Needed Disclosures for Lawyers
Needed Disclosures for Lawyers

One of the items that is most often brought up during talks about ethics among legal professionals is the repeated talk about what cannot be disclosed during the ongoing administration of a case, and the handling of a case after disposition.  Even hidden within conversations about things that are not barred for disclosure is the topic about why there still is a duty not to disclose.  However, there is generally very little talk about what SHOULD, under all circumstances, be disclosed.  This post attempts to address a few of those items that require disclosure.  These items include, but are not limited to:

  • the client communication plan,
  • the chances of winning the case,
  • the steps in the process and the client’s role in them,
  • including a timeline for due diligence processes,
  • any compromises to the trust account,
  • any compromise to client data,
  • any conflicts of interest, including friends, family, bosses, and medical providers, etc,
  • any merger or acquisition since they may involve the transference or otherwise sharing of information,
  • any external data management organizations utilized,
  • how their data will be handled internally with the firm,
  • and possibly how the trust money is being handled including any interest earned on it.

The Client Communication Plan
The first on the list is the client communication plan.  Although there is no ruling requiring it, you'll find that the satisfaction that the customers have towards the firm will be largely increased, as well as their willingness to cooperate, when the client gets to help create the plan prior to beginning the procedures in the case.  When clients know ahead of time when their attorney will be communicating with them, when staff will require that the client communicate with the firm, and that their legal team is willing to adjust the plan according to those needs, it leaves little room for complaining about it afterward.  Let’s delve a little into the ethicality of a predetermined communication plan.  First, aside from a conflict by the courts for time slots available for booking procedures what is the biggest thing that creates a conflict to due diligence?  Many times, it is the customers.  This isn’t because the customers are not willing to cooperate, because they've given up, or because they've found another attorney - it's usually because they do not know their attorney is trying to communicate. 

Lack of Communication Examples
This has been witnessed many times in the past, where the customer held up the process because they have gone about their time not realizing the firm is attempting to gain their cooperation to move forward with the case, otherwise they would have cooperated.  Then the customer will call a week later wanting to know the status of their case then at that time they have to be told that their case has experienced conflicts to the legal time frames for filing things, causing more fees in the form of extensions.  Then the customer gets upset because no one told them.  There was a case once where the associate assigned to close out the file ended up having to schedule multiple times a day to show up at the client’s house because all other firms of communication were not working.  It was a simple procedure needing to have the client sign the authorization forms to be able to release the settlement check from the trust account in order to pay the client.  However, the client has no idea that communication was supposed to happen, so it delayed the case closure for at least a month.  This is highly unethical since the settlement check is supposed to be processing through the bank while the authorization is signed so that the check can be cut immediately after, following ethical and procedural requirements for the time it should take for clients to get their money once a case has settled.

Case Progression
In that regard, another set of disclosures relates to the progression of a case.  Many attorneys cover the separate steps in the case when they go over the scope at the initial signing of the contract.  A lot of times the original scope is entirely obscure.  This overview of the case plan lists the name of the individual processes and the associated price, but they do not talk about the client's necessary actions during each separate part of the scope, nor what each relevant task does for the case, unless the client asks.  First, the client needs to know in detail what each step does to affect the outcome of their case, and any actions that can be taken during those steps to help increase the chances of winning and winning big.  They also need to know about time limits, including what the regular time limits are for each step in the process, especially according to due diligence requirements, as well as any steps needed so that the time is not held up.  Further, they need to be able to leave the signup meeting with a deliverable that gives them a reminder of the timeline of tasks the client will be involved with assisting to completion - such as signing authorizations, etc.  During this time, the attorney needs to go over with the client any details of the case that might create a risk for the client as far as any settlement amounts are concerned.  It is unethical to allow the client to sign on to the case with an unrealistic set of expectations about the outcome.  In the end, a differential outcome from the client's expectations may hinder any future relationship with that client, or the client’s friends and family.

Settlement Offers
Aside from communications and process disclosures, attorneys also have an ethical obligation to report all settlement offers made.  This may seem like a contrary statement since the highest settlement is usually the goal of the attorney and the client.  However, clients may have various reasons for accepting a settlement offer.  For instance, some may have rent due or upcoming car payments for the vehicles not effected in a settlement, prior medical bills that are keeping them from getting treatment in this instance.  There are several reasons why a client might need their money at a time when it may require accepting a lower settlement amount.  They may also have pre-existing plans to go back home, to another state, or move across the nation, they may be visiting from another country and must leave earlier than when a higher settlement amount might dispose based on their visa, etc.  A lot of times earlier settlements are much smaller, and the attorney does not want to have to disclose those offers to their clients when they know the client will be able to earn more from the case.  However, there is an ethical obligation to disclose each settlement amount offered, including the timelines for settlement.   IT is up to the client what amount to accept and when.
Compromised Trust
Another, less desired disclosure happens when a trust account becomes compromised.  In the world of cybersecurity and high technology, it's becoming an increasingly wide black-market business to hack into accounts and leak money and/or information from them.  Even if money is not stolen from the account, the compromise cannot be fully confirmed, or a ransomware threat has not been fully confirmed, the attorney will still need to inform the client of the situation.  This is scary because the client might decide to go elsewhere as soon as they find out that their funds have been exposed to a threat.  Attorneys are required to maintain insurance in case of such an occurrence, but any compensation from such claim depends on how much the insurance can cover once an occurrence is confirmed.  Such insurance won’t necessarily hold a client during a compromise.

Other Compromises
Other compromises include expenditures that become larger than what was estimated in the scope of services (unless the attorney is willing to pay for those expenses from their own account without penalizing the client), and any extra fees endured from the courts that were not expected in the scope - such as fees for extensions, objections, or to cure misconduct.  Even fees from late payments to suppliers must be disclosed to the client if the client's settlement amount may be effected by them.   A final compromise is when the firm goes into bankruptcy.  The trust account should remain separate at that time, and rarely will any court allow for debtors to touch the trust since it belongs to the clients, however, the client should still be notified in case somehow the court does approve for the trust account to be accessed.  All these possible compromises should always immediately be disclosed to the client under all occasions. 

Data Handling
Under a similar frame, anytime there is a compromise to the electronic data handling systems - files, accounts, correspondences, trial courts systems and efiling systems, all clients should be made aware of the compromise.  It should be disclosed to them the type of files that could at all be compromised, and how accessed.  There should be notice that the compromise could cause a release of information about the client that may fall into the category of privilege of privacy between the attorney and the client.  Even if the compromise is not confirmed, and even if it is highly unlikely that any private data was shared in the compromise, all clients should still be made aware of the fact that some of that data COULD be compromised.  In this regard, it should also be disclosed to clients any steps that are being taken to cure the compromise and any time frames that the firm is aware of in dealing with the compromise. Sometimes the situation may be that the client’s data was purged, and not compromised at all, the attorney still has a duty to disclose this occurrence.  Information is required to be kept for a certain amount of time, even at the closure of a case.  Further, if the case is still open, the attorney may need to re-gather than information in order to continue with the case.  Finally, clients are allowed rights to access any information maintained in files at the firm, and when the information is compromised or purged, this also compromises the clients access to it.  It is imperative that the client know.

Other Data Handling Issues
Aside from data handling compromises, there are some other data handling disclosures that need to be made.  For instance, if the company experiences a merger, the acquired/acquiring company may have access to the client’s data, and usually does.  Furthermore, many companies use external firms to assist with handling data.  This may be a cloud service for records software, a company that handles legal research and records management via software that also codes the software for reporting, a full fledged data handling company that gathers records, holds records, and disseminates records reports to the firms, and companies that maintain data for the company under legal timelines.  Since such an organization will have access to client privileged data, the client needs to be made aware of this company and to what extent they have access to the data.  Finally, the client needs to know how the firm handles the client’s data internally.  This includes timelines, if it is all electronic or if there are hard copies kept, the chain of command for the data, and how the firm will use the data, including all possible uses of that data.

Conflict of Interest
Another disclosure that should be made immediately is when there is an allowable conflict of interest with another client of the firm or one of its attorneys.  If it IS an allowable conflict of interest, most courts will require a signed consent form from both parties involved in the conflict for the case to move forward.  Furthermore, even when a client is the one that referred a friend or family member, it is important to disclose to the client that such a person is also a client of the firm.  The reason is that both parties may have information regarding the other that the firm may not already have and all parties need to be aware that when they are providing information they may be divulging facts that are not already privileged to the firm about someone who members of the firm are familiar with.  In this example, both parties should still be required to sign permission for representation by the firm as a no conflict claim.  Finally, when one client is a medical provider or employer of another, the same occurrence happens as if the situation involves friends or family members.  There may be information retained by one party that has not been made aware to the firm that could affect the case of the other party, requiring that all parties be aware and sign consent for their cases to move forward with that firm.

Interest on Trust
Currently there is no rule regarding this, but there is some controversy regarding the need to disclose what law firms are doing with the interest earned on trust accounts.  The conversation goes that clients should be made aware that there is interest building on such an account in case the client wants to collect the interest from it.  Some attorneys may argue that the interest is to cover the fidelity fund, which will serve as insurance in case of the occurrence of malpractice.  Many attorneys say that malpractice should not happen, and therefore the attorney should have to pay for any occurrence of malpractice out of their own pockets.  Other attorneys argue that if there is no insurance to cover such an occurrence for the trust account, the trust account might be compromised, harming the clients.  Still others mention that such funds would not have earned interest had it not gone into the attorneys hands and the attorney decided to build interest upon it through the choice of accounts; and the counter argument to that is that the client was the one that chose that attorney, based on an expectation of full disclosure of those types of decisions and such client may have built interest themselves, there is no prior knowledge of if they would or would not have.  Since many effected people are currently in the process of demanding rulings about it, it is best to leave it at the idea that some clients might not know their accounts are earning interest.  Clients have the need to have all handling of their trust account disclosed to them, beyond just interest.  In this regard, the lack of disclosure also keeps them from deciding for themselves if they can collect that interest or not.

While this list of items is extensive as to what SHOULD be disclosed to clients, it is not meant to be exhausting.  There are many other items that should be disclosed.  This post is meant to start interest in the conversation regarding the way disclosure is also ethical in some instances of disclosure.  It is not a bad word, just a contingent reference.

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