CURRENT MONTH (September 2017)

Professional Responsibility

Liability of Former Partner in LLP and Reasonableness of Fees

By Keith R. Fisher, National Center for State Courts

Co-lead class-action counsel sought in arbitration an additional $1.2 million in fees out of a total $163.5 million settlement from another firm (Target) whose principal, previously a limited liability partner of yet another co-lead class counsel, had formed his own firm that also received fees from the settlement. The claim was based on a referral agreement with the former employer. Target sought to derail the arbitration via a declaratory judgment action in federal court in California, but a favorable ruling based on the Rules of Professional Conduct was nullified when the 9th Circuit found no personal jurisdiction. Target refiled in Maryland, and the court there awarded Target summary judgment because a former partner in a registered LLP under California law isn’t liable for the LLP’s obligations or liabilities (the referral agreement), and all relevant Rules of Professional Conduct authorize any fee sharing between lawyers in different firms only if proportionate to the services provided, agreed to in writing by the client, and reasonable. Saveri Law Firm v. Criden et al., No. RDB-17-1603 (D. Md., Sept. 7, 2017).


Permissibility of Bitcoin as Legal Fees and Deposits in Trust Accounts

By Keith R. Fisher, National Center for State Courts

The first ethics opinion in the country to address lawyers accepting fee payments in Bitcoin in compliance with the proscription against charging an unreasonable fee, Nebraska Ethics Advisory Opinion 17-03, requires converting the digital currencies into U.S. dollars at objective market rates immediately upon receipt through the use of a payment processor; so notifying the client; and crediting the client’s account accordingly at the time of payment. Such payments can be accepted from third parties as long as attorney independence and client confidentiality are not compromised and know-your-customer procedures are implemented. A lawyer may hold digital funds in escrow or trust if kept separate from the lawyer’s property, but, because Bitcoin constitutes property and not currency, it may not be deposited in lawyer trust fund accounts created under Nebraska Supreme Court Rules Chapter 3, Article 9.


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