1. D E N V E R L A S V E G A S O R A N G E C O U N T Y P H O E N I X S A L T L A K E C I T Y T U C S O N Nevada Ethics Update for In-House Counsel Cynthia A. LeVasseur clevasseur@swlaw.com | 702.784. 5234

2. ©2007 Snell & Wilmer L.L.P. 2 Topics to Be Covered  Recent Rule Changes  Recent Ethics Opinions  Implications for In-House Counsel

3. ©2007 Snell & Wilmer L.L.P. 3 Recent Rule Changes: Numbering System  Effective May 1, 2006, Nevada Rules of Professional Conduct (formerly Supreme Court Rules) were renumbered to conform with the ABA’s Model Rules  The new system is cited as “RPC”

4. ©2007 Snell & Wilmer L.L.P. 4 Recent Rule Changes: Whistle blowing by in-house counsel  Effective January 1, 2007, RPC 1.13 changed substantively to conform with the ABA’s Model Rules  RPC 1.13: Organization as a Client  Governs lawyer’s actions when lawyer knows:  Someone in the organization is “engaged in action, intends to act or refuses to act in a way that will likely cause the organization civil or criminal liability,” and  The potential liability would likely cause the organization substantial harm

5. ©2007 Snell & Wilmer L.L.P. 5 Recent Rule Changes: Whistle blowing by in-house counsel (cont’d)  Old Rule (2006)  Focus on minimum disruption and minimum risk of disclosure  Refer the matter to higher authorities in the organization (Go up the ladder until the top)  Must not disclose relevant information outside of the organization  Resignation if the highest authorities ignore the lawyer

6. ©2007 Snell & Wilmer L.L.P. 6 Recent Rule Changes: Whistle blowing by in-house counsel (cont’d)  New Rule (2007)  New focus on the best interest of the client organization  Refer the matter to higher authorities in the organization (Go up the ladder until the top)  May disclose the information if the highest authorities ignore the lawyer, the lawyer  But only if and to the extent the lawyer believes disclosure to be necessary to prevent substantial injury to the organization.  If the lawyer if fired or withdraws because of actions related to the rule, the lawyer must inform the organization’s highest authority what has happened

7. ©2007 Snell & Wilmer L.L.P. 7 Recent Rule Changes: Dual Representation of Organization and Employees  RPC 1.13: Organization as a Client  When dealing with directors, officers, employees, shareholders or other constituents  Explain that the organization is the client  Attempt to make sure the constituent understands that the organization is the client

8. ©2007 Snell & Wilmer L.L.P. 8 Recent Ethics Opinions: Adverse Counsel’s Contact with Employees RPC 4.2: Communication with Person Represented by Counsel In representing a client, a lawyer shall not communicate about the subject of the representation with a person the lawyer knows to be represented by another lawyer in the matter, unless the lawyer has the consent of the other lawyer or is authorized to do so by law or a court order.  Textually identical to ABA’s Model Rule 4.2  Rationale: Prevent  Overreaching  Interference with lawyer-client relationship  Uncounseled disclosure

9. ©2007 Snell & Wilmer L.L.P. 9 Recent Ethics Opinions: Adverse Counsel’s Contact with Employees (cont’d) Nevada State Bar Eth. Op. 27 (revised and reissued Apr. 16, 2005). The “Manager-Speaking Agent Test”  Prohibits communication with anyone who:  Is authorized to speak for the organization about the subject matter of the litigation or dispute  “The inquiry is whether the employee can bind the organization with his or her statement.” Palmer v. Pioneer Inn Associates, Ltd., 59 P.3d 1237, 1248 (Nev. 2002).

10. ©2007 Snell & Wilmer L.L.P. 10 Recent Ethics Opinions: Adverse Counsel’s Contact with Former Employees RPC 4.2 does not apply to former constituents. Palmer v. Pioneer, 19 F.Supp.2d 1157 (D.Nev. 1998). General rule in majority of states. Adopted by Commissioner Biggar (1998).

11. ©2007 Snell & Wilmer L.L.P. 11 Recent Ethics Opinions: Adverse Counsel’s Contact with In-House Counsel ABA Formal Opinion 06-443 (August 5, 2006) Contact with Inside counsel of an Organization regarding a Matter When the Organization is Represented by Outside Counsel  Rationale of RPC 4.2: Prevent  Overreaching  Interference with lawyer-client relationship  Uncounseled disclosure  Generally not present with in-house counsel  In-house counsel presumed to be legally sophisticated

12. ©2007 Snell & Wilmer L.L.P. 12 Recent Ethics Opinions: Adverse Counsel’s Contact with In-House Counsel (cont’d)  Exception: Specific request for no contact (RPC 4.4)  Probable Exception: In-house counsel is a party in the matter and represented by some outside counsel.  This Opinion 06-443 relies on Alter Ego Test that was required by Nevada, so distinction can be made. The purpose of the protection of the Alter Ego Test and the Manager-Speaker Test are the same, however, so most likely such protection will be afforded in-house counsel considered to the parties.

13. ©2007 Snell & Wilmer L.L.P. 13 Recent Ethics Opinions: Inadvertently Disclosed Materials  Opposing counsel inadvertently produces confidential or privileged materials to you or your outside counsel. What do you do with them?  Ethics  Professional courtesy  Procedural law  Substantive law

14. ©2007 Snell & Wilmer L.L.P. 14 FRCP: Inadvertently Disclosed Materials (cont’d)  FRCP 16(b) Pretrial Conferences: Requires lawyers to propose “provisions for disclosure or discovery of electronically stored information (ESI).”  FRCP 26(f)(4) “Claw Back”: An agreement that governs how opposing parties treat inadvertently disclosed materials.

15. ©2007 Snell & Wilmer L.L.P. 15 FRCP: Inadvertently Disclosed Materials (cont’d)  FRCP 26(b)(5)(B) “Claw Back” Codified:  The sending party notifies the receiving party of an inadvertent disclosure The receiving party must:  “Promptly return, sequester, or destroy” the specified information  Not use or disclose the information  Try to retrieve the information if it has already been disclosed The receiving party may: Present the information to the court under seal for a determination of the claim The sending party must: Preserve the information until the claim has been resolved

16. ©2007 Snell & Wilmer L.L.P. 16 FRCP: Inadvertently Disclosed Materials (cont’d)  Advisory Committee Note to Rule 26(b)(5)(B).  FRCP 26(b)(5)(B) does not address whether privilege or work product protection has been waived.  Merely provides “a procedure for presenting and addressing these issues.”

17. ©2007 Snell & Wilmer L.L.P. 17 Ethical Rules: Inadvertently Disclosed Materials  RPC 4.4(b) A lawyer who receives a document relating to the representation of the lawyer’s client and knows or reasonably should know that the document was inadvertently sent shall promptly notify the sender.

18. ©2007 Snell & Wilmer L.L.P. 18 Preserving Information: Litigation Hold  Housing Rights Center v. Sterling (2005 WL 3320739 (C.D. Cal. Mar. 2, 2005): Litigation Hold:  P arties have a duty to preserve information:  Potentially relevant to litigation  Litigation is either current or probable  In-house counsel should have a “litigation hold” plan in place  Possible adverse inference jury instruction

19. ©2007 Snell & Wilmer L.L.P. 19 Recent Ethics Opinions: Metadata ABA Formal Opinion 06-442 (August 5, 2006) discusses the uses of metadata. “Metadata” has been defined as “the history, tracking, or management of an electronic document.” Williams v. Sprint, 230 F.R.D. 640, 646 (D.Kan. 2005). Examples: Last date and time a document is saved and date on when it was last accessed. Name of owner of computer that created the document, date and time of creation, name of person who last saved document. Seeing of redline revisions. Seeing of embedded comments.

20. ©2007 Snell & Wilmer L.L.P. 20 Recent Ethics Opinions: Metadata: How can it be used?  Do the Model Rules of Professional Conduct permit a lawyer to review and use embedded metadata contained in e-mail and other electronic documents, whether received from opposing counsel, an adverse party or an agent of an adverse party?  No specific rule prohibiting a lawyer from reviewing and using hidden metadata.  RPC 4.4(b) is analogous. It states: A lawyer who receives a document relating to the representation of a lawyer’s client and knows or reasonably should know that the document was inadvertently sent shall promptly notify the sender. Opinion failed to address whether in receiving electronic materials, attorney knows or should know that production contains metadata that was produced inadvertently. Metadata mining permissible.

21. ©2007 Snell & Wilmer L.L.P. 21 Recent Ethics Opinions: Obligation of Truthfulness in Mediation  RPC 3.3(a)(1): Candor Toward the Tribunal A lawyer shall not knowingly make a false statement of fact or law to a tribunal or fail to correct a false statement of material fact or law previously made to the tribunal by the lawyer.  RPC 4.1(a): Truthfulness in Statements to Others In the course of representing a client a lawyer shall not knowingly make a false statement of material fact or law to a third person.

22. ©2007 Snell & Wilmer L.L.P. 22 Recent Ethics Opinions: Obligation of Truthfulness in Mediation (cont’d)  ABA Formal Opinion 06-439 (April 12, 2006) Lawyer’s Obligation of Truthfulness When Representing a Client in Negotiation: Application to Caucused Mediation  Don’t lie about facts  Representing an employer in labor negotiations and stating to union lawyers that adding a particular employee benefit will cost the company an additional $100 per employee when you know it’s only $20 per employee  Representing that documentary evidence will be submitted at trial in support of a defense when the lawyer knows that such documents do not exist or will be inadmissible  Concealing client’s death  Puffing is not lying