Suits Gets Fraud on the Court Right

I had one of those WTH moments while watching Suits recently. A lawyer with a grudge against Harvey shows up claiming he has evidence that a judgment Harvey obtained 5 years ago was done fraudulently. The evidence? He comes up with a memo he claims was hidden. In it, a company representative talks about the design defect the company denied existed in a products liability case. He claims Harvey hid it deliberately. He is suing the law firm for fraud and is going to move the court to set aside the judgment.

So I’m thinking, five years? How is he going to reopen a case that old? Does fraud on a court let you go back indefinitely in New York?

The answer is, maybe. If the judgment was entered in Federal court, the parties have only one year to seek relief based on fraud. Fed. R. Civ. P. 60 says:

(b) Grounds for Relief from a Final Judgment, Order, or Proceeding. On motion and just terms, the court may relieve a party or its legal representative from a final judgment, order, or proceeding for the following reasons:
(1) mistake, inadvertence, surprise, or excusable neglect;
(2) newly discovered evidence that, with reasonable diligence, could not have been discovered in time to move for a new trial under Rule 59(b);
(3) fraud (whether previously called intrinsic or extrinsic), misrepresentation, or misconduct by an opposing party;
(4) the judgment is void;
(5) the judgment has been satisfied, released, or discharged; it is based on an earlier judgment that has been reversed or vacated; or applying it prospectively is no longer equitable; or
(6) any other reason that justifies relief.
(c) Timing and Effect of the Motion.
(1) Timing. A motion under Rule 60(b) must be made within a reasonable time—and for reasons (1), (2), and (3) no more than a year after the entry of the judgment or order or the date of the proceeding.

However, I don’t see a similar time limit under New York’s CVP. LAW § 5015 : Relief from judgment or order:

(a) On motion. The court which rendered a judgment or order may relieve a party from it upon such terms as may be just, on motion of any interested person with such notice as the court may direct, upon the ground of:

1. excusable default, if such motion is made within one year after
service of a copy of the judgment or order with written notice of its
entry upon the moving party, or, if the moving party has entered the
judgment or order, within one year after such entry; or

2. newly-discovered evidence which, if introduced at the trial, would
probably have produced a different result and which could not have been
discovered in time to move for a new trial under section 4404; or

3. fraud, misrepresentation, or other misconduct of an adverse party;
Or

4. lack of jurisdiction to render the judgment or order; or

5. reversal, modification or vacatur of a prior judgment or order upon
which it is based.

The one year time limit only applies to excusable default, and not to the other grounds. So I’ll rate that plotline as plausible (NY civil procedure gurus, let me know if I missed something).

The next thing that happened is the lawyer tricked Harvey into doing his own investigation after the client fired the firm. Harvey found out that there was indeed fraud. The lawyer then announced that Harvey had to disclose the fraud to the court now.

If they were in Florida, that’s probably true. New York law isn’t so clear. NY DR 7-102(B)(1) provides that “[a] lawyer who receives information clearly establishing that . . .[t]he client has, in the course of the representation, perpetrated a fraud upon a person or tribunal shall promptly call upon the client to rectify the same, and if the client refuses or is unable to do so, the lawyer shall reveal the fraud . . . except when the information is protected as a confidence or secret.”

So while Harvey probably had to withdraw once he found out the client committed fraud, he probably can’t reveal it to the court. That’s because the fraud occurred while he represented the client, so most of his factual knowledge comes from attorney-client communications. If a person other than a client has committed the fraud, the lawyer must tell the tribunal. So the other lawyer probably has a duty to inform the court if he thinks Harvey’s client perpetrated a fraud.

On the other hand, NY law says a lawyer may reveal: “Confidences or secrets to the extent implicit in withdrawing a written or oral opinion or representation previously given by the lawyer and believed by the lawyer still to be relied upon by a third person where the lawyer has discovered that the opinion or representation was based on materially inaccurate information or is being used to further a crime or fraud.” So maybe he’s okay if he reveals the fraud, but he can only do it to the extent he announces to the court that he’s withdrawing his representation that the company produced all the relevant documents. He probably can’t say, “Oh, by the way, the client told me that he had produced everything but I found this document that wasn’t produced.”

Overall, although I initially thought the plotline wasn’t very plausible, I have to conclude that it is indeed plausible under New York law. While the writers took some liberties, I’ll concede that they did a good job overall. I wonder how Harvey will get out of this one?

USA's Suits Gets Dangerous Employment Clause for Writers Right

Yes, yes, I know. I’ve been away, not blogging. I was in Italy for 3 weeks, so sue me. But I’m back, and am starting to catch up on my American TV.

In the first episode of season 2 of the USA show Suits, our hero and fake lawyer Mike had to deal with representing a publishing company against a former employee. The employee sued, saying she had pitched a book idea to her boss, wrote up a proposal, and it was rejected. Shortly after that, her book showed up under her boss’s name.

As part of her employment contract, she signed an intellectual property clause saying, essentially, that if she wrote it, thought it or sketched it while she worked for the company, it belonged to the company.

At first, Mike does the thing I always hate in these legal shows: he started to act against the interest of his client. He even convinced them to pay her off to the tune of $30,000. She didn’t take the deal. She should have.

Fortunately, Mike finally read the contract. Not only that, but he came up with two prior books the company published with similar ideas. “There’s nothing new under the sun,” he said. She ended up with nothing.

That brings up two key points for writers:

1. You can’t copyright an idea. If you put your idea out there to someone, you have very little protection if they run with it. Copyright protects the written expression of an idea, not the idea itself. If you have the greatest book idea in the world, write the book. Don’t blab and let someone else run with it.

2. You are probably bound by your intellectual property agreement. Remember the Bratz dolls? They disappeared off the shelves for awhile because their founder used to work for Mattel. He did some preliminary sketches while he still worked there, albeit on his own time. It took years of litigation and millions of dollars, losing a court case and the entire Bratz franchise, then appealing, to take it back. Most writers don’t have the kind of financial wherewithal to fight when their employer takes credit for their work. 

The whole inability to copyright an idea bit is scary. I write nonfiction, and when you do nonfiction you don’t write the whole book. You write a proposal with a few chapters and a pitch for the rest. There’s very little protection if a publisher says, “Wow, what a great idea! Let’s get one of our regular writers on this.”

So what do you do? Write the best, most professional proposal you can. Show them you’re the right person to do the book. Have your platform polished and prove to them you can sell the book.

As to employment contracts, always have an employee-side employment lawyer look at yours, especially if you do anything creative. Whether you are writing a novel that has nothing to do with work or writing a nonfiction book in your area of expertise, make sure you have a clause exempting any work you want to own before you sign. Otherwise, your employer just might own it.

Chinese Walls and Other Idiocy on Suits

This will be my final rant about the last few episodes of Suits this season. Hopefully they'll get it together and I can use them as a good example again next season.

Harvey has to figure out how to divide a tabloid tycoon's multi-million dollar estate between his two daughters who happen to hate each other. Jessica, the firm boss, places Louis, Harvey's arch-nemesis, in charge of one daughter and Harvey of the other. Louis and Harvey will be pitted against each other in dividing the assets.They say there will be a "Chinese Wall" and they won't share info with each other. Then they sneak around spying, backstabbing, lying and tricking each other in a game they play against each other to see who will "win."

Hello? The firm represents both clients. That means the firm has to act in both clients' best interests. It's obvious they cannot. If they can't, then they are disqualified from representing both clients. The courts and the Bars don't let the "Chinese Wall" concept fly.

This episode was a travesty. Sure, it was funny watching the guys with their antics, but it couldn't happen in real life, at least not ethically. The writers either needed to acknowledge that the lawyers were totally off track ethically and that they could be disbarred for it, or they needed to do something else. The writers should have had the firm get both of these clients represented by independent counsel. Then they could act on behalf of the estate.They could still show Harvey and Louis bickering about who should get what, but it would have been funnier watching them have to act as neutrals in front of the two lawyers representing the daughters and pretend they wanted a fair division.

The way it turned out, the daughter who "lost" should sue the pants off the firm. The failure to share vital information was malpractice.

Suits Should Know Better - Working Against A Client Is A No-No

This is my second post in my I'm-Getting-Really-Frustrated-With-Suits-So-Make-It-Stop rant. In the episode called Shelf Life, the writers commit what I consider to be one of the biggest faux pas of bad legal writing: working against a client. You can't do it. Ever.

In this episode, Mike and Harvey have to fire Stan Jacobson, the senior vice president of their client and accounting firm, Dreibach Accounting due to phony credentials. Jacobson claims he's getting railroaded  because he recently discovered some illicit book-cooking and refuses to sign. So far, so good. Then they decide to investigate his allegations. That's fine. They're doing their due diligence in case he sues, and they represent the corporation, not Jacobson's boss, so they have to figure out if the corporation has exposure. Here's where it goes bonkers.

They decide he's right. So instead of doing what they were told, they decide not to push Jacobson to sign. Instead, they start acting on behalf of Jacobson and against their client. Whoa doggy. After that, I lost my ability to concentrate on the plot. I was too busy screaming at the TV screen. I still like the show because I enjoy the characters and love the main plotline since it really happens (a nonlawyer faking his way in a big firm, pretending to be a lawyer). But if they're close to losing me, then imagine how many lawyers and people involved in the legal system they lost who tuned into the show for the first time.

I have one more episode to rant about. They need to get their act together next season or they'll lose me as a fan, along with everyone else who knows they're not bothering to get the legal stuff right.

Suits Goes Haywire on Switching Firms, Talking To Clients

In the "Undefeated" episode of USA's summer show Suits, the writers went way off track on some key points. I found it hard to enjoy the show even though it had the delicious Eric Close on as a guest star, playing a lawyer whose shady tactics keep our heroes busy. The show centered around a case involving a toxic chemical that exposed people who worked at and attended a school. They have cancer, and they're suing. In comes Close, playing a lawyer who brags he's never lost. That raises Harvey's hackles, because he is also undefeated. (I'll even let slide that all lawyers lose cases unless they settle them instead of taking them to trial).

There were key problems with this show. Here are the main ones:

Paralegal switching firms: A subplot involved a paralegal who had worked on the case being offered a job at Close's firm. She was angry and said she'd tell them all about the case. That's an instant disqualification for Close's firm. In fact, I was hoping that it was Harvey's sneaky tactic to do just that. Instead, there was much hand-wringing and they finally convinced her to come back. Paralegals and secretaries can't switch firms and give out client confidential information any more than lawyers can. It's a major amateur-hour mistake. The writers have been pretty good up to now, so I was surprised by this.

Talking to clients: The writers had Close sending representatives to talk to Harvey's clients. Hello? In what universe? Harvey would have run to the judge and the Bar so fast that Close wouldn't have had time to collect his toothbrush before he was thrown in jail for contempt or disbarred. Lawyers can't talk to someone they know is represented without their lawyer's permission. And they can't get a third party to do it either.

Calling a meeting with clients: Then the writers had Close use a third party to call all of Harvey's clients to a meeting in a hotel to hear a settlement offer. Harvey and our hero, Mike, talked about how, if Close spoke to their clients, they would be able to go to the judge. They rushed to the meeting. Then Close relayed the settlement offer - not to the clients, but to Harvey, loudly enough so the clients could hear. Oh no! The lawyers commence hand-wringing again. They've been outsmarted. Huh? They had Close dead to rights. Their clients should have been called to testify or provide affidavits about who contacted them about the meeting, and Harvey could have gone to the judge. Again, the third parties contacting the clients is as bad as the lawyer doing it himself.

This episode was a disappointment to me. So far, the writers had been pretty good. I had nits to pick, but nothing too awful. I have two more episodes to complain about in other posts. I'm worried about the show. If they can't be bothered to get the legal stuff right, they'll lose me as a fan, along with 1.1 million other lawyers who notice when they get it wrong.

Relaying Settlement Offers to a Client is Never Just a Formality

On a recent episode of Suits, after a $15 million settlement offer was relayed, the lawyer declined huffily without speaking with his client. He told the client later that he was relaying it to them only as a formality. I should be glad that at least the lawyer in this show discussed the offer with the client. In too many shows and books, the lawyer refuses or accepts offers on their own.

The ABA Model Rules of Professional Conduct, which every state but California uses as the model for their own rules, say:

1.4(a) A lawyer shall:

(1) promptly inform the client of any decision or circumstance with respect to which the client's informed consent, as defined in Rule 1.0(e), is required by these Rules;

(2) reasonably consult with the client about the means by which the client's objectives are to be accomplished;

(3) keep the client reasonably informed about the status of the matter;

(4) promptly comply with reasonable requests for information; and

(5) consult with the client about any relevant limitation on the lawyer's conduct when the lawyer knows that the client expects assistance not permitted by the Rules of Professional Conduct or other law.

The comments to the rule explain:

  [A]lawyer who receives from opposing counsel an offer of settlement in a civil controversy or a proffered plea bargain in a criminal case must promptly inform the client of its substance unless the client has previously indicated that the proposal will be acceptable or unacceptable or has authorized the lawyer to accept or to reject the offer.

As to whether the lawyer has to accept the client's decision, the rules are clear:

(a) Subject to paragraphs (c) and (d), a lawyer shall abide by a client's decisions concerning the objectives of representation and, as required by Rule 1.4, shall consult with the client as to the means by which they are to be pursued. A lawyer may take such action on behalf of the client as is impliedly authorized to carry out the representation. A lawyer shall abide by a client's decision whether to settle a matter. In a criminal case, the lawyer shall abide by the client's decision, after consultation with the lawyer, as to a plea to be entered, whether to waive jury trial and whether the client will testify.

Relaying the settlement offer to the client isn't a just a formality - it's a requirement. It's not that hard to write the scene correctly. The proper response is, "I'll relay it to the client, but I'll recommend against it." The only way the lawyer can shoot it down is if the client already said they wouldn't accept anything under x-amount and authorized the lawyer to turn down anything under that number.

Life Imitates Suits

I couldn't resist sharing this headline with you after I said how much I enjoyed the show Suits. Just in case you thought it was unrealistic that someone could pass himself off as a lawyer at a big firm, here's one who did just that. Apparently a guy worked for the firm Clausen Miller in New Jersey for two years before they realized he was a phony.

His firm bio said, "Before entering practice, [the phony] was law clerk to multiple judges of the Superior Court of New Jersey, including the presiding civil judge of Union County." The website went on to say he graduated cum laude from Siena College in 1997 and Seton Hall University School of Law in 2000, and was admitted to the New Jersey bar in 2000 and the New York bar in 2001. It's looking more and more likely that none of these statements were true.

The potential consequences are an 18 month prison sentence and a $10,000 fine. To the firm, they have to notify the judges, clients and opposing counsel and face loads of malpractice suits. Opposing counsel, I'm sure, will be particularly understanding and not openly laugh at them at all.

So, life imitates art. Gotta love it.

For a Decent Summer Legal Show, Check Out Suits

            Suits, the new USA summer show about a guy passing himself off as a lawyer, had me worried at the beginning. The very first scene was a real lawyer lying to a client to get a deal closed. That’s a huge, disbarrable no-no. The writers redeemed themselves when the characters discussed how interested the Bar would be in that incident. Two characters threatened each other with mutually assured destruction if one reported the other. I was so happy. Maybe I’m easily amused.

            Then they had a sexual harassment case as our hero’s first case, and I cringed. Shows about my area of practice are always the most difficult for me to watch because they get so much wrong. But Suits did a really nice job. Sure, they took some license, but not too much. They got the concept of quid pro quo sexual harassment right. And then they showed what happens far too often in the real world. You see, the Supreme Court says sexual harassment victims have to report the harassment to Human Resources and give them a chance to fix it. If they don’t do it, they lose their right to bring a case.

            Here, the victim reported it. Sure enough, two months later, she was fired for alleged performance problems. Do you have any idea how many times I hear the same story in real life? Try about once a week. Again, I was unduly happy.

            They got big firm life down to a tee – the first year associates being treated like slaves, frowning on them leaving before 9 p.m., the bickering among partners, the competition, and the cutthroat atmosphere.

            I don’t usually comment on the actual writing, but I have to here because I really enjoyed this show. The characters were fun, dialogue snappy and the plot interesting. I’ve said before that I tend to watch all the USA shows, and this will apparently be no exception. Hopefully the writers will keep up the good work.