Did this attorney behave unethically?

In My Humble Opinion
1

I’ll keep this as simple as possible - more details available if needed.

Board members from a nonprofit organization began to explore options for regaining access to funds that had been wrongfully removed from the nonprofit’s accounts and put into a trust by Margaret when she stepped down as chair of the board and took most of the organization’s money with her.

As an early step, the board members asked Attorney Bob, an informal advisor to the nonprofit, if he thought we had any legal recourse. No money changed hands, it was free advice.

Bob is not a trust attorney, so he consulted some trust attorneys before advising the board members. One of the trust specialists he asked was Attorney Fred.

Fred knows Margaret and told her that the non-profit was beginning to look at legal options to regain the funds. She then paid him a retainer (from the trust fund - a judge later made her pay it back and pay legal fees from her own pocket) so that Fred would represent her trust if the board members’ inquiries eventually led to a lawsuit. At that time, no legal action had been taken - it was actually another full year after she put Fred on retainer before a suit was filed.

Did Fred behave unethically? I’m not sure there was any expectation of confidentiality if one attorney says to another (Bob to Fred in this case), “hey, I was informally asked about this curious situation - what’s your take on it?”

But for Fred to provide input on behalf of one side in a potential lawsuit, and then rush off to the opposing side and say, as he apparently did, “hey, some people are looking at possibly taking you to court,” and accept an engagement to represent that side doesn’t feel quite right to me. I can’t really put my finger on why it might be wrong, though.

This matter is now concluded (justice prevailed, we got the money back from Margaret) and even if there is consensus that Fred was unethical, we have no intention of trying to get him in trouble with the ethics board. It’s water under the bridge now. I’m just curious what both legal eagles and regular folks think of his actions.

2

IANAL. Fred comes across as an ambulance chaser to me.

3

I know lawyers have their own ethics and hopefully one will weigh in, but I don’t see what Fred did as being particularly wrong. It doesn’t seem much different from me telling Dave “Hey, Steve’s really mad at you and might do something.” Even if Steve has good reason to be angry I don’t see what I did as wrong. The error seems to be Bob’s. He should have consulted a trust attorney who didn’t know Margret.

4

I’m a lawyer. I don’t know whether Fred violated any specific bar ethics rules, but (assuming the facts as described in the OP) I would say that what he did by “tattling” to Margaret after being consulted by Bob is very, very shady.

Perhaps Bob was a bit reckless in talking to Fred about it, but most lawyers have a collegial relationship and rely on each other for informal advice on matters. It’s not unreasonable for Bob to assume that if he talks to Fred, then Fred will tell him straight up “I’m friends with Margaret, so don’t tell me anything you don’t want her to know.”

5

Yeah, it’s probably going to turn on exactly how Bob phrased it and whether the information about the Board’s actions was confidential or public at that time. Fred is close to the line either way, and potentially crossed it. If an attorney client relationship* was created when Bob consulted Fred, he certainly should not have agreed to later represent Margaret regarding the same matter.

*The establishment of the attorney-client relationship involves two elements: a person seeks advice or assistance from an attorney; and the attorney appears to give, agrees to give or gives the advice or assistance. If the client reasonably believes that there is an attorney-client relationship, then the lawyer has professional obligations to that client.

No retainer is required, nor a formal retention agreement.

6

The hardest questions on the MPRE (multi-state professional responsibility exam) are the ones where the answer seems pretty darn unethical but they are technically within the model rules.

I think technically Fred was not sharing any confidential information given to him by a prospective client because there wasn’t a prospective client.

But “ambulance chasing” is against the model rules.

7

I don’t think giving a friend a heads up that she’s a target in an investigation is soliciting a client, and not against the model rules. It wasn’t Fred’s primary motive, and they were friends.

(b) A lawyer shall not solicit professional employment by live person-to-person contact when a significant motive for the lawyer’s doing so is the lawyer’s or law firm’s pecuniary gain, unless the contact is with a:

(1) lawyer;

(2) person who has a family, close personal, or prior business or professional relationship with the lawyer or law firm; or

(3) person who routinely uses for business purposes the type of legal services offered by the lawyer.

8

I knew I should have looked up the rule.

9

Those who realize their folly are not true fools.

Zhuangzi

10

I concur with what’s been said. Likely not strictly speaking unethical, but sharp practice. Once he realized what or who Bob was asking about, he should have made a decision to stop Bob, or not tell his friend. The profession benefits from collegiality and civility, and actions like this damage those things, and the profession, even if they don’t technically break any rule.

11

We have no knowledge on what Fred’s motive was, or what the initial conversation between Fred and Margaret was like. It could have been anything from Fred barely knowing Margaret, but running to her and saying “hey, you better hire me, word on the street is that you are about to be sued” to the two of them being close friends and Fred saying, “I shouldn’t get involved but as your friend I think you should know” and then Margaret begging him to take the case.

Or, come to think of it, maybe there WAS no acquaintance between Fred and Margaret at the time Bob consulted Fred. (That was an assumption on my part; on reflection I shouldn’t have made it. But on an island we’re all pretty connected, which is why I jumped to that conclusion.)

The evidence I have that Fred contacted Margaret directly after being consulted by Bob is circumstantial. I was not aware of any of this until recently - I thought it was pure coincidence that Margaret hired an attorney that Bob had talked to - until I was reviewing financial statements of the trust and saw the date of the retainer check that Margaret wrote to Fred, which was right around the time of Bob’s discussion with Fred.

At that time our discussions and inquiries were extremely confidential and we took care to keep the whole situation under wraps (in part because we were pretty sure that if Margaret learned we were looking into legal action, she’d take preemptive steps to block us - an assessment that now appears to have been not far off the mark.)

12

You are certainly free to raise the issue with the bar. They usually take this kind of thing seriously and would do an investigation.

13

I appreciate knowing that!

We’ll let sleeping dogs lie, though - for one thing, we have our hands full; for another, it’s better not to make enemies in a small community (our organization took some flack for forcing the matter, although not much because Margaret had a reputation for being manipulative and most people didn’t like her), and finally, while the circumstantial evidence is overwhelming, it is still circumstantial.

14

Yeah, I’d like to imagine that Bob wouldn’t go seeking legal advice from Fred anymore if Fred is going to turn around and uses it against Bob’s clients. And if that’s Fred’s way of doing things, he may become frozen out of the legal community - nobody would recommend him when people are looking to hire somebody and wouldn’t call him up to try to work things out when he was on the other side of a case. Fred’s short term gain could have long term consequences for his career.

Then again, if Bob is the type, what about the possibility that he told Fred some version of “you go represent the other side and then we’ll hammer out a settlement. We’ll both get paid!”

15

Oh brother, this is embarrassing.

An update, of sorts: I think Fred is in the clear, with regard to having used his “insider knowledge” to obtain a client. I had forgotten that our attorney contacted the trustees before he filed suit. (It was quite a letter - basically it said, “Hi there scumbags, your trust is all kinds of wrong and you can either resign en masse and let the rightful owners of the funds take over, or I will sue your asses six ways from Sunday. Did I mention you are a scumbag for participating in this activity which is both outrageous and illegal?”)

Anyway, the date of the retainer check to Fred is after the date on that letter.

Apologies for misconstruing the circumstances - I blame Covid. The entire situation was ridiculously protracted due to our attorney getting stuck on the mainland due to Hawai’i quarantine requirements, the courts not hearing cases, etc. What should have taken a few months ended up taking nearly three years.

And as a hypothetical, I do find the question I posed interesting, so all the answers were informative even if it it turns out they don’t totally apply in this exact case.

16

I’ve got a pretty jaded view of lawyerly ethics, and bar organization enforcement. ISTM that commingling funds is the most common way to run afoul of the bar assoc.

What you describe impresses me as just the sort of dickish behavior a portion of the legal profession regularly engages in. And not even crazy dickish at that. Bob should have been more circumspect in what he said to whom. You are fortunate to have enjoyed a favorable outcome.

(37 years as a lawyer, 12 as a judge.)

17

I like to call those “nasty grams”

18

Oops - ninjaed.

If I believed in hell, there would be a special room for the surprisingly large number of folk who steal from their friends and social/nonprofit organizations. I write “surprisingly”, but I cannot remember when I ceased being surprised as such behavior…

19

That removes the spreading “confidential information” part of your concern. He still is in warm water in my view for giving advice to Bob, then agreeing to take the position opposite Bob’s. Whether he intended to or not, advising Bob early in the process probably created an attorney-client relationship between your group and Fred. Once that was established, he cannot jump to the other side. (exceptions apply)

20

Yeah, after we got our first communication from Fred I mentioned to Bob, “hey, didn’t Fred advise you about our case? Can he take Margaret’s case after you talked to him about our side of things?”

Bot agreed it was an interesting point and said he wasn’t sure, but tended to think that Fred’s behavior didn’t rise to the level of a true ethical violation. And of course, Bob knows the nature of his talk with Fred - none of the rest of us do.

It’s also possibly relevant that Bob was NOT the attorney who took our case to court (we engaged a trust attorney, which Bob is not - Bob is just a friend of our organization, and he recommended the attorney we used.)