Before his sentencing for orchestrating the largest Ponzi scheme in U.S. history, Bernie Madoff explained to the court he had “made a terrible mistake.” To borrow a line from my 11-year old daughter: “No duh.” Madoff’s “mistake” led to a 150-year prison sentence.
In bar disciplinary proceedings, the word “mistake” is often used either to explain, describe, or defend against, a charge of alleged unethical behavior. But is it unethical for an attorney to make a “mistake”? Ethical guidance on what seems to be a straightforward question is mixed. The New Jersey Office of Attorney Ethics, for example, offers this guidance on its website:
A mistake does not necessarily constitute unethical conduct. If a mistake causes a loss, the client may be able to recover the loss in a civil suit against the lawyer for money damages. But a simple mistake or error in judgment by itself is not unethical conduct.
Unfortunately, this statement raises more questions than answers. Indeed, that a “mistake” is not “necessarily” unethical implies that a “mistake” could, in fact, be unethical. The further attempt to classify a mistake as “simple” begs the question – what is a “simple” ethical mistake?
Take the typographical error. The “typo” could easily be characterized as a “simple” mistake. Maybe the typo is negligent, but will it result in professional discipline? What if the typo caused the client to miss a non-extendable filing date, resulting in the lapse of valuable patent rights? Ethical or not?
The USPTO’s Office of Enrollment and Discipline has imposed fairly significant discipline against patent and trademark practitioners whose “simple” mistake of failing to timely pay maintenance fees led to the unintended loss of client patent rights. For example, in In re Brufsky, a patent attorney received a multi-year suspension because his staff erroneously determined the client was responsible for payment of maintenance fees.
In another “mistake” case, In re Druce (discussed here), the OED disciplined a named partner in an IP firm for failing to “adequately” supervise a paralegal. Such conduct could very well be characterized as “simple mistakes,” yet the purported “simplicity” of the “mistake” provided no defense.
“All men make mistake, but only wise men learn from their mistakes” – Winston Churchill
According to The New Jersey Office of Attorney Ethics, “There are situations that a client may find most annoying, but that do not constitute unethical conduct. An example would be the lawyer’s failure to consult with the client prior to writing every letter or prior to filing every document in the client’s case, or perhaps the lawyer’s failure to respond to all of the client’s telephone calls inquiring about the progress of the case.” Again the “every” and “all” qualifications are significant.
The Rules of Professional Conduct governing USPTO practitioners state “a practitioner shall . . . keep the client reasonably informed about the progress of the matter” and “promptly comply with reasonable requests for information from the client.” 37 C.F.R. § 11.104(a)(3) & (4). The ethics rules also impose a duty to “act with reasonable diligence and promptness in representing a client.” 37 C.F.R. § 11.103.
The line between reporting “every” communication and “reasonably” communicating is ill-defined. From the perspective of the bill-paying client, however, it may not be unreasonable to expect their lawyer to respond promptly to every communication. Furthermore, the OED will not hesitate to discipline an attorney for violating the duties of diligence and client communication, as discussed in our posting here.
Many attorneys who have been accused of intentional misconduct, such as lying to a tribunal (37 C.F.R. § 11.303), making false statements of fact or law to a third party (37 C.F.R. § 11.401), committing a crime that involves dishonesty (37 C.F.R. § 11.804(b)), or engaging in conduct involving fraud, deception, or misrepresentation (37 C.F.R. § 11.804(c), have characterized their conduct as a “mistake” – and yet such a characterization provides no defense to an ethics charge.
A “mistake” also is no defense to the violation of a number of ethics rules which are strict liability. For example, counsel owes a duty to maintain their client’s property separate from the practitioner’s property, maintain proper trust account records, and ensure that trust funds are properly balanced. 37 C.F.R. § 11.115. Whether the result of a “mistake” or not is irrelevant to the issue of whether these ethics rule were violated.
Apart from those cases of “intentional” misconduct and strict liability, there lies a broad middle-ground of negligence. Whether such a “mistake” is disciplinable, and the level of sanction to be imposed, depends on the duty violated as well as the harm, if any, to the client. See, e.g., In re Bristol, 140 N.M. 317 (N.M. 2006) (holding attorney’s negligence in failure to notify client warranted professional discipline for violating duty of reasonable diligence, but negligence was defense to intent-based ethics rules). The Eastern District of Virginia recently explained the mistake-ethics question as one that turns on the attorney’s state of mind:
Although a mistake like the one alleged to have been made by Plaintiff can have costly repercussions and form the basis of a malpractice claim, it does not rise to the level of unethical or unprofessional conduct. Barring malice or ill-will, there is nothing necessarily unethical or unprofessional about a mistake by an attorney that prejudices his client. The intentional failure to file transcripts associated with an appeal despite a client’s directions to do so, for example, might constitute unprofessional conduct. But the simple mistake of forgetting to file transcripts associated with an appeal does not.
Spencer v. American Int’l Inc., 2009 U.S. Dist. LEXIS 457 (E.D. Va. Jan. 6, 2009).
Attorney Judgment As Unethical?
The New Jersey Bar further suggests that an “error in judgment” by counsel may not “necessarily” be unethical. If the error in judgment is the result of counsel’s failure to adequately prepare, which resulted in the exercise of poor judgment, the lawyer could be charged with violating their duty of competence, which the USPTO ethics rules define as “the legal, scientific, and technical knowledge, skill, thoroughness, and preparation reasonably necessary for the representation.” 37 C.F.R. § 11.101.
A recent article co-authored by one of the leading practitioners in the field of interference law, Charles “Chico” Gholz, discusses whether an attorney’s exercise of professional judgment is a defense to a claim of malpractice predicated on an alleged breach of the duty of competent representation See C. Gholz and A. Englehart, Members of the Interference Bar Must Exercise Reasonable Care, But They Are Not Required to Tell the Future!, Intellectual Property Today (December 2014). As Mr. Gholz explains, “Members of the interference bar are super-specialists. We are patent lawyers, which make us specialists in the minds of many generalist judges, but we are also specialists in a small niche market within that specialty. That is our glory, but it is also our burden.” That “glory” of super-specialist status imposes with it a higher level of competence than the standard demanded of attorneys generally or even “regular” patent attorneys specifically.
The article addresses Seed Co. Ltd. v. Westerman, 111 U.S.P.Q. 2d 1976 (D.D.C. 2014), a malpractice lawsuit arising out of a patent interference. The district court in Seed granted defendants’ (attorneys who were accused of malpractice) motion for summary judgment of no liability for professional malpractice based on the “judgmental immunity doctrine.” The court explained the judicial immunity doctrine provides that an “informed professional judgment made with reasonable care and skill cannot be the basis of a legal malpractice claim” and that “no claim of legal malpractice will be actionable for an attorney’s reasoned exercise of informed judgment on an unsettled proposition of law.”
While the Seed case was not a disciplinary action, it is apparent that, in the court’s opinion, the attorneys complied with their ethical duty of competent representation.
General Guidelines on the Ethics of Attorney Mistakes
As one Colorado bar ethics opinion advised, “professional errors exist along a spectrum.” At one end are errors that “will likely prejudice a client’s right or claim. Examples of these kinds of errors are the loss of a claim for failure to file it within a statutory limitations period or a failure to serve a notice of claim within a statutory time period.”
At the other end of the spectrum are errors that may never cause harm to the client, either because any resulting harm is not reasonably foreseeable, there is no prejudice to a client’s right or claim, or the lawyer takes corrective measures that are reasonably likely to avoid any such prejudice. “For example, missing a nonjurisdictional deadline, a potentially fruitful area of discovery, or a theory of liability or defense may constitute grounds for loss of sleep, but not an ethical duty to disclose to the client.”
As one commentator remarked regarding similar circumstances, “Unless there are steps that can be taken now to avoid the possibility of future harm, there is probably no immediate duty to disclose the mere possibility of lawyer error or omission.” “In between these two ends of the spectrum are innumerable errors that do not fall neatly into either end of the spectrum and must be analyzed on a case-by-case basis.”
For example, it is ordinarily not necessary to disclose questions of professional judgment where the law was unsettled on an issue or the attorney “made a tactical decision from among equally viable alternatives.” Under the doctrine of “judgmental immunity,” as discussed above, these types of decisions are not, as a matter of law, considered errors, below the applicable standard of care, or negligent conduct. However, when reasonable lawyers may disagree about whether the state of the law was unsettled or the available alternatives were equally viable, the lawyer should err on the side of discussing the available alternatives with the client before pursuing a course of action.
Duty to Inform Clients of Mistakes
USPTO practitioners must keep their clients “reasonably informed about the status of the matter.” 37 C.F.R. § 11.104(a)(3). Counsel must also inform their client of “any decision or circumstance with respect to which the client’s informed consent is required by the USPTO Rules of Professional Conduct.” Id. at § 11.104(a)(1). The duty to keep a client “reasonably informed” requires disclosure regarding “significant developments” in the matter. Not surprisingly, the duty to inform the client regarding “significant developments” includes the duty to disclose material adverse developments, including those caused by the attorney’s own error.
Whether the attorney’s mistake is “significant” or “material” will depend on the circumstances. Where the mistake is easily correctable or otherwise of no moment (a typo in a pleading comes to mind), and will not prejudice the client’s rights or claims, it is usually not necessary to disclose the mistake to the client in order to keep the client “reasonably informed.” If counsel’s “mistake” was a breach of the duty of competent representation that materially prejudiced the client’s rights, then counsel must promptly disclose the error to the client. Such an error may result in a question as to whether the attorney has a conflict of interest and must obtain the client’s informed consent in order to continue the representation. Whether or not continued representation is permissible, either because there is no potential conflict or the potential conflict is waivable, depends on the nature of the error.
In many circumstances, the interest of the attorney in avoiding liability will be consistent with the interest of the client in a successful representation. Withdrawal is typically not required if the error likely can be corrected during the course of the representation, the error is not likely to result in harm to the client’s cause, the error does not prejudice the client’s right or claim, or the error does not necessarily constitute an error at all.
In an ethics opinion, the New York State Bar advises that “whether an attorney has an obligation to disclose a mistake to a client will depend on the nature of the lawyer’s possible error or omission, whether it is possible to correct it in the pending proceeding, the extent of the harm resulting from the possible error or omission, and the likelihood that the lawyer’s conduct would be deemed unreasonable and therefore give rise to a colorable malpractice claim.”
Although it can be difficult to determine whether a lawyer must call a client’s attention to an error, it is relatively easy to describe what to say to the client when the lawyer has made the decision to disclose. Candor is a given. The result may be a surprisingly appreciative and understanding client.
Mistake as Relevant to Sanctions
Whether the attorney’s conduct was the result of a “mistake” of the negligence variety or the “mistake” of the fraudulent variety may be the difference between a reprimand, a suspension, or an exclusion. In deciding what level of discipline is appropriate, many disciplinary authorities, including the USPTO, are informed by the ABA Standards for Imposing Discipline. A lawyer’s state of mind can be an important part of the sanctions analysis.
For example, the ABA Standards recommend a private reprimand when the attorney was negligent and caused little or no harm to the client. Negligence that causes client harm, on the other hand, may result in a public reprimand. A “mistake” that is in fact an act of fraud or deceit will, absent extenuating circumstances, often results in either a period of suspension or disbarment.