing to do. The following examples show how this works in action.
Criminal sanctions against lawyers. As you may recall, in 1996 Congress provided that a person who knowingly and willfully disposed of assets in order to become eligible for Medicaid was liable for a criminal fine and/or imprisonment if the disposition of assets resulted in a period of ineligibility for Medicaid benefits. That act became known as the "Granny Goes to Jail Law," and substantial political pressure caused Congress to amend the act in 1997. Congress deleted the section that made it a crime to dispose of assets, instead authorizing criminal sanctions against those who counsel or advise their clients to transfer their assets. Specifically, Section 4734 of the Balanced Budget Act of 19971 authorizes criminal sanctions against lawyers who advise their clients to dispose of assets to qualify for Medicaid, even though this disposition is now perfectly legal.
In practice, Section 4734 interferes with a lawyer's ability to discuss valid estate planning options with clients. For example, a lawyer cannot, without fear of criminal liability, counsel an elderly widow to make a legal gift of some of her life savings to her children.
In New York State Bar Association v. Reno, an action filed in the Northern District of New York, the plaintiff challenged the constitutionality of Section 4734, asserting, among other things, that it impairs the constitutional free speech rights of members of the bar to provide legal advice, assistance, and counsel to their clients without the threat of criminal prosecution and sought a preliminary injunction to enjoin Janet Reno, in her official capacity as attorney general, from enforcing the section. Remarkably, the Department of Justice conceded the unconstitutionality of the section. Nevertheless, it opposed the New York State Bar's motion for summary judgment on the ground that the Justice Department has publicly stated it will not enforce the section and therefore the plaintiff could not demonstrate any injury sufficient to constitute a justiciable controversy.
The district court agreed with the New York State Bar and entered judgment in its favor. Despite the Justice Department's protestations that it has no interest in enforcing the section, it has now appealed the lower court's judgment, and the New York State Bar has requested the support of our Association in an amicus brief.
According to the Association's policy on amicus briefs, the Board of Trustees will ordinarily authorize the filing of an amicus brief on behalf of the Association only if one or more of the following criteria are met:
1) The views of the Association have been specifically requested by the court;
2) The issues to be briefed directly affect the activities of the Association;
3) The issues to be briefed substantially affect attorneys in the conduct of their professional activities; or
4) The issues to be briefed are of substantial importance to our legal system or to the administration of justice, particularly in Southern California, and
(a) The brief of the Association is likely to make a material contribution to the presentation of the other counsel in the case; or
(b) The views of the legal profession or the Association are likely to be of interest and persuasive to the court.
The Association's Amicus Briefs Committee, which has more than 40 members and is chaired by John Kronstadt (of Blanc, Williams, Johnston & Kronstadt, LLP) and Catherine Barrad (of Sidley & Austin) reviewed the briefs filed in New York State Bar Association v. Reno. At the Association's Board of Trustees meeting on January 27, 1999, the Amicus Briefs Committee presented its unanimous recommendation that the Association participate with other bar associations in the preparation of an amicus brief, and the board unanimously approved the motion. The committee argued that the issues in the case substantially affect our members, particularly those who, in the conduct of their professional activities, advise clients on their eligibility for medical assistance and estate, financial, and tax planning.
Disciplining of law firms through sanctions of reprimand, admonition, disgorgement of fees, and fines. In 1996 the four Appellate Divisions of the State of New York adopted a joint order amending the New York Disciplinary Rules to provide for the discipline of law firms.2 After reviewing those rules, the ABA's Standing Committees on Professional Discipline and Lawyer Competence recommended that the ABA adopt similar amendments to the ABA Model Rules of Professional Conduct and the Model Rules for Lawyer Disciplinary Enforcement.
In a report to the ABA House of Delegates, the ABA Standing Committee argued that discipline of a firm might be appropriate when the firm lacked adequate systems for ensuring that individual members of the firm conform to the Professional Rules of Conduct.3 Under the proposed rules, sanctions available to discipline law firms are 1) public reprimand, 2) private admonition, 3) disgorgement of all or part of the fees, and 4) fines and supervision.
Our Association's Evaluation of Professional Standards and State Bar Committee, cochaired by Don Mike Anthony (of Hahn & Hahn) and Assistant District Attorney Rod Leonard, reviewed these proposals and recommended that the Association oppose them. First, there has been no showing that a change in the rules is necessary, because ABA Model Rules 5.1 and 5.2 already subject partners and supervisors to discipline for failing to ensure that lawyers in their firms conform to the Rules of Professional Conduct in certain circumstances. Further, the proposed amendments would result in guilt by association-the reputation of all lawyers in the firm could clearly be damaged even though the firm is disciplined for conduct perpetrated by a few.
Our committee also questioned whether the state, which is responsible for discipline, has any jurisdiction over law firms, most of which are not licensed by the state. Of course, there also are practical problems that are naturally attendant to disciplining organizations rather than individuals: what happens when a firm that has been censured merges or changes its name? Can the firm avoid a sanction (or shed its sanction) if the offending members leave the firm?
Our committee concluded that the ABA should wait and see how the changes in the New York disciplinary rules work before amending the Model Rules. Moreover, another ABA Committee, the Ethics 2000 Committee, is considering a revision of the entire ABA Model Rules of Professional Conduct, and this proposal should be left to that committee's consideration. The Association has also been following the proposals generated by the Ethics 2000 Committee through a subcommittee chaired by Judge Sam Bufford.
Following the recommendations of the Evaluation of Professional Standards and State Bar Committee, the Association's Board of Trustees unanimously voted to oppose the proposed amendments calling for the discipline of law firms.
Restructuring the Ninth Circuit. The White Commission, which was formed by Congress in response to last year's proposals to split the Ninth Circuit, sent its Final Report to the president and Congress on December 18, 1998.4 Among other recommendations, the report proposes dividing the Ninth Circuit into three "divisions," with parts of California winding up in two different divisions. The opinions of one division would not be binding on the trial courts of the others. Thus, federal law in Northern California could be different from federal law in Southern California. A "super en-banc" procedure was proposed to resolve interdivisional conflicts, but such review would be discretionary, so not all conflicts between divisions would necessarily be addressed. The potential for forum shopping, not to mention sheer confusion, is obvious.
Last year, the Association formed an ad hoc committee to review the proposals generated by the White Commission. That committee was chaired by Assistant U.S. Attorney Miriam Krinsky, who presented testimony on behalf of the Association before the White Commission during its public hearings. Once the White Commission issued the Final Report, our ad hoc committee reviewed the proposals and prepared comments that were adopted by the Board of Trustees. The Association's response to the White Commission proposals is available for your review at our Web site www.lacba.org/white/
There are many other recent examples of the Association speaking out on issues important to lawyers, including:
- Our opposition to the proposals to divide the California Supreme Court into separate civil and criminal divisions.
- The salary survey we conducted for government lawyers in our community (which was recently cited by the Los Angeles Times) and circulated to the new governor, attorney general, and key members of the legislature.
- Our opposition to proposed changes in the disciplinary rules of the Central District Court.
Many other Association committees are also actively involved in the process, and your participation and comment on any of these issues is always welcome. Just let me know.
1 Balanced Budget Act of 1997, 42 U.S.C. §§1320a-7b(a).
2 See N.Y. Disc. Rules Rule 1-102(A) (providing that a lawyer or law firm "shall not violate a disciplinary rule, engage in illegal conduct," etc.); Rule 1-104(a)("A law firm shall make reasonable efforts to ensure that all lawyers in the firm conform to the disciplinary rules.").
3 Report 115B to the ABA House of Delegates 10 (1999).
4 Commission for Structural Alternatives for the Federal Courts of Appeals, Final Report http://app.comm.uscourts.gov/.