Legal Ethics for a ChangingProfession

Michael Downey

Downey Law Group LLC

September 2017

SlideShare.net/DowneyLawGroupLLC

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Changing Nature of Firms

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Marketing and Fundingfor Firms

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Gender and Diversity Issues

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(New) ABA Model Rule 8.4(g)

• It is professional misconduct for a lawyer to . . . (g) engage in conduct that the lawyer knows or reasonably should know is harassment or discrimination

• on the basis of race, sex, religion, national origin, ethnicity, disability, age, sexual orientation, gender identity, marital status or socioeconomic status

• in conduct related to the practice of law.

• This paragraph does not limit the ability of a lawyer to accept, decline or withdraw from a representation in accordance with Rule 1.16.

• This paragraph does not preclude legitimate advice or advocacyconsistent with these Rules.

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Lawyer as Gatekeeper

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12/27/16, 3)12 PMAre US Lawyers a Weak Link in the Fight Against Money Laundering | The American Lawyer

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Are US Lawyers a Weak Link in the FightAgainst Money Laundering?

Susan Beck, The Am Law Daily

December 22, 2016

Earlier this month, for the first time in 10 years, an intergovernmental organization called theFinancial Action Task Force graded the United States on its efforts to combat money launderingand terrorist financing. The group, which includes government representatives from more than 30countries, gave the U.S. the lowest possible score in five of the 51 categories it uses to judgecountries' efforts.

The five categories had one thing in common. They each singled out the activities of Americanlawyers.

This isn't surprising. Going back to 2002, when Congress floated new rules to identify moneylaundering in the wake of the Sept. 11 attacks, the American Bar Association has staunchlyopposed any federal legislation that would require lawyers to help identify money laundering orterrorist financing. Banks and other financial institutions must comply with the Bank Secrecy Act,which imposes stringent "know your customer" rules and requires that suspicious transaction bereported to federal authorities.

U.S. lawyers are exempt from these rules, which puts the country at odds with the United Kingdomand the European Union, where lawyers have been required to adhere to anti-money launderingrules for more than a decade.

The task force report concluded that the failure of lawyers to follow accepted anti-money launderingrules is a "significant gap" in the U.S. regulatory framework for identifying money laundering andterrorist financing. Moreover, there's no evidence that U.S. lawyers "have an adequateunderstanding of [money laundering and terrorist financing] vulnerabilities and the need toimplement appropriate controls to mitigate them," the report concluded.

"The U.S. has always been lagging behind in this area," said Kristine Safos, a manager in HBRConsulting's law firm advisory group who has reviewed law firms' anti-money laundering practices.

She noted that lawyers in the U.K. and EU haven't been hindered by complying with anti-money

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5/9/17, 3)32 AMWelcome to the Missouri Bar

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The Eth ics of Client Trust Accounts: Fr equent ly Asked Quest ionsThe Eth ics of Client Trust Accounts: Fr equent ly Asked Quest ions

by Melinda J. Bentley[1]

Some of the most frequently asked questions of the Legal Ethics Counsel office focus on how to comply with ethical

obligations related to handling client trust accounts. Lawyers are often wary of making a misstep with their client

trust accounts, but by instituting sound accounting practices within their offices in accordance with Rules 4-1.145 –

4-1.155, lawyers should be able to readily comply with their safekeeping obligations. To assist lawyers with meeting

these obligations, this article will provide answers to some of the most frequently asked ethics questions.

Q: How do I find ou t i f m y financial inst i t u t ion Q: How do I find ou t i f m y financial inst i t u t ion is appr oved t o ho ld cl ien t t r ust accoun t s?is appr oved t o ho ld cl ien t t r ust accoun t s?

A: There are two steps by which financial institutions may be approved to hold client trust accounts. First, the

financial institution must be deemed “eligible” by the Missouri Lawyer Trust Account Foundation in accordance with

the requirements of Rule 4-1.145.[2] Second, the financial institution must be “approved” by the Advisory

Committee pursuant to the regulation it has adopted, which includes overdraft reporting to the Office of Chief

Disciplinary Counsel.[3] To find out if a financial institution is approved to hold client trust accounts, you may view

the list published at www.Mo-Legal-Ethics.org (http://www.Mo-Legal-Ethics.org).

Q: What do I do when I r eceive a paym ent t h r ough Q: What do I do when I r eceive a paym ent t h r ough an inst r um ent t hat con t ains bot h ear ned feesan inst r um ent t hat con t ains bot h ear ned fees

and advance paym ent o f f ees and and advance paym ent o f f ees and expenses?expenses?

A: Rule 4-1.15(a)(4) requires that receipts be deposited intact, so you cannot make a split deposit.[4] The proper

way to handle this situation is to deposit the full amount into the trust account. Once the funds have become

“good funds,” meaning the funds have actually been collected by the financial institution in which the trust account

is located,[5] you should then transfer the earned fees into your operating account within a reasonably prompt

period of time.

Q: M ay I keep m y own funds in t he cl ien t t r ust Q: M ay I keep m y own funds in t he cl ien t t r ust accoun t ?accoun t ?

A: No, you may not keep your own funds in the client trust account except an amount necessary for the sole

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Basic Rule on Handling Funds Paid for Legal Services

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PaymentPayment Payment

Trust Account

Operating Account

Fee EarnedWork starts

Receiving Funds

Method of PaymentActual Receipt of

Funds

Risk of Unilateral Cancelation or

WithdrawalAmount received

Cash Immediate None Amount paid

Check

Minimum of several days and up to two weeks,* presuming no attempt to "stop

payment"

None

(after funds are received)

Amount paid

Credit Card Several daysConsiderable – often

for six months (or more)

Amount paid less fees

Electronic Fund Transfer

Immediate None Amount paid

Credit Cards• Payments after earned

– Funds go into operating account– All fees and "chargebacks" (canceled payments) come out of

operating account– You can use whatever system you want

• Payment in advance (before earned)– Funds go into trust account– What about fees and "chargebacks" (canceled payments)?

• Lawyer specific processing: all charges come out of operating account• Non-lawyer specific: have to keep track of all money going both ways,

and chargebacks may cause overdrafts – My advice: TOO DANGEROUS, DON'T DO IT – use a Lawyer-specific processing

system

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Storing Client Information

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1/8 /17, 9(45 PMChinese Nat ionals Charged With Hacking Firms to Steal M A Info | The American Lawyer

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Chinese Nationals Charged With HackingFirms to Steal M&A Info

Mark Hamblett, The Am Law Daily

December 27, 2016

Three Chinese nationals face federal charges for allegedly hacking into two major U.S. law firms ina scheme to trade on information about imminent mergers and acquisitions.

U.S. Attorney Preet Bharara of the Southern District of New York announced Tuesday that IatHong, Bo Zheng and Hung Chin have been charged with infiltrating the servers of two law firms in2014 and 2015 and accessing nonpublic information about pending deals. According to Bharara'soffice, the information was used in trades that reaped roughly $4 million in illegal profits.

The indictment unsealed Tuesday does not name the law firms, which are referred to as Law Firm1 and Law Firm 2. According to the charges, Law Firm 1 advised Intel Corp. on its 2015 acquisitionof Altera Corp. for $16.7 billion and represented a company that was in deal talks with InterMuneInc., which sold to Roche AG in 2014 for $8.9 billion.

The second major law firm advised Pitney Bowes Inc. in the 2015 acquisition of New York-based e-commerce company Borderfree, the indictment states.

Based on those details the two firms appear to be Weil, Gotshal & Manges and Cravath, Swaine &Moore, firms where cyberbreaches previously were reported. Weil represented Intel in the Alterabuy and Cravath is identified in securities filings as Pitney Bowes lead deal counsel.

Representatives of both firms, reached Tuesday, declined to comment.

"This case of cyber meets securities fraud should serve as a wake-up call for law firms around theworld: you are and will be targets of cyber hacking, because you have information valuable towould-be criminals,” Bharara said.

In addition to infiltrating the two firms, Bharara said the defendants went after at least five other lawfirms between March and September 2015, trying to get unauthorized access to the firms' networksand servers on over 100,000 occasions.

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PrivatePublic

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Email Encryption

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“A lawyer generally may transmit information relating to the representation of a client over the Internet without violating the Model Rules of Professional Conduct where the lawyer has undertaken reasonable efforts to prevent inadvertent or unauthorized access…

Multijurisdictional Practice

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Regulation Shifts to Proactive

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Michael DowneyDowney Law Group LLC

(314) 961-6644(844) 961-6644 toll free

mdowney@DowneyLawGroup.com

Thank You