Ethics Advisory Opinions deal with firm e-files and metadata

first_img OPINION 90-7 (March 1, 1991) Although it is not unethical per se for an attorney to enter into business transactions with clients, the proposal presented by the inquiring attorney, when viewed in its entirety, is fraught with conflict problems and thus is impermissible. RPC: 4-1.7(b); 4-1.8(a); 4-1.10(a) Opinions: 72-21, 72-26, 73-1, 88-15 The inquiring attorney presents three questions concerning the propriety of members of his law firm engaging in certain business transactions with firm clients. The questions presented are: 1. A partner (i.e., shareholder) or partners of the law firm become stockholders of an independent insurance agency. The agency acts in a brokerage capacity, i.e., it is not the insurance company, but rather sells insurance to its clients. The agency proposes to offer to sell casualty insurance policies to corporate clients of the law firm. Assuming disclosure of the attorney partner’s interest in the agency to the law firm’s clients, is there anything improper in the activity?2. [W]ould any conflict arise if the client were to seek a legal opinion about the amount of insurance it was required to carry or the specific terms of a policy? Would it make any difference if the opinion were rendered by the attorney with the interest in the insurance agency or by another member of the firm?3. Assuming a claim was made on an insurance policy by a client of the firm where the policy was sold to the client by the agency in which a firm partner had an interest, would there be any conflict were the insurance company to assign defense of the claim against the client to the law firm? [Emphasis in original.]Although the inquirer has separated his inquiry into three questions, it is more appropriate to examine the proposal in its entirety. This will help bring the interests and issues involved more clearly into focus.Generally speaking, a practicing attorney is not ethically precluded from also engaging in another, nonlaw business if certain ethical guidelines are observed. See, e.g., Florida Ethics Opinion 88-15. An attorney who wishes to refer law practice clients to another business in which the attorney has an interest, though, obviously faces a potential conflict of interest. In its advisory opinions, the Professional Ethics Committee of The Florida Bar has recognized this potential conflict but has indicated that such a referral is not ethically prohibited, provided that the referral is in the best interest of the client and that the attorney’s personal interest in the transaction is fully disclosed to the client. See Florida Ethics Opinions 72-26; 73-1.The issue of an attorney’s business transactions with clients is now specifically addressed in the Florida Rules of Professional Conduct (Chapter 4, Rules Regulating The Florida Bar). Rule 4-1.8(a) provides: (a) A lawyer shall not enter into a business transaction with a client or knowingly acquire an ownership, possessory, security, or other pecuniary interest adverse to a client, except a lien granted by law to secure a lawyer’s fee or expenses, unless: (1) The transaction and terms on which the lawyer acquires the interest are fair and reasonable to the client and are fully disclosed and transmitted in writing to the client in a manner which can be reasonably understood by the client; (2) The client is given a reasonable opportunity to seek the advice of independent counsel in the transaction; and (3) The client consents in writing thereto. An attorney may enter into a business transaction with a client in accordance with the above rule, however, only if the requirements of the general conflict of interest rule, Rule 4-1.7, can be satisfied. Rule 4-1.7(b) provides: (b) A lawyer shall not represent a client if the lawyer’s exercise of independent professional judgment in the representation of that client may be materially limited by the lawyer’s responsibilities to another client or to a third person or by the lawyer’s own interest, unless: (1) The lawyer reasonably believes the representation will not be adversely affected; and (2) The client consents after consultation. [Emphasis added.] Rule 4-1.7(b) permits an attorney to undertake or continue representations which involve a potential conflict between the attorney’s personal interests and those of the client—such as an attorney-client business transaction—only if both conditions of this rule are satisfied. The comment to Rule 4-1.7 points out that, in some situations, it is improper for an attorney to ask a client to consent to representation notwithstanding an actual or potential conflict. The comment provides in pertinent part:A client may consent to representation notwithstanding a conflict. However, as indicated in paragraph (a)(1) with respect to representation directly adverse to a client and paragraph (b)(1) with respect to material limitations on representation of a client, when a disinterested lawyer would conclude that the client should not agree to the representation under the circumstances, the lawyer involved cannot properly ask for such agreement or provide representation on the basis of the client’s consent.Ordinarily it would not be prohibited for the inquiring attorney to sell insurance to his law firm clients in accordance with the requirements of Rule 4-1.8(a). However, when the inquirer’s proposal is considered in its entirety, ethical problems are apparent. Advising a client regarding the amount of insurance that the client needs, and then selling that client the insurance, presents an inherent conflict of interest. This is one of those conflicts, referred to in the above-quoted comment, that cannot be cured by asking for the client’s consent. A disinterested attorney would recognize that an attorney should not put himself into such a position of conflict. Such a conflict exists regardless of whether the attorney advising the client is the firm member who owns the interest in the insurance agency. Rule 4-1.10(a).The conflict between the attorney’s personal interests and those of the client is highlighted by the inquiring attorney’s indication that his firm also desires to be hired by the insurance company (to whom the attorney, as insurance agent, would owe a fiduciary duty) for the purpose of representing the client (to whom the attorney, as attorney, would owe a duty of undivided loyalty).To summarize: Although it is not unethical per se for an attorney to engage in business transactions with a client, the proposal presented by the inquiring attorney is fraught with conflict problems and, consequently, it would be unethical for the inquirer to undertake the proposed course of conduct. See Florida Ethics Opinion 72-21. OPINION 62-1 June 29, 1962 A lawyer should withdraw as counsel when it becomes necessary for him to testify to material facts on behalf of a client. Canon: 19 Opinion: ABA 220 Vice-Chairman Smith stated the opinion of the committee: A member of The Florida Bar inquires whether it is necessary for him to withdraw as counsel of record in a case in which it now appears that it will be necessary for him to testify on behalf of his client.It is the opinion of the Committee that he should withdraw entirely from the case and allow it to be prosecuted thereafter by attorneys to whom the matter has been or will be referred. Canon 19 of the Canons of Professional Ethics provides that when a lawyer is a witness for his client, except as to merely formal matters, he should leave the trial of the case to other counsel. The situation involved has frequently come before ethics committees and is treated in great detail in Opinion 220 of the Professional Ethics Committee of the American Bar Association. Florida cases having bearing on the matter may be found in connection with Dudley v. Wilson, 13 So.2d 145 (Fla. 1943).Although there are circumstances under which a lawyer may testify on behalf of his client and still remain connected with the case, it appears that in this situation the testimony is most material. It is our feeling, therefore, that both the letter and the spirit of the Canons of Professional Ethics require the lawyer’s withdrawal from the matter. The Professional Ethics Committee has issued Proposed Advisory Opinions 06-1 and 06-2 (reprinted below) at the request of The Florida Bar Board of Governors. Pursuant to Rule 4(c) and (d) of The Florida Bar Procedures for Ruling on Questions of Ethics, comments from Florida Bar members are solicited on the proposed opinion. The committee will consider any comments received at a meeting to be held at 2 p.m. on Friday, June 23, in conjunction with the Bar’s Annual Meeting at the Boca Raton Resort & Club. Comments must contain the proposed advisory opinion number and clearly state the issues for the committee to consider. A written argument may be included explaining why The Florida Bar member believes the committee’s opinion is either correct or incorrect and may contain citations to relevant authorities. Comments should be submitted to Elizabeth Clark Tarbert, Ethics Counsel, The Florida Bar, 651 E. Jefferson Street, Tallahassee 32399-2300, and must be postmarked no later than May 31. Professional Ethics of The Florida Bar Proposed Advisory Opinion 06-01 (April 10, 2006) The Professional Ethics Committee has been directed by The Florida Bar Board of Governors to issue an opinion regarding electronic storage of law firm files. The bar has received many inquiries regarding electronic storage of law firm files in the wake of natural disasters, such as hurricanes. Some lawyers have asked whether they may store files exclusively electronically, without retaining a paper copy.There are very few Rules Regulating The Florida Bar that address records retention. Rule 4-1.5(f)(4) requires that lawyers retain copies of executed contingent fee contracts and executed closing statements in contingent fee cases for 6 years after the execution of the closing statement in each contingent fee matter. Additionally, lawyers who are paid by insurance companies to represent insureds must retain a copy of the Statement of Insured Client’s Rights that the lawyer has certified was sent to the client for 6 years after the matter is closed. Rule 4-1.8(j), Rules of Professional Conduct. Copies of advertisements and records of the dissemination location and dates must be retained for 3 years after their last use. Rule 4-7.7(h), Rules of Professional Conduct. Finally, trust accounting records must be retained for 6 years following the conclusion of the matter to which the records relate. Rule 5-1.2(d), Rules Regulating The Florida Bar.The Rules Regulating The Florida Bar, with limited exception, do not specify the method by which records must be retained. As an example of an exception, Rule 5-1.2(b)(3) requires that lawyers retain original cancelled trust account checks, unless the financial institution they are drawn on will provide only copies.The committee has indicated in prior opinions that “the attorney must place primary emphasis on the desires of the client.” Florida Ethics Opinion 81-8. The committee has further determined that lawyers should make diligent attempts to contact clients to determine their wishes regarding file retention before the lawyer destroys any closed files. Florida Ethics Opinions 63-3, 71-62, and 81-8. These opinions are silent as to the method of file retention.Many opinions from other states address records retention issues and, more specifically, whether files may be stored electronically as opposed to paper copies. These opinions, too numerous to cite, raise issues specific to electronic document retention that the committee finds worthy of mention. The opinions generally conclude that, with appropriate safeguards, electronic document retention is permissible. See, e.g., ABA Informal Ethics Opinion 1127 (1970) (Lawyers may use company that stores attorney files on computer as long as the material is available only to the particular attorney to whom the files belong and the company that has procedures to ensure confidentiality and to admonish the company that confidentiality of the files must be preserved); New York County Ethics Opinion 725 (1998) (Permissible for a lawyer to retain only electronic copies of a file if “the evidentiary value of such documents will not be unduly impaired by the method of storage”); New York State Ethics Opinion 680 (1996) (Client’s file may be stored electronically except documents that are required by the rules to be kept in original form, but lawyer should ensure that documents stored electronically cannot be inadvertently destroyed or altered, and that the records can be readily produced when necessary); and North Carolina Ethics Opinion RPC 234 (1996) (Closed client files may be stored electronically as long as the electronic documents can be converted to paper copies, except for “original documents with legal significance, such as wills, contracts, stock certificates”).This committee concludes that the main consideration in file storage is that the appropriate documents be maintained, not necessarily the method by which they are stored. Therefore, a law firm may store files electronically unless: a statute or rule requires retention of an original document, the original document is the property of the client, or destruction of a paper document adversely affects the client’s interests.The committee agrees with other jurisdictions that have noted practical considerations involved in electronic file storage. The committee cautions lawyers that electronic files must be readily reproducible and protected from inadvertent modification, degradation or destruction. The lawyer may charge reasonable copying charges for producing copies of documents for clients as noted in Florida Ethics Opinion 88-11 Reconsideration. Finally, lawyers must take reasonable precautions to ensure confidentiality of client information, particularly if the lawyer relies on third parties to convert and store paper documents to electronic records. Rule 4-1.6, Rules of Professional Conduct.The committee encourages the use of technology, such as electronic file storage, to facilitate cost-effective and efficient records management. However, the committee is of the opinion that a lawyer is not required to store files electronically, although a lawyer may do so. FLORIDA BAR PROFESSIONAL ETHICS COMMITTEE PROPOSED ADVISORY OPINION 06-2 (April 10, 2006) The Board of Governors of The Florida Bar has directed the committee to issue an opinion to determine the ethical duties of lawyers when they send and receive electronic documents from other lawyers in the course of representing their clients. These ethical responsibilities are now becoming issues in the practice of law where lawyers may be able to “mine” metadata (information about information) from electronic documents sent by e-mail. Metadata has been defined as “information describing the history, tracking, or management of an electronic document.” 1 M etadata can contain information about the author of a document, and can show, among other things, the changes made to a document during its drafting, including what was deleted from or added to the final version of the document, as well as comments of the various reviewers of the document. Metadata may thereby reveal confidential and privileged client information that the sender of the document or electronic communication does not wish to be revealed. 2 This opinion does not address uses of metadata that is discoverable under applicable rules or is admissible in a trial or arbitration.The Florida Rules of Professional Conduct require lawyers to protect the secrets and confidences of their clients. Rule 4-1.6(a) provides as follows: (a) Consent Required to Reveal Information. A lawyer shall not reveal information relating to representation of a client except as stated in subdivisions (b), (c), and (d), unless the client consents after disclosure to the client. The Comment to Rule 4-1.6 further provides: A fundamental principle in the client-lawyer relationship is that the lawyer maintain confidentiality of information relating to the representation. The client is thereby encouraged to communicate fully and frankly with the lawyer even as to embarrassing or legally damaging subject matter. In order to maintain confidentiality under Rule 4-1.6(a), Florida lawyers must take reasonable steps to protect client confidences in all types of documents and information that leave the lawyers’ offices, including electronic documents and electronic communications with other lawyers and third parties. The duties of a lawyer when sending an electronic document to another lawyer and when receiving an electronic document from another lawyer are as follows: (1) It is the sending lawyer’s obligation to take reasonable steps to safeguard the confidentiality of all communications sent by electronic means to other lawyers and third parties and to protect from other lawyers and third parties all confidential information, including information contained in metadata, that may be included in such electronic communications. (2) It is the recipient lawyer’s concomitant obligation, upon receiving an electronic communication or document from another lawyer, not to try to obtain from metadata information relating to the representation of the sender’s client where the recipient knows or should know that the information is not intended for the recipient. Any such metadata is to be considered by the receiving lawyer as confidential information which the sending lawyer did not intend to transmit. See, Ethics Opinion 93-3 and Rule 4-4.4(b), Florida Rules of Professional Conduct, effective May 22, 2006. 3 This opinion does not address uses of metadata that is discoverable under applicable rules or is admissible in a trial or arbitration. The foregoing obligations may necessitate a lawyer’s continuing training and education in the use of technology in transmitting and receiving electronic documents in order to protect client information under Rule 4-1.6(a). As set forth in the Comment to Rule 4-1.1, regarding competency: To maintain the requisite knowledge and skill [for competent representation], a lawyer should engage in continuing study and education. Advisory Ethics Opinions Withdrawn by the Committee The Professional Ethics Committee withdrew Florida Ethics Opinions 90-7 and 62-1 (reprinted below) at its meeting on April 10, 2006. 1 The Sedona Guidelines: Best Practice Guidelines and Commentary for Managing Information and Records in the Electronic Age, Appendix F (The Sedona Conference Working Group Series, Sept. 2005 Series, available at The Microsoft Word and Microsoft Office online sites also contain detailed information about metadata, showing examples of metadata that may be stored in Microsoft applications and explaining how to remove this information from a final document. Examples of metadata that may be hidden in Microsoft documents include the name of the author, the identification of the computer on which the document was typed, the names of previous document authors and revisions to the document, including prior versions of a final document. 2 Further references regarding metadata and eliminating metadata from documents may be found on Microsoft’s user support websites at and See also, Michael Silver, “Microsoft Office metadata: What you don’t see can hurt you” Tech Republic Gartner 2001 The court’s discussion of metadata in Williams v. Sprint/United Management Company, 230 F.R.D. 640 (2005) is also very helpful. 3 The ethical implications of such hidden information in electronic documents have been discussed in legal journals and ethics opinions in other states, The New York Bar Association has issued Opinion 749 (2001), which concluded that attorneys may not ethically use computer software applications to surreptitiously “mine” documents or to trace e-mail. New York Ethics Opinion 782 (2004), further concluded that New York lawyers have a duty to use reasonable care when transmitting documents by e-mail to prevent the disclosure of metadata containing client confidences or secrets. Legal commentators have published articles about ethical issues involving metadata. David Hricik and Robert B. Jueneman, “The Transmission and Receipt of Invisible Confidential Information,” 15 The Professional Lawyer No. 1, p. 18 (Spring 2004). See also, Brian D. Zall, Metadata: Hidden Information in Microsoft Work Documents and its Ethical Implications, 33 Colo. Lawyer No.10, p. 53 (Oct. 2004). April 30, 2006 Regular News Ethics Advisory Opinions deal with firm e-files and metadata Ethics Advisory Opinions deal with firm e-files and metadatalast_img read more

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