Professional Ethics and Responsibility Archives

Category: Professional Ethics and Responsibility

You Can Buy Me Dinner, But Don’t Expect to Choose My Entrée: Motion to Disqualify for Non-Party Litigation Funding Conflicts of Interest

You can pay for the dinner, but you cannot pick when, where or what we’re eating. At least that’s what a Magistrate Judge in the District of New Jersey decided last week in Harish v. Arbit, No. CV 21-11088-EP-AME, 2025 WL 354434 (D.N.J. Jan. 31, 2025), a patent dispute that resulted in the disqualification of two law firms from representing two defendants because the defense was funded, at least in part, by a non-party with an interest in the patent.

Adversarial Standing

Plaintiff maintained that defense counsel violated N. J. Rule of Professional Conduct 1.8(f) when they represented defendants and a non-party payer. The Court held that the plaintiff, as an adversary, had standing to raise a potential conflict of interest and bring a motion to disqualify. While the Court noted that the Third Circuit had not ruled on the issue directly, “this District has held that ‘[a]dversaries, as well as former clients, may raise conflict of interest concerns.’”

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Supreme Court to Resolve Attorney-Client Privilege Split

For the first time in 25 years, the U.S. Supreme Court is considering the scope of the attorney-client privilege in the case In re Grand Jury, No. 21-1397. The Court heard oral arguments earlier this week about when the attorney-client privilege protects communications involving both legal and nonlegal advice (dual-purpose communications).

In re Grand Jury

A grand jury subpoenaed documents from the petitioner, a tax law firm, related to a criminal investigation into the law firm’s client. In re Grand Jury, 23 F.4th 1088, 1090 (9th Cir. 2021). The law firm withheld documents that had dual-purpose communications based on the attorney-client privilege. After the government moved to compel, the district court used the “primary purpose test” to determine whether the dual-purpose communications were privileged. The court used the test to determine “whether the primary purpose of the communication [was] to give or receive legal advice, as opposed to business or tax advice.” Id. at 1091 (citation omitted). In the end, the district court ordered the law firm to produce documents to the government after redacting tax-related legal advice. When the law firm refused, the court held it in contempt, and the Ninth Circuit affirmed the contempt order.

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Improper Texting During Remote Testimony Can Result in Significant Consequences to Litigants and Lawyers

For many litigators, sworn testimony today looks much different than it did two years ago. As the COVID-19 pandemic has required parties to limit travel and in-person proceedings, remote testimony for depositions, arbitrations and even trials has become the rule rather than the exception. With this transition, litigators have been confronted with unique circumstances and felt compelled to ask questions to confirm that the witness’s testimony is that of the witness, and only the witness. For example, is anyone else present in the room with the witness? Does the witness have any unauthorized lines of communication that could be used while the sworn testimony is proceeding? It has now become critical to ask a witness to swear under oath that there is no one else in the room with the witness and that no person is authorized to communicate with the witness during her or his testimony. Several recent decisions solidify this practice point and illustrate the consequences to litigants and lawyers when a witness surreptitiously communicates with others during the course of remote testimony.

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New Jersey Ethics Committee: Beware Marketers that “Lead” to Ethics Violations

Increasingly popular online “lead generation” services offering to connect attorneys with potential mass tort plaintiffs may expose counsel to ethics violations, the New Jersey Advisory Committee on Professional Conduct cautioned in two recent advisory opinions.

New Jersey attorneys are charged with the affirmative responsibility to “question whether the marketing company is improperly labeling its services,” the committee stated in a June 21, 2021 joint opinion with the Committee on Attorney Advertising. On the same date, the Advisory Committee issued another joint opinion with the Committee on the Unauthorized Practice of Law offering further insight on the circumstances in which a permissible client lead becomes an improper for-profit referral.

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Summary of HB1125: Deceptive Lead Generation

Lawsuit advertisements—specifically ones that target prescription drugs and medical devices—can be dangerous. Nationwide, dramatized and exaggerated legal ads have flooded both televisions and the internet, often masquerading as “medical alerts.” Some estimates have total spending on legal advertisements at around $1 billion annually. As a result, state legislatures are beginning to take action to combat deceptive advertising and come up with solutions, including in Indiana, which recently passed House Bill 1125. House Bill 1125 places several limitations on the practice of lead generation – the use of commercial communications to initiate consumer interest or inquiry into legal services intended to redress an alleged injury from a medical device or legend drug – and provides a private right of action for manufacturers and sellers of medical devices and legend drugs against deceptive lead generators.

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Considerations from the ABA’s Best Practices for Litigation Funding

The exact dollar amount that third-party investors infuse in U.S. lawsuits every year is unknown, but conservative estimates begin around $2.3 billion, with agreement that the industry has room to grow. With the ongoing pandemic stretching litigation timelines and straining budgets, the litigation funding industry remains highly active. Despite the importance of litigation funding to all parties involved (lawyers, plaintiffs, and defendants), regulation varies by state, and litigation funders are largely left to self-regulate.

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