Litigation and Trial - Max Kennerly : Philadelphia Trial Lawyer Max Kennerly : Business and Commercial Litigation : Civil Attorney : The Beasley Firm : Philadelphia Pennsylvania

Via @pointoflaw, I learned of a recent column by Randy Cohen, who writes The Ethicist for The New York Times.

Last week, Cohen chose two inquiries:

and

Legal Ethics Forum rounds up some legal blogger reactions to the first inquiry.

The inquiries are awfully similar to one another. As noted by the article, the law firm had more qualified applicants than it could accept, and the potential patient was able to secure other medical treatment. It's a big world out there; you are not everyone's keeper.

Thus, Cohen had a simple answer for both:

Oops, my mistake: that should have been Cohen's simple answer for both.

Instead, that answer was solely for the doctor, who was free not to treat the trial lawyer because the doctor's political beliefs — i.e., his views on patient's right to recover for damages caused by medical malpractice — differed from the trial lawyer's.

Not so for the law firm. No, when it comes to Federalist Society members:

Cohen apparently didn't even see any conflict between the advice he gave the lawyer and the advice he gave doctor, and doesn't bother to defend the contradiction.

Which leaves us to speculate: What does Cohen think is the material difference between the two inquiries?

One possible answer: Cohen believes Federalist Society members and trial lawyers should be subject to special rules. Federalist Society members' political beliefs are good, trial lawyers' political beliefs are bad.

End of story.

Some ethics.

 

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As you may have heard, Judge Rakoff did not like the proposed SEC settlement with Bank of America (neither did I) in part because it blamed the bank's lawyers while refusing to waive attorney-client privilege and explain what, exactly, went wrong. A week ago, he rejected it entirely:

In a 13-page order available here at the New York Times's DealBook blog, Rakoff variously calls the settlement "trivial," "absurd," and "neither fair, nor reasonable, nor adequate." His primary objection seems to be that shareholders would indirectly pay for the alleged failure to disclose the bonuses, since the bank, not the individual executives who struck the merger agreement, would pay the fine. The SEC, according to Rakoff, says it cannot punish BofA executives because those executives did not craft the merger agreement in a way that--according to the agency--violated disclosure rules. Who did craft the merger agreement in such a way?

According to the SEC, that would be the lawyers who wrote the agreement--Wachtell, Lipton, Rosen & Katz for BofA and Shearman & Sterling for Merrill. Rakoff responds with a sentence that must frighten any M&A lawyer: "If that is the case, why are the penalties not then sought from the lawyers?"

As we've written at length, the pointing of the finger at outside counsel has raised serious questions about whether the bank waived attorney-client privilege in its talks with the SEC, and whether Rakoff may try to extend that waiver into his courtroom. The bank, for its part, has denied any wrongdoing, saying it is routine to conceal sensitive information, such as bonus payments, in confidential statements filed at the same time as public merger agreements.

Now Congress has jumped in:

The chairman of the House Committee on Oversight and Government Reform on Friday told Bank of America that it has questions concerning disclosures made surrounding the bank’s purchase of Merrill Lynch. The panel’s chairman, Edolphus Towns (D-NY), told the bank it can’t use the attorney-client privilege when dealing with Congress. Click here for more, from the NYT; here for earlier coverage of BacMerSaga, from the LB.

In a letter on Friday, Towns (pictured) said the bank must divulge when it became aware of the enormous losses at Merrill last year, when it received a commitment from the federal government for a second round of bailout money and what legal advice its management received about whether it had to disclose those developments to the bank’s shareholders. (Legal advice? Yipes! It means that, at least for the moment, the roles of Wachtell, Lipton and Shearman & Sterling will likely stay firmly in the spotlight.)

...

Bank of America acknowledged that Congress had the authority to disregard attorney-client privilege. That said, the bank’s Washington law firm, WilmerHale, argued that that would set a bad precedent. It’s a sentiment shared, writes the NYT, by the Association of Corporate Counsel, which came to BofA’s defense this month when the New York attorney general Andrew Cuomo asked the bank to give up its claim that its legal advice should remain private. The group issued a statement saying that it would be an “outrageous precedent” for other public companies if the bank had to give up its right to legal privacy.

As I wrote back when Judge Rakoff was still considering the settlement,

Courts often hold that clients cannot use attorney-client privilege as both a sword and a shield. That is, clients can either use lawyers' advice as a "sword" to defend themselves or they can use the privilege as a "shield" to keep communications private, in which case they're off limits entirely.

But they can't have it both ways. If they could, every defendant would just blame their lawyers and call it a day.

Bank of America's (current) lawyers have it exactly backwards: it would set a "outrageous precedent" if privilege was not waived here, because the bank itself interjected legal advice into the matter by blaming its lawyers for what happened.

The principle involved is not complicated. If you want to keep your legal advice out of the case, then do not use it in your defense. If you want to blame your lawyers and raise advice of counsel as a defense, then you lose the privilege.

Sword or shield. Not both.

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When the going gets weird, the weird turn pro.

Here's how it starts:

Nancy Kanter, Esquire ("Kanter") referred a case to Alan B. Epstein, Esquire ("Epstein"). The case involved a claim by a child in the foster system who was abused by her prospective adoptive foster parents (the "Tara M. case"). Kanter had served as a guardian ad litem for the child. When Kanter referred the case to Epstein, he agreed to pay her a referral fee. However, this agreement was not reduced to writing. Subsequently, Epstein joined the firm of Spector Gadon and Rosen, P.C. ("SGR") while he was handling the Tara M. case. Eventually, the Tara M. case was settled for $ 4,310,000. From that amount, Epstein realized attorney's fees of $ 1,293,000. Kanter claimed that she was entitled to a referral fee of $ 431,000. However, Epstein and SGR refused to pay Kanter a referral fee.

Kanter v. Epstein, 2004 PA Super 470, 866 A.2d 394, 395–96 (Pa. Super. Ct. 2004).

Kanter sued and won $215,500 at trial, exactly half what she claimed. The jury then considered, and declined, punitive damages.

Then things got ugly:

On August 16, 2002, counsel for SGR informed the court that she would be taking a pre-paid vacation and requested that the briefing schedule be adjusted to accommodate her vacation. ... Following on-the-record discussions, the trial court summarized the agreement of all parties that the Rule 227.4 deadline [the time at which judgment can be entered and appeals taken] would be extended until March 14, 2003. ...

Despite the fact that they had executed a written agreement and had agreed on the record to extend the Rule 227.4 deadline until March 14, 2003, the Defendants filed a praecipe to enter judgment on January 8, 2003, and judgment was entered that same day.

Why did defendants' counsel jump the gun on their own extension? Who knows. Either way, after filing the judgment, defendants filed two appeals.

Bad idea. The Superior Court later knocked out these first two appeals because:

Accordingly, the judgment entered on January 9, 2003 was improvidently entered as a result of the Defendants' breach of their agreement to extend the Rule 227.4 deadline. As a result, Defendants' appeal of the trial court's December 30, 2002 contempt Order was interlocutory and not appealable at the time that the Defendants filed their appeals at 186 and 187 EDA 2003. Accordingly, the appeals filed at Nos. 186 and 187 EDA 2003 are quashed.

Back at the trial court, after the premature appeal things got uglier:

The trial court ultimately issued an Order dated March 10, 2003, in which the trial court denied the Defendants' post-trial Motions and granted Kanter's post-trial Motion, in part. Essentially, the trial court granted: (1) Kanter's request for additur, increasing the award to $ 431,000; (2) pre-and post-judgment interest; (3) Kanter's request for punitive damages; and (4) Kanter's Motion for sanctions.

Let me fill in the amounts. Interest bumped the compensatory award to $461,429, then punitive damages added another $ 645,000, and then sanctions (for attorney's fees) topped it off with another $124,219.86, bringing Kanter's total to $1,230,648.86, about $60,000 less than the total fee collected by Epstein in the first place.

Defendants appealed that, too.

In the Pennsylvania Superior Court, things got even uglier:

In this case, the trial court ordered the Defendants to file concise statements of the issues to be raised on appeal. However, the Rule 1925(b) Statements filed by the Defendants were anything but concise. SGR's fifteen-page Rule 1925(b) Statement included fifty-five issues that it purportedly sought to raise on appeal and also incorporated by reference the forty-nine issues raised by Epstein in his Rule 1925(b) Statement. Likewise, Epstein filed a fifteen-page Rule 1925(b) Statement that raised the forty- nine issues, and also incorporated by reference the fifty-five issues raised by SGR. 7 In total, the Defendants identified 104 issues in their Rule 1925(b) Statements. Furthermore, we note that many of the issues identified by each of the Defendants also included multiple sub-issues.

Kanter v. Epstein, 2004 PA Super 470, 866 A.2d 394, 400–401 (Pa. Super. Ct. 2004).

The Superior Court dismissed that appeal as well, leaving defendants with nothing. The Pennsylvania Supreme Court and United States Supreme Court both denied certiorari.

So defendants sued their appellate lawyers.

There's an old saying that legal malpractice cases are hard to win because they require the plaintiff prove a "case within the case;" i.e., the plaintiff have to prove they would have won the original case in order to prove the malpractice case.

How do you do that for a bungled appeal? Do you try to convince a jury of non-lawyers what an appellate court would have done with 104 distinct legal issues?

My preferred quote for describing legal malpractice cases is, when the going gets weird, the weird turn pro.

As the Court of Common Pleas for Philadelphia County held last winter:

Whereas, the Kanter action appeal was quashed by the Superior Court of Pennsylvania without reaching a decision on the merits of the appeal;

Whereas, this action is based on the contention the Kanter action appeal was quashed due to the alleged malpractice by defendant, Saul Ewing;

Whereas, the existence of actual loss sustained by plaintiffs to the malpractice by defendant depends on the outcome of the “case within the case” and whether plaintiffs would have received appellate relief and the extent of appellate relief in the Kanter action if plaintiffs’ appeal had not been quashed by the Superior Court;

Whereas, the parties agree that the “case within the case” presents questions of law for the Court to decide and not a jury trial issue;

Whereas, the parties agree to bifurcate the proceedings to present the “case within the case” to the court for decision prior to a trial (if necessary) on the remaining issues for plaintiffs’ malpractice claim and defendant’s counterclaim. …

It is hereby ordered that … the “case within the case” is bifurcated from the other issues in this action and the Court will decide whether and the extent to which plaintiffs would have received appellate relief if their appeals had not been quashed in the Kanter Action … Following the Court’s decision of the “case within the case,” the court will entertain a request for immediate appeal of the decision of the “case within the case” if the decision is not a final order and no party shall oppose the request of another party to immediately appeal the court’s decision of the “case within the case” even if not a final order to resolve the “case within the case” prior to trial of other issues.

Good idea! Three weeks ago, the trial court issued its full order for the inevitable appeal:

A reading of the Trial Judge's Opinion, dated February 26, 2004, reflects his disappointment with the persistently adversarial, over-zealous, and non-cooperative posturing among all trial counsel for more than two years under his jurisdiction, and in his courtroom. As a result, this distinguished jurist may have inadvertently ordered overlapping financial sanctions for punitive damages, additur, Contempt and attorneys fees. An objective review brings a different result. With that in mind, the Superior Court most probably would be constrained to reverse. ...

This Reviewing Court believes that the Superior Court would be unable to find support in this record for the sua sponte alternative. Delaying tactics during trial, including objections and side bar conferences are annoying, but not the sort of wanton or reckless conduct that meet the criteria for a punitive damage award. ...

Ms. Kanter's request for additur was premised on her belief that the triers of fact were required to award her the full amount of her claim. The Superior Court would have reviewed the record and determined that the triers of fact are free to believe all or part or none of the testimony. ...

The Trial Court ordered attorneys fees and contempt as sanctions "relating to punitive damages only" (emphasis in original), however, for all the reasons set forth above finding that conversion and punitive damages should not have been part of this case, the Superior Court would not have remanded the record to the Trial Court for a hearing.

Epstein v. Saul Ewing, LLP, 2009 Phila. Ct. Com. Pl. LEXIS 83 (Pa. C.P. 2009).

And so back they go to the Superior Court, to rule on what it would have done had it considered the original appeal.

The weird have definitely gone pro.

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The WSJ Law Blog points us to an Op-Ed in the NYTimes:

Restoring a foundation of trust requires a new system of medical justice. Medical cases are now decided jury by jury, without consistent application of medical standards. According to a 2006 study in the New England Journal of Medicine, around 25 percent of cases where there was no identifiable error resulted in malpractice payments. Nor is the system effective for injured patients — according to the same study, 54 cents of every dollar paid in malpractice cases goes to administrative expenses like lawyers, experts and courts.

America needs special health courts aimed not at stopping lawsuits but at delivering fair and reliable decisions. A special court would provide expedited proceedings with knowledgeable staff that would work to settle claims quickly. Trials would be conducted before a judge who is advised by a neutral expert, with written rulings on standards of care.

With a special health court, damages would consist of all lost income and medical costs, plus “pain and suffering” based on a set schedule depending on the severity of the injury. All information about each incident, including details learned in settlements, would be compiled and disseminated so that doctors and hospitals could learn from their errors. Proponents of special health courts have estimated that the total cost of such a new liability system would be about the same as the existing system — less than 2 percent of America’s total health care costs. One benefit would be that the quicker, streamlined system would compensate far more people, with drastically lower legal costs. Most important, it would restore faith in the reliability of medical justice.

The author is none other than Philip Howard, whose latest screed, Life Without Lawyers, cautioned Americans against the devastating effect warning labels have had on our quality of life.

His column is loaded with unsupported references to standard boogeymen like defensive medicine, but let's just focus on the special health courts. Though described in bombastic terms, Howard's proposed system is different in only three respects:

1. the jury is removed and medical malpractice becomes a bench trial before judges;
2. independent experts are (apparently) removed and replaced by a single "neutral" expert chosen by an unspecific procedure; and,
3. the judge is limited in the damages they can award to "lost income and medical costs, plus 'pain and suffering' based on a set schedule depending on the severity of the injury."

I do not see how the first and second part would "free[] doctors from worries about unnecessary and unreasonable malpractice claims." I have known many judges who have presided over many medical malpractice cases, but I have never heard a judge say they felt they personally had the expertise to evaluate whether the standard of care was breached or not any better than a jury. In fact, I have frequently heard the opposite.

Bearing that in mind, would such a system result in more "reliable" malpractice results than our current jury system?

Let's go back to that "2006 study in the New England Journal of Medicine" Howard references, which was unveiled to the public through a press release from the researchers titled "Study Casts Doubt on Claims That the Medical Malpractice System Is Plagued By Frivolous Lawsuits." Here's what they found:

The researchers analyzed past malpractice claims to judge the volume of meritless lawsuits and determine their outcomes. Their findings suggest that portraits of a malpractice system riddled with frivolous lawsuits are overblown. Although nearly one third of claims lacked clear-cut evidence of medical error, most of these suits did not receive compensation. In fact, the number of meritorious claims that did not get paid was actually larger than the group of meritless claims that were paid. The findings appear in the May 11, 2006 issue of The New England Journal of Medicine.

“Some critics have suggested that the malpractice system is inundated with groundless lawsuits, and that whether a plaintiff recovers money is like a random ‘lottery,’ virtually unrelated to whether the claim has merit,” said lead author David Studdert, associate professor of law and public health at HSPH. “These findings cast doubt on that view by showing that most malpractice claims involve medical error and serious injury, and that claims with merit are far more likely to be paid than claims without merit.”

...

Most claims (72%) that did not involve error did not receive compensation. When they did, the payments were lower, on average, than payments for claims that did involve error ($313,205 vs. $521,560). Among claims that involved error, 73% received compensation. “Overall, the malpractice system appears to be getting it right about three quarters of the time,” said Studdert. “That’s far from a perfect record, but it’s not bad, especially considering that questions of error and negligence can be complex.” The 27% of cases with outcomes that didn’t match their merit included claims that went unpaid even though the injury was caused by an error (16%); claims that were paid but did not involve error (10%); and claims that were paid but did not appear to involve a treatment-related injury (0.4%).

So our current system gets it right "three quarters of the time," and, when it gets it wrong, favors the doctors -- would Howard's system beat that?

Probably not; such a system is unlikely to make results any more "reliable" than now, unless you presume that judges are systematically biased in favor of one side or the other. The judges in Howard's proposal -- none of whom have particular expertise in medicine -- will be wholly dependent upon the "neutral expert" for their understanding of the medicine. Worse, unlike the jury in a medical malpractice action today, they will not have the benefit of seeing a cross examination or in considering the views of multiple experts. 

Ironically, Howard's process for chosing a "neutral" expert and the materials they opine on will probably make medical malpractice litigation more contentious, expensive, and uncertain because it will at best resemble the Markman process used in evaluating patent disputes. Markman hearings often involve the selection of a "neutral expert" in helping the judge determine the meaning of a patent, a process loathed by patent attorneys for adding "a whole new level of lawyering, cost, delay and, some say, uncertainty to patent litigation." So there goes parts 1 and 2.

That leaves Howard with a single proposal: limiting damages, for which he proposes a system like workers' compensation, which covers economic losses and provides a pre-set amount for particular damages. [We'll put aside for this post the fact that, as a practical matter, medical malpractice cases are already typically limited by the size of the defendant's insurance policy;  very rarely do plaintiffs ever collect or even attempt to collect amounts over that.]

The problem here is that workers' compensation is, and always has been, construed as a bargain: in exchange for reliable compensation, the workers give up their right to a jury trial on damages. But Howard doesn't propose any quid to go along with his quo -- patients are just supposed to give up their rights to damages without receiving any increased certainty in their compensation if they are injured.

If Howard really wanted to create "fair and reliable" results, he'd propose something along the lines of the National Vaccine Injury Compensation Program, which, inter alia, provides compensation for the plaintiff's attorneys even if a meritorious suit does not prevail, thereby ensuring no one is left behind by the process.

But that's not what Howard really wants.

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After my post yesterday, "Differential Diagnosis, Defensive Medicine and Medical Malpractice: Coumadin Edition," the original physician responded on WhiteCoat's Call Room at length:

Max Kennerly is another lawyer that posted a response on his blog “Litigation & Trial.” He accused me of being afraid to use the “basic principle of clinical medicine known as differential diagnosis” - which he defines as “a process of elimination by which physicians reach a diagnosis by eliminating the most serious and unlikely diagnoses first before continuing their basic evaluation.”

What Mr. Kennerly is apparently suggesting is that, rather than use medical education and heuristics, physicians “shoot the moon” and order “million dollar workups” on every patient complaint. Forget that a runny nose and cough in a child are highly likely to be a viral upper respiratory infection. According to Mr. Kennerly, physicians have to “eliminat[e] the most serious and unlikely diagnoses first … before continuing their basic evaluation.” Because runny nose and cough could also be signs of serious and unlikely diagnoses like bronchopulmonary dysplasia, pandemic bird flu, and inhaled foreign bodies, Mr. Kennerly is apparently asserting that every child with a runny nose and a cough requires a NICU admission, full isolation precautions, viral cultures for H5N1 influenza virus, a call to the CDC (just to be sure), and bronchoscopy before physicians can breathe a sigh of relief and recommend nasal suction and honey (cold syrup is much too dangerous - just ask all the pediatricians). Did I miss anything in my “differential,” sir?

Mr. Kennerly then takes issue that I would consider discharging a woman with a mild head injury who developed a headache 5 days later and who was also taking coumadin. Bleeding in the brain must be ruled out “even after minor accidents,” according to an article he cited from the NIH. But Mr. Kennerly does not stick to his own script. Many “serious and unlikely diagnoses” can cause a headache. Using Mr. Kennerly’s logic, it is likely that “differential diagnosis” algorithm he proposes would require me to get an MRI and MRA to rule out vascular causes of headache and to perform a lumbar puncture to rule out pseudotumor cerebrii. While he may have some success getting a jury to believe that “his” is the way medicine should be practiced, it just isn’t so.

...

I removed the second half; I'll have to answer that later.

I responded in his comments section:

Thanks for the link! It’s great to get a dialogue going.

Just to be clear, I didn’t use the phrases “shoot the moon” or “million dollar workups,” but I did suggest that physicians should rule out severe and life-threatening conditions first.

I’m surprised you’d disagree. Truth is, you don’t. Think back to all of the examples you provided in your prior post — why did you order all those x-rays and CT scans? To avoid a lawsuit?

Nope — no physician has ever been held liable for not performing an x-ray or a CT scan. There’s no harm from simply not performing a test.

Physicians are liable for not ordering tests when they should have and when harm was caused by that failure. You ordered all those tests because, in your judgment, there was a reasonable chance that the ‘unlikely’ scenario was the actual diagnosis.

Let’s take the 60yo woman on coumadin with the head injury. You tried to dodge those initial facts by recasting it as “a headache” and then listing all the potential but unlikely causes.

Well, she didn’t have “a headache.” She was on coumadin, had a fall, and then had a headache serious enough to bring her to the hostpial, which is why you ordered a CT scan looking for brain bleeding, and not a lumbar puncture looking for pseudotumor cerebrii.

You applied your judgment, saw an unlikely by possible serious complication, and ruled it out. That wasn’t “defensive,” it was “appropriate” — if you didn’t think there was a reasonable chance of her having a brain bleed, then you’d have absolutely no reason to fear a lawsuit.

Moving on to your child with the runny nose and the cough, it’s hard to take your example seriously when you first propose the “child” go to a unit reserved for neonates. If a neonate has an obvious infection, that is a very serious issue that will be treated accordingly, likely with multiple antibiotics and multiple x-rays to repeatedly check pulmonary function.

If by “child” you mean the typical toddler going to a pediatrician, then, yes, I submit to you that if the pediatrician has reason to suspect something more serious than a typical cold then they should rule out that serious possibility. You gave no other facts than “every child with a runny nose and a cough.” I have kids. They’ve had runny noses and coughs. My pediatrician ordered no tests. That’s fine; it was a typical kid with a cold.

But let’s mix it up, the way it happens in real life: my child has had a severe cough for over a week now, has shown trace blood in her mouth, can’t sleep, and won’t eat.

Now what? Go home?

Or should you look for something more?

“Defensive medicine” doesn’t exist — the concept requires a doctor somehow see enough of a risk to fear litigation but not enough of a risk to warrant testing. What sense does that make? Either the doctor fears the serious outcome or they don’t.

But the ball is in your court — what would you have us do different? Set up a, say, 5% rule? As in, if something has a less than 5% likelihood, physicians as a matter of law need not look for it?

You tell me. I hold doctors to the standard of keeping people safe by making sure patients don’t have any serious or life-threatening complications that are reasonably foreseeable. You want something less than that.

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On Christmas Eve, the Third Circuit issued its opinion in Jurinko v. The Medical Protective Company and The Medical Care Availability and Reduction of Error (MCARE) Fund, a fascinating insurance bad faith claim arising from the failure to tender policy limits in a medical malpractice case, prompting an article in yesterday’s Legal Intelligencer and a flurry of twitter and blog activity. Perhaps it’s a lesson to all of us in the limitations of twitter and blogs and other rapid-response social media. Bob Ambrogi’s tweet “3rd Circuit imposes 1-1 ratio for punitive to compensatory damages” was technically correct, as was this AmLawDaily blog post summarizing the holding:

The court, citing two U.S. Supreme Court rulings (including the Exxon case), ruled that the award was excessive under a test the high court devised in a 2003 case. The judges went further, though, in concluding that the Supreme Court's general path points toward a 1-1 ratio between compensatory and punitive damages becoming a general guidepost. Good news for corporate defense lawyers.

Both, however, miss the point: the Third Circuit didn’t create or recognize a brightline 1-to-1 ratio. It’s a little more complicated than that.

Taking the “precedential” and “non-precedential” designations at face value (in spite of Federal Rule of Appellate Procedure 32.1 making such designations irrelevant), the non-precedential Jurinko opinion must give way to the precedential CGB Occupational Therapy v. RAJ Health Services, et al. opinion of August 23, 2007, which reduced a verdict of 18-to-1 punitive-to-compensatory damages down to 7-to-1 in another case also involving purely economic damages (and thus falling squarely under State Farm and Gore).

On the face of the two opinions, the take-home message is that, in the wake of recent Supreme Court precedent, trial and appellate courts will give very little weight to jury’s punitive damages awards and will instead look anew at the facts to determine, in the court’s own judgment, the degree to which the plaintiff established the State Farm v. Campbell elements for exceeding the 1-to-1 ratio:

(1) the degree of reprehensibility of the defendant’s misconduct; (2) the disparity between the actual or potential harm suffered by the plaintiff and the punitive damages award; and (3) the difference between the punitive damages awarded by the [factfinder] and the civil penalties authorized or imposed in comparable cases.

State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 418 (2003). (I note here how courts frequently overturn jury verdicts awarding punitives but never overturn verdicts denying punitives.)

Viewed that way, the distinction between the cases is clear: the conduct of Medical Protective was not nearly as reprehensible as the conduct of Sunrise (the company responsible for the most wrongful conduct in CGB Occupational Therapy), because Medical Protective merely acted in an outrageous manner to protect its own financial interests, rather than intentionally setting out to harm the plaintiff, as Sunrise did. The size of the respective underlying compensatory awards was also critical: in Jurinko, the jury awarded $1,658,345 in compensatory damages, as compared to the $109,000 awarded in CGB.

In essence, as a defendant’s conduct becomes worse, punitives above 1-to-1 are allowed but will be discounted by the size of the compensatory damages. (Again, note how no opinion will conclude, for example, “because the jury did not recognize how truly reprehensible the defendant’s conduct was, we hereby triple the punitive damages awarded.”)

Which brings me to what I believe is the real meaning behind both of these cases: courts have begun to take an economic, as opposed to legal, view of punitive damages. In line with the Supreme Court’s criticism in Exxon v. Baker of “the stark unpredictability of punitive awards” – an economic, not legal, concern – courts are increasingly unwilling to uphold verdicts designed to financially punish defendants (one of the explicit goals of punitive damages), even where the defendant has acted in a manner the court itself has recognized as “outrageous” and “reprehensible.”

I think that’s a shame, particularly given the mechanism by which such civil immunity from bankruptcy is being enacted: constitutional interpretation, the second most powerful weapon in the legal arsenal after constitutional amendment. If the duly-elected legislature decides that unlimited punitive damages awards are outweighed by the need for “predictability” after outrageous and reprehensible conduct, that’s one matter, but to see the courts usurp an economic policy determination under the rubric of constitutional interpretation is quite another.

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Yesterday’s Wall Street Journal included an editorial by Dan Slater (who runs the WSJ Law Blog) called "The Debate Over Who Pays Fees When Litigants Mount Attacks," suggesting reconsideration of the “English Rule,” in which unsuccessful litigants are required to reimburse their opponent's legal fees and costs (a/k/a the “loser pays” system), as contrasted to the “American Rule,” in which each party bears their own legal expenses: 

Legal experts think a loser-pays system cuts down on frivolous suits. Those clearly hurt the U.S. The nation's tort system cost $245.7 billion in 2003, amounting to about 2.2% of total gross domestic product, according to a report from professional services firm Towers Perrin. The percentage of GDP spent on litigation was at least twice those in the U.K. and Germany.

At the same time, say experts, the insurance helps mitigate the pitfalls of a loser-pays system. "Insurance does move in to fill the gap for those suits that might not otherwise be brought in a loser-pays system," says Paul Lomas, a London-based litigator at Freshfields Bruckhaus Deringer.

Initially, a few factual corrections are in order.

First, the Towers Perrin study claiming that litigation costs amount to 2.2% of total gross domestic product has been roundly criticized as being baseless and inflated. For example, the study unfairly lumps together actual litigation costs, like attorneys fees, with the routine functioning of our torts and insurance system. As the Wall Street Journal itself noted over two years ago,

But here's the problem: critics of past years' studies -- and there are many -- say the number and the projections that come with it are deeply flawed. For instance, they include payments that don't involve the legal system at all. Say somebody smashes his car into the back of your new SUV and his insurance company sends you a $5,000 check to fix the damage. That gets counted as a tort cost in Tillinghast's number. Critics say it's just a transfer payment from somebody who wasn't driving carefully to somebody who has been legitimately wronged. How is that evidence of a system run amok?

"It's just so inflated," J. Robert Hunter, the director of insurance for the Consumer Federation of America and a former Texas insurance commissioner, says of the Tillinghast figure. Critics also argue that other insurance-industry costs that aren't the fault of a burdensome tort system -- such as the salaries of insurance-industry CEOs -- show up in its calculations.

"Math Divides Critics As Startling Toll of Torts Is Added Up," By LIAM PLEVEN, March 13, 2006; Page A2.

Second, plaintiff’s lawyers are in no sense “accustomed to being the exclusive financier of litigation.” The primary "financier" of litigation in America is the insurance industry, turning its good hands into boxing gloves when injured parties seek more than nominal compensation. Even in the context Slater is thinking about – the plaintiff's side of personal injury tort suits – there are hundreds of companies willing to loan money to plaintiff’s firms and/or plaintiffs for a piece of the eventual recovery. Ordinary business banks also loan to firms after performing the same due diligence they would with an company.

All of these companies, however, have the same restriction that would have to be imposed in a loser pays insurance system: the financier has absolutely no say as to whether the case will be settled or not. Such limitation is appropriate to ensure uncompromised decision-making and is analogous to similar barriers on the defense side, in which the defendant, with limited exceptions, retains control over whether to settle and where the defense lawyer nominally represents only the defendant and not the insurance carrier as well, so as not to divide the lawyer's loyalties and prejudice the defendant.

Third, most states already recognize a form of “loser pays” in the claim for wrongful use of civil proceedings, which permits the victims of frivolous lawsuits to recover damages caused by such frivolous lawsuits. It has bite here in Pennsylvania -- the "Dragonetti Act" has resulted in multi-million-dollar outcomes.

There's also, of course, the "loser pays" already at the heart of contingent fee cases: if I lose a case, I get nothing. No reimbursement for my time. No reimbursement for my expenses. Nothing. A total loss.

Which brings me to my primary objection to the loser pays system. I would not object to receiving a guaranteed income like my brethren of the defense bar instead of bearing the risk that years of effort and tens of thousands – potentially hundreds of thousands – of dollars will be spent in vain, but I would object, on grounds of fairness, to penalizing a party that brought a valid claim merely because they did not meet their burden of proof.

Consider a typical medical malpractice case. Most of the facts are uncontested. The dispute centers on whether the physician-defendant breached the standard of care, whether such breach caused any harm, and what damages resulted.

In all states of which I am aware, the first two elements require expert medical testimony. To even start a lawsuit here in Pennsylvania, I need a certificate of merit from a qualified physician establishing those two elements. To prevail at trial, obviously, I need in-court credible testimony from a qualified physician establishing those elements to a reasonable degree of medical certainty.

No expert testimony, no claim. Period. That is to say, by law the first two elements are matters entirely outside the understanding of any plaintiff except for physicians who happen to be victims of malpractice in the specialty they currently practice or teach.

If, in good faith, my client and I believed our qualified expert's opinion on matters the law says are beyond our understanding, why should we be punished if a jury accepts the defendant’s version instead of our's?

Deterrence? Of what? Claims a qualified expert physician thought were valid? Should I be deterred merely because the defense found someone to say otherwise? In medical malpractice, there's always some doctor somewhere willing to say that my client coincidentally suffered a heart attack or stroke or spontaneous decapitation regardless of the record or the probabilities.

Why would we want to deter valid claims? Isn't the point of a civil justice system to offer people the opportunity to present their claims in fair and open court?

I'm wary, too, of considering the lower litigation costs in Europe as a positive sign of judicial health (if, indeed, they are lower, given the inflated numbers of the US study). Many European countries routinely apply legal doctrines we consider abhorrent in the United States, such as the onerous standards applied to publishers in libel cases in the United Kingdom, standards incompatible with First Amendment principles of free speech.

When all is said and done, the effective result of loser pays, whether insured or not, is to change the civil system from one in which a plaintiff must convince a jury of the rightness of their cause with the preponderance of the evidence to one in which a potential client must convince a lawyer and/or insurance company of the rightness of their cause beyond a reasonable doubt. The client must convince the lawyer/insurer not only that their case is worth their damages, but that their case is worth well beyond their damages, to mitigate the direct loss the lawyer or insurer will incur if they lose.

The practical effect, then, would be to intimidate plaintiffs' lawyers like me into rejecting the vast majority of legitimate cases because, even though I may feel they have a strong likelihood of prevailing, I simply can't afford to test my luck with anything other than the handful of cases I'm sure will win.

UPDATE: Dan Slater got plenty of email, as he relates on the WSJ Law Blog.

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To all clients out there, you don't have to tolerate abuse like this:

I injured myself on the job 2 yrs ago and obtained an atty to represent me on a consignment basis. I have rebuffed his sexual innuendos and in most recent months he has treated me horribly. This whole process has torn my marriage apart and my husband wants a divorce. I am the injured party here and feel betrayed by the one that should represent me. He curses at me, calls me stupid and quotes things that my doctors have never said. We now are at a stage with the case that the company being sued says their doctors say there is nothing wrong with me, which is just not true. I have been put on SSI as a direct result of the damage. My atty is encouraging me to settle for some ridiculous $500/mo payment for 25 yrs, because he doesn't think  we'll win in a court of law. He just wants his money and run.  My doctors have submitted their findings and assured me of the proper diagnosis. This condition is not going away and will progress over time. No contract was signed with the atty and at first it was a 33% fee, then he threatened with 45% and now I don't know what to do. If I am not satisfied with the offer, can I go to another atty without financial liability to this one. Please I need help....

 My response:

If what you write is true, it's shameful, wrongful and actionable. Your attorney should not be making sexual advances towards you, nor misrepresenting the status of the evidence, nor treating you with disrespect, nor "threatening" you to increase his fee. Such represents a breach of your contract, a breach of his fiduciary duties, and a breach of professional ethics.

You should promptly contact another attorney before further damage is done to your underlying case.

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Over at PhilaLawyer, an anonymous (and largely humor-focused) part of the Rudius blog network, there are four ideas for "Shyster-Proofing the Courts:"

1. Immediate Mandatory Mediation
2. Allow Expert Witnesses to be Deposed
3. Give Frivolous Litigation Claims Teeth and Allow Expert Witnesses to Be Sued in Such Claims
4. Eliminate Referral Fees

First, let's keep something important in mind: the bulk of civil cases involve automobile accidents. So in some sense we're really missing the boat unless we're talking about that specifically. That said, I doubt any of these would make a difference.

1. Immediate Mandatory Mediation

Because I work on a contingent fee, I would like nothing better than to settle cases as quickly as possible.. Settlement puts money in my pocket, does not require my own money put out on the street for costs and fees, and puts my client back on their feet, a particular concern in personal injury and medical malpractice cases. So don't think I am ever the one driving the litigation.

Problem is, even a hypothetically perfect insurance company that promptly and fairly evaluates every claim, sets an appropriate reserve, and begins negotiation has multiple incentives not to settle early. The insurance company makes a return on every single penny in their reserves, a return that evaporates the moment they tender a check to me. The insurance company also typically starts blind on damages; they know a lot about their insured's liability, but very little about my client's medical expenses, lost wages, and the impact the injury has had on their life, and for obvious reasons the insurance company is not going to take my word for any of them. Finally, the insurance does not know how highly I really value the case. The only way they believe they can estimate my bottomline is by pushing back against me and seeing how I respond. Even at a firm with a strong reputation for taking cases to trial and for rejecting weaker (even though meritorious) cases, there is still a belief among insurers and defense counsel that some of the cases are "nuisance value" cases taken to maintain cash flow, with little expectation of a substantial settlement or verdict.

In the real world, the above analysis does not even happen at the insurance company until the case is ready for trial. The insurance adjuster, who, as a cog in a bureacracy, has the primary goal of demonstrating their usefulness to the bureaucracy by creating an extensive paper trail, frequently does not even bother to set a reserve for the case until trial schedules have been finalized. Similarly, the defense attorney, who gets paid by the 10th of the hour they spend defending the case, has little incentive to encourage a swift resolution of the case, thereby extinguishing a source of income and appearing feckless in the face of controversy.

Thus, by and large early mandatory mediation conferences will function as a subsidy for defense lawyers — by giving them something else to bill for — and a tax on plaintiff's lawyers — by taking them away from their other contingent fee cases. At the conference, the defense attorney will have authority only for a nuisance value while the plaintiff's attorney (who will be a junior associate, if the firm has them) will have authority only for the highest number the plaintiff's attorney can reasonably demand. If there is some external force which could drive early settlement, that force will do so regardless of court intervention.

2. Allow Expert Witnesses to be Deposed

That's already the case in the federal system. While it probably does reduce the need for trial because it puts almost everything on the table, it won't do anything to cut back on litigation. The point about having experts who write bogus opinions expecting a case will never go to trial is well taken, but that's already factored into our current system — if one of the sides thinks the expert will pull out the event at trial, they'll just push the case straight to trial, extracting a favorable settlement while teaching the other side a lesson. Adding a deposition, which would naturally have to occur after discovery (as it does in the federal system), won't really change that dynamic, it just slightly advances the time when the expert pulls out. There might be some savings to that, since it obviates the need for full trial preparation, but those savings would be minimal.

I don't think expert witness depositions are a bad idea, I just don't think they will result in any significant savings. Moreover, in cases worth less than, say, $100,000, expert witness depositions could have the perverse effect of making settlement less likely, because they hike up the costs of bringing the case to trial, thereby requiring the plaintiff and their attorney to raise the demand accordingly to protect the amount they get in the end, which in turn makes it less likely the insurer will meet the demand.

3. Give Frivolous Litigation Claims Teeth and Allow Expert Witnesses to Be Sued in Such Claims

Frivolous lawsuits are already actionable in most states, and are frequently acted upon right here in Philadelphia County. In Pennsylvania, there is specific statutory authorization for them under the so-called Dragonetti Act, named after the first attorney to get really walloped under it. The elements of such a wrongful use of civil proceedings suit seem reasonable to me:

§ 8351.  Wrongful use of civil proceedings

(a) ELEMENTS OF ACTION.-- A person who takes part in the procurement, initiation or continuation of civil proceedings against another is subject to liability to the other for wrongful use of civil proceedings:
 
   (1) He acts in a grossly negligent manner or without probable cause and
   primarily for a purpose other than that of securing the proper
   discovery, joinder of parties or adjudication of the claim in which the
   proceedings are based; and
 
   (2) The proceedings have terminated in favor of the person against whom
   they are brought.

...

§ 8352.  Existence of probable cause

A person who takes part in the procurement, initiation or continuation of civil proceedings against another has probable cause for doing so if he reasonably believes in the existence of the facts upon which the claim is based, and either:
 
   (1) Reasonably believes that under those facts the claim may be valid
   under the existing or developing law;
 
   (2) Believes to this effect in reliance upon the advice of counsel,
   sought in good faith and given after full disclosure of all relevant
   facts within his knowledge and information; or
 
   (3) Believes as an attorney of record, in good faith that his
   procurement, initiation or continuation of a civil cause is not
   intended to merely harass or maliciously injure the opposite party.

42 Pa.C.S. § 8351 et seq.
 

If there is a way to improve these elements, I would love to hear it. I personally can't think of any way of strengthening it without making it, at best, confusing and, at worst, a violation of the rights of due process and access to the courts.

As for moving against experts, there is always perjury. Beyond that, it's hard to imagine a worse idea than intimidating witnesses not to say what they really think. The point about this honest experts is, again, well taken, and I have tangled with my fair share of them, but such annoyances must be balanced against minor concerns like truth, justice and fairness. The best you can do now to retaliate against a lying expert is to report them to whatever professional organization of which they are a member, which hopefully have a deterrent effect against future offenders. I am loath to really encourage that idea, though, because by and large professional associations have a serious pro-defense bias, the natural result of a (perhaps understandable) desire to protect and shield their members from liability.

4. Eliminate Referral Fees

I have no idea how that would help anything. Plaintiffs lawyers bill on a contingent fee; if the case is meritless, they're a waste of time and money to pursue. Indeed, referral fees in my opinion actually reduce the number of cases filed, because they cut into the fee earned by the attorney actually pursuing the matter, thus requiring the case be stronger and have larger damages than if the case been brought in directly. Moreover, if there really is a problem of "recidivist professional plaintiffs," what good would it do to eliminate referral fees? They'll simply go to the same attorneys over and over or they'll find attorneys on their own — they're among the few people who really can find the right attorney for them on their own.

More importantly, referral fees serve a critical purpose in the civil justice system, introducing economic efficiency to an ordinarily inefficient process: the selection of a personal injury attorney by a nonlawyer. Corporate lawyers and clients don't need anything like a referral system because, as part of their paying jobs, they interact with all kinds of attorneys and generally have connections that can set them up with the right person for the job.

Your typical Wal-Mart or Wawa cashier hasn't the faintest clue about what to do when they get paralyzed by a drunk truck driver or when their spouse's brain gets blown out by an overdose of Heparin. Most lawyers don't even know to whom they'd turn in the event of a catastrophic injury. The referral system creates an incentive for the initial attorneys not just to half-assedly send a case away, but to diligently choose an appropriate attorney who can get the best result for the client.

Finally, and to me this is the most important function of the referral system, referral fees — specifically large referral fees — encourage attorneys who are not really qualified to handle large matters to refer those matters out to attorneys who are qualified. I cannot tell you the number of times I have been referred a case either because "it's just too big for me" or because "after I filed suit, the defense attorneys went nuclear on me." That is a good thing; attorneys should have no hesitation to radio SOS when the waters get rough. Eliminating referral fees gives them an incentive to hold on to these cases and "do their best," which is frequently not in the client's best interest.

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The Nevada Accident & Injury Law Blog describes how a Nevada Jury Awards Las Vegas Man $60 Million:

A federal jury in Nevada last week awarded $60 million to a Las Vegas man who alleged Paul Revere Life Insurance Co. and the Unum Group denied in bad faith his claim for disability benefits.

This is one of those “be careful what you wish for” cases. In a previous trial, a jury awarded Plaintiff $11.6 million but it was overturned on appeal. So the case was tried again and the second jury awards five times what the first jury awarded.

I see that a lot, particularly in tort cases with verdicts over $1 million, and I don't think it's a coincidence.

At a tort (negligence, malpractice, breach of fiduciary duty, wrongful death, etc.) trial, the defendant usually holds most of the cards. They generally know which stones you overturned on discovery and which ones you did not, and they know which evidence that you have his most embarrassing and which evidence you do not have is most absolving.

More importantly, they were there. They really know what they did and did not do, and what they were thinking when they did it, and they certainly know what they intend to say.

It does not matter how many depositions you took -- you could have had people testifying for days -- and how much written discovery you collected, trial will still be full of surprises. Even if no new facts are revealed, you will see facts presented in a new light, often at odds with the light they were presented in pleadings and during discovery. (And you will have to quickly react to this new version of the truth: don't even try to argue to the jury that a fact was "presented in a different light during discovery.")

Trial makes the defendant show their cards, clearing away their natural advantage in a tort suit. You will see the strongest defense arguments and the most favorable defense evidence. More importantly, while you can always run a mock jury and see how neutral non-lawyers react to your evidence, you will never get a chance, pre-trial, to practice cross examining a defendant to see what evidence makes them squirm, babble, or obviously lie. A deposition will give you hints, but it will never show you what will really make a defendant fold or what they'll do when the chips are down.

My view is that these big cases aren't 50-50 or longshots, they're slam dunks if you have all the evidence, know where the defendant wants to go, and know where the defendant doesn't want to go. That's how a "big" verdict becomes a "blockbuster" verdict the second time around.

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43(B)log  refers us to a NYT feature on doctors who give consumers incentives to post doctor-created ads as their own contributions to YouTube:

Trouble is, most marketing videos don’t announce that patients are compensated. Take Jiffy Reed, who posed for a video tribute on YouTube about Dr. Daniel Noor, a New York-based cosmetic dentist who straightened her smile with invisible braces. “I was so happy, I would have done anything,” Ms. Reed said. What the video doesn’t mention is that her physician whitened her teeth at no charge; it usually costs about $700.

Exactly right. Although the article quotes a couple physicians who generally object to unseemly nature of such advertisements, the core problem here is not a medical issue, it's a consumer issue. Paid endorsements used for advertising that aren't identified as such are generally illegal, and there is no medical exception to that.

My own view is that this problem, like a number of problems in the medical profession, are the result of lackadaisical enforcement by most state Boards of Medicine. If even just a handful of physicians were reprimanded for using paid endorsements that were made to appear spontaneous, there likely would not be much of a problem anymore.

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The WSJ Law Blog on a malpractice suit, alleging that discovery mistakes led to a $107 million settlement [to which] the company would not have otherwise agreed:

According to the complaint, the North Carolina federal court in which the underlying litigation occurred, held that it was “under Kaye Scholer’s watch” that Celanese was sanctioned for “discovery abuse,” which the Court described as “egregious.” The North Carolina court, as quoted in the complaint filed against Kaye Scholer, wrote: “The court is not unmindful of the positions urged by [Celanese], but in the context of the trove of documents it held in the wings just out of sight of the non-class plaintiffs, these positions can’t be seen as coherent or compelling.”

In a June 2006 order, a North Carolina judge sanctioned Celanese $114,000 in fees and expenses, but said he would consider further sanctions on evaluating the impact of the discovery misconduct. An October 2006 sanctions motion by plaintiffs asked for a range of findings against Celanese, according to the NYLJ, including one that the company acted in bad faith and that an adverse inference should be drawn against it on key issues.

The judge said he would evaluate the need for such sanctions as the case proceeded. Celanese said in its suit that the prospect of sanctions that would have hampered its ability to defend itself at trial forced it to enter into a settlement in May 2008.

Hmmm. That is a tough argument. While an actual order instructing the jury to draw an adverse inference against the company would have prejudiced its interests, it is hard to say that a motion requesting an order is a but for cause of an unfavorable settlement.

Obviously, in the real world settlement takes place in the totality of circumstances, and I'm sure the pending motion was on their minds, but I have serious doubts that the motion would itself cause the defendants to settle for over $100 million.

I am willing to bet the documents withheld by Kaye Scholer were devastating to Celanese (otherwise, why withhold them?); once the plaintiffs had them, it was simply a discussion of numbers, with or without the adverse inference.

Moreover, an adverse inference would not have, standing alone, "hampered its ability to defend itself at trial." It would merely have been a unfavorable jury instruction at the end of trial, one that defense counsel would be permitted to argue to the jury was inappropriate because it was the lawyer's fault, not the client's. Every day in America defendants blame their lawyers at trial -- what would have stopped them here?

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From the "no surprise" department, via TortDeform:

The American Medical Association issued its first health insurance report card at the group's annual meeting Monday. The primary focus is on how quickly and accurately doctors get paid.

"Physicians are spending 14 percent of their total revenue to simply obtain what they've earned," said Dr. William Dolan, an AMA board member.  (Emphasis added.)

The report card is an effort to reduce the cost of claims processing to doctors and help them as they negotiate contracts with insurance companies, he said. The report card will help patients if it reduces wasteful administrative costs, Dolan added.

The report card compares Medicare and seven national commercial health insurers on the timeliness and accuracy of claims processing. It is based on a random sample drawn from 3 million claims.

There are no grades like A, B and C, and many of the technical measures may not mean much to most patients. But business leaders and health policy makers are interested in cutting an estimated annual $210 billion in wasted administrative claims processing costs, AMA leaders said.  (Emphasis added.) Source: AMA issues first report card on health insurers - Yahoo! News

At least as of 2003, the Congressional Budget Office estimated malpractice costs as a whole at $24 billion, less than 2 percent of overall costs.

Don't blame the victims. Blame the culprits.

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At New York Attorney Malpractice Blog:

How Do You Forget to File a $19 Million Legal Malpractice Case?

Chicago Business Litigation Lawyer Blog reports that a huge class action legal malpractice case against DLA Piper Rudnick has been dismissed.  Plaintiff's and defendants had entered into a tolling agreement that was amended and went on for several years.  This case was valued at over $ 19 million dollars.  After several amendments of the tolling agreement plaintiffs started the case, but the court determined that it was started a year too late!  Joyce v. DLA Piper Rudnick ended in dismissal.

The easiest and most common way to commit legal malpractice is to fail to file or fail to prosecute. Now the plaintiffs' lawyers themselves are likely on the hook.

The easiest way I know of to avoid that is to create tickler and to-do systems. The moment something comes in, put it in the system. I just have to look at my calendar to know when I'm hitting a deadline, since I put it in the moment the motion, case, whatever came in.

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I spotted this intriguing entry with regard to the Bear Stearns indictment and the duty of corporate counsel to employees:

[Defendant Tannin] raised the issue of whether to approach a lawyer regarding his doubts about the market. “Who do we talk to about this?” wrote Tannin in an e-mail, sent from his private account, to co-defendant Ralph Cioffi. “Outside counsel? (And here we have to be careful because our outside counsel is [Bear Stearns Asset Management’s counsel] NOT our counsel — This is another very big issue we at least need to think about.)”

He was right -- if he had talked to Bear Stearns' lawyer, they would not have told him what was in his best interest. They would have told him what was in the best interest of the company. More below the fold.
Let me quote the American Bar Associations's Model Rule for Professional Conduct 1.13:

(a) A lawyer employed or retained by an organization represents the organization acting through its duly authorized constituents.

(b) If a lawyer for an organization knows that an officer, employee or other person associated with the organization is engaged in action, intends to act or refuses to act in a matter related to the representation that is a violation of a legal obligation to the organization, or a violation of law that reasonably might be imputed to the organization, and that is likely to result in substantial injury to the organization, then the lawyer shall proceed as is reasonably necessary in the best interest of the organization.  ...

A company's lawyer is just that: a lawyer for the company. Never believe that they will protect any confidences with you personally, because they don't have any duty to represent employees individually.

Don't they have to tell me that?

Sort of:

(f) In dealing with an organization's directors, officers, employees, members, shareholders or other constituents, a lawyer shall explain the identity of the client when the lawyer knows or reasonably should know that the organization's interests are adverse to those of the constituents with whom the lawyer is dealing.

Note how it doesn't say "if the employee was confused, the attorney must keep what they learned confidential," because the attorney doesn't have to. Frequently, the attorney -- regardless of what they really thought -- can later claim they did not know the employee's interests were "adverse" until after they learned something damaging about the employee, which they were then duty bound to report to the organization.

When talking with them, will they tell you when they think you've transcended some line imperiling your own legal interests, making you liable for criminal fraud? Probably not. Will they tell you when they think you've said something that you probably don't want the rest of the company to know? Probably not.

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A question on LawGuru about attorney malpractice in eastern Pennsylvania:

I just found out a few months ago my lawyer died. I also found out he recieved money from a claim I have with workmans comp. My workmas comp went bankrupt. and is in recievership He recieved money June 20 2003 and cashed the check July 3 2003, I had no idea he recieved and cashed the check till his son ( who is also a lawyer) contacted me and said he would handle the case.
I found out about the check when reviewing the case with his son.
The son said his father didn't keep good records and that was noway they could tell if he recieved, or if he sent me my part of the check.
I called the office in charge of releasing the funds and they sent me a copy of the cashed check and my name was forged on the check.
Is there anything I can do?

I answer:

... You should contact the Pennsylvania Lawyer's Fund for Client Security. You can find their contact information at http://www.palawfund.com/

The Fund's limit is $75,000.

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