By: Jonathan Broder, Esq. and CEO of MyMotionCalendar << Back to Articles
Use of coverage counsel is a hot topic these days. This is evidenced by the S.D. of Florida Bankruptcy Court’s adoption of Interim Local Rule 2090-1(C) restricting the use of local counsel, the 15th Judicial Circuit’s symposium regarding coverage counsel, and the fact that the Judicial Rules Committee and Florida Bar are actively examining this issue, albeit indirectly by proposing changes to Rule 2.505(e) regarding “Appearance of Attorney” in a case.
Law firms that hire coverage counsel, the judiciary and the Bar all have legitimate questions and concerns about the use of coverage counsel. The good news is, the Bar has previously implemented rules, procedures, and ethical guidelines regarding the unbundling of legal services and the use of contract attorneys that provide ample guidance as to how coverage counsel should be properly regulated.
I am an advocate that the Bar should establish rules, procedures and ethical guidelines to regulate coverage counsel.
The coverage counsel business can be separated into two groups; (1) individual attorneys and small law firms that provide coverage services, and (2) companies like MyMotionCalendar that manage a network of coverage attorneys. (To be fully transparent, I started and own MyMotionCalendar).
The first ever coverage counsel probably showed up and attended a hearing for a friend because they were sick or out of town. Coverage counsel has existed for years and thousands of attorneys across the nation participate in this business daily. Some attorneys use coverage counsel on an as-needed basis while others use it regularly and have incorporated it into their business model. Some attorneys use coverage counsel without realizing it; ever asked a friend in another state to file a pleading on your behalf?
Coverage attorneys come from every aspect of life. Some are semi-retired or stay-at-home moms or dads. Some are in-between jobs or have started their own practice. Some supplement their income with coverage work and for others it’s their primary income.
Both law firms and corporate legal departments hire coverage counsel. Law firms in almost all practice areas use coverage counsel, but there is definitely a concentration in the foreclosure, collections, evictions, bankruptcy, traffic, small claims, and social security and disability practices. Many corporate legal departments, especially insurance companies, have embraced the Association of Corporate Counsel’s Value Challenge and are using coverage counsel to improve the value of their legal spend. Some of these corporate legal departments use coverage counsel directly, while others are requiring their law firms to use coverage counsel to control costs.
Law firms benefit too. Like using a contract attorney, the use of coverage counsel is billable so law firms can increase revenues and effective hourly rates. It also allows a law firm to allocate their personnel to higher priority tasks. It keeps attorneys working on substantive, important work, not billing for low level, or administrative-like work.
The recent recession, layoffs, price pressures, and reluctance of law firm’s to hire associates has also contributed to the increase use of coverage counsel. Coverage counsel is the newest LPO (Legal Process Outsourcing) and it is good for U.S. lawyers; we can’t outsource hearing coverage to India. Local counsel is a growing business within the legal industry and it’s time that Bar rules be updated to allow for and regulate the practice.
Under Florida Rule 2.505(e) of the Rules of Judicial Administration, the “Appearance of Attorney” in a case does not allow an associate, partner or an attorney who is “of counsel” in the same law firm to appear at a hearing on behalf of the attorney of record unless they’ve complied with Rule 2.505(e). According to the rule, an attorney can only “appear” in a case in one of three ways:
(1) By serving and filing the first pleading or paper in the proceeding.
(2) By substitution of counsel
(3) By filing a notice of appearance as counsel for a party that has already appeared in a proceeding pro se or as co-counsel
As far as the rules are concerned, there is no difference between an associate, partner, “of counsel” or coverage counsel; none of them can appear at a hearing unless they’ve complied with Rule 2.505(e). Nonetheless, attorneys from the same law firm and coverage counsel appear at hearings all the time on behalf of the attorney of record.
Subcomittee “A” of the RJA is proposing new language to Rule 2.505 to permit “other attorneys” to appear under section (f) “at the request or direction of the attorney of record.” The proposed rule should include language that allows any attorney who is a member of the same firm as the attorney of record to appear without filing an NOA, while an attorney not a member of the law firm must file an NOA before appearing.
The “Same Firm” vs. “Other”
The rule should distinguish between an attorney from the firm and those not from the same firm. Attorneys in the same firm should not be burdened by having to file an NOA.
Any other attorney should have to file an NOA before appearing to prevent the unethical practices of “it’s not my case” and “hot potato”, as well as to ensure coverage counsel’s appearance is recorded. The “It’s not mine” excuse occurs when coverage counsel states “I am just covering this hearing, it’s not my case.” “Hot potato” refers to the practice of a coverage counsel handing off a case to another coverage counsel to handle. Without court reporters and case files there’s no other way to document their appearance. If coverage counsel efiled an NOA and two minutes later filed a Notice of Withdrawal, when did they “appear”? Filing an NOA before the appearing ensures that coverage counsel is fully bound by their ethical obligations as an attorney while they “appear” in the case, defines the duration of their appearance, and ensures there is privity between the hiring party and the coverage counsel.
Ethical obligations of an attorney are the same for an attorney of record, an associate, or contract attorney and apply equally to coverage counsel. Coverage counsel must be prepared, knowledgeable, and familiar with the facts. Similarly, the Rules’ supervisory responsibilities apply equally; the hiring attorney must properly prepare and supervise coverage counsel just as they would an associate in the firm.
The Domino Effect: “Of Counsel” Issues
Many law firms classify their relationships with coverage counsel as “of counsel”. Traditionally, “of counsel” meant that an attorney practices with one law firm exclusively, does not maintain an independent practice or have relationships with multiple law firms.[i] The vast majority of coverage counsel maintain their own law practice and represent numerous law firms. The use of “of counsel” should not be allowed, especially if it would allow them to bypass the requirement to file an NOA before an appearance under a revised Rule 2.505(f) or mislead a member of the judiciary when a judge asks “Are you a member of the law firm?”
Coverage counsel should be able to withdraw from the case without permission of the court by filing a “Termination of Appearance” once the appearance is completed.
Coverage counsel are bound to the same ethical standards as any other attorney. Coverage counsel must be prepared, knowledgeable, and familiar with the facts.
The truth is that coverage counsel is just as likely to be as prepared or unprepared and just as likely to be more knowledgeable or less knowledge than an attorney from the law firm. Why is this? Because they are all just attorneys with differing levels of experience, expertise and time invested in the case.
Too often the issue is not whether coverage counsel is prepared or knowledgeable; the issue is whether or not the hiring attorney has timely provided coverage counsel with the instructions and documents needed to properly handle the matter. The hiring attorney must properly prepare coverage counsel just as they would supervise and prepare an associate. The supervisory responsibilities delineated in the Rules apply equally to supervising coverage counsel.[ii]
Bar Registration and Requirements
Law firms and companies like MyMotionCalendar that provide coverage services should be required to register with the Bar, carry minimum levels of insurance and have a secure I.T. platform to protect the highly confidential information transmitted between the lawyers.
Law firms that maintain their own network of coverage attorneys would need to require their own “coverage counsel” be registered with the Bar, have the requisite insurance, and ensure all communications with local counsel are facilitated through a secure I.T. platform.
Privacy & Data Security
Amazingly, neither the Bar Rules nor the Florida Rules of Judicial Administration mention the word “privacy” or “data security” even once in the context of protecting a client’s personally identifiable information.[iii] This should concern every attorney because law firms are on the CFPB’s radar[iv]. Considering how much confidential information law firms collect on clients, it is possible that law firms may be the target of the next wave of CFPB investigations. The CFPB might also be motivated by that fact that, as reflected by the absence of these concepts in our rules, our self-regulation appears to be lacking.[v]
The Bar should adopt rules that require law firms to have privacy and data security safeguards. It should be required that any attorney providing or hiring coverage counsel services use a secure I.T. platform to relay information and documents to one another.
The Rules need to be updated and ethical opinions issued to ensure the use of coverage counsel is properly regulated.
Rule 4-1.2 allows “limited representation” and the “reasonableness” requirement of the rule governs when it is and is not appropriate to use coverage counsel. Coverage counsel should be bound by and adhere to the professional rules of conduct just like all attorney are. Coverage counsel should be required to file an NOA prior to appearing to ensure they are accountable, their presence recorded, and to eliminate any unethical practices. Remedies for violations of any obligations are best addressed by the Bar where the appropriate disciplinary action can be taken.
It’s time to formalize these practices and establish professional standards and rules to govern coverage counsel.
At MyMotionCalendar, we will continue to support rules and regulations that keep coverage counsel accountable and protect our profession.
MyMotionCalendar has developed many of its processes and procedures to comply with Bar guideline. Please continue to the next page to learn more….
In addition to providing a secure I.T. platform, here are some examples of how our system works and ensures compliance with Bar rules:
- The reservation form provides the client with ample opportunity to provide written instructions including specifically the nature of the matter, arguments to be made, desired outcomes, and additional/background information that may be needed.
- Our clients (the law firms) are provided the name, email, address, and phone number of the coverage counsel who will be handling the matter.
- We provide and facilitate conference calls between our client and the coverage counsel whenever requested.
- Clients are responsible for instructing the coverage counsel. The standard we use is “Client shall provide coverage counsel with all of the information and documents an attorney employed full-time by the firm would need in order to properly handle the assigned matter(s).”
- Clients can upload up to 20 documents to the reservation which are stored on our secure cloud system as opposed to being emailed via unsecure email services.
- In Q2 2014 we will be releasing software that will automate notices of appearances
- We have numerous automated reminders that get sent to both clients and coverage counsel to ensure everyone is prepared and has the materials needed to handle the matter.
- By virtue of the contracts, all parties are bound by the same confidentiality requirements any contract attorney or associate in a firm would be.
- Our contract with our clients and coverage counsel states that they are responsible to adhere to all rules regarding confidentiality, conflicts of interests, and competency
- Our contract with our clients advises them to inform their clients of our services if they “would likely consider this information material.”
- We only work with experienced attorneys; we do not hire recent law school graduates.
For individual attorneys and small law firms that provide coverage, the business remains a “cottage industry” without rules, procedures, compliance and inadequate I.T. and data security protections.
When I started MyMotionCalendar, the goal was to establish a professional operation with standards, procedures, technology, and compliance. To that end, we have a secure, online reservation and documents management system, dedicated support staff, a robust compliance program that includes contracts for all parties. In addition, we vet our attorneys, interview and screen them, have their resumes on file, check their bar status quarterly, conduct background checks, verify their insurance,[vi] and maintain our own insurance.
[i] Professional Ethics of the Florida Bar, FL Ethics Opinion 94-7. 1995 and Ethics Opinion 75-41. 1976 [ii] Rule 4-5.1 Responsibilities of Partners, Managers and Supervisory Lawyers [iii] Almost all references to “confidentiality” relate to attorney-client relationships or confidentiality of pleadings or investigations. It is not in the context of protecting personally identifiable information or data security. The Florida Rules of Judicial Administration do refer to data security as it relates to “court technology systems” only. [iv] “CFPB hhits Kentucky law firm with RESPA suit.” Oct. 2013. Housing Wire.
and “CFPB’s first civil enforcement suit targets law firm,” September, 2012. American Association for Justice: Trial News.[v] Many of MyMotionCalendar’s clients are law firms that service the financial services industry. As a result, we have built our I.T. platform to the highest standard in order to meet and comply with Gramm Leach Bliley, the CFPB, mortgage servicer’s requirements and privacy laws. Individual attorneys and small law firms that provide coverage services completely lack even basic I.T. and data security protections. It’s a serious concern. [vi] Client requirements vary. Only certain clients require background checks. The minimum amount of insurance coverage also varies by client.