Innovation Foundation

"Change," Ben Chun (CC BY-SA 2.0)

“Change,” Ben Chun (CC BY-SA 2.0)

by Jim Doppke

As I prepare to attend the #MAKELAWBETTER conference tomorrow, I reflect on the all the talk of innovation in law – talk we sorely need. The ethics and professional responsibility realm should be, and often is, at the forefront of the discussion. As we ponder changes in methods, we should also ponder changes in norms and standards. The Illinois ethical landscape should change with the changing times, too. We have the fifth-largest active attorney population in the United States, and as Prof. Daniel B. Rodriguez pointed out at the Future of Law 2.019 conference this year, we have every opportunity and reason to think of ourselves as leaders in the development of the practice.

But even before our current hot-button issues came to the fore, the Illinois Supreme Court gave us a conceptual starting point for the future of legal regulation: the watershed case of In re Karavidas, 2013 IL 115767. In that case, the Court refocused our disciplinary system in ways that can help us now conceive of the leaner, more agile system we need for the future.

The respondent in Karavidas, acting as executor of his father’s estate, borrowed nearly $400,000 from the estate, in a manner that breached his fiduciary duties to his mother and sister. The Hearing Board of the ARDC found that those breaches; the “conversion” of the estate funds; and the resulting prejudice to the administration of justice should have subject the respondent to discipline. Both parties appealed to the Review Board, which recommended the dismissal of the charges. The Review Board rejected the concept of charging or disciplining lawyers for conduct (e.g., breaches of fiduciary duty) that did not amount to violations of the Rules of Professional Conduct.

The Court, in its published opinion, reconciled the Hearing and Review Board’s positions by agreeing with the former that the respondent had breached his fiduciary duties, but also with the latter that such a breach should not subject lawyers to discipline. It held that “professional discipline may be imposed only upon a showing by clear and convincing evidence that the respondent attorney has violated one or more of the Rules of Professional Conduct. Mere bad behavior that does not violate one of the Rules is insufficient.” Karavidas, at par. 79.

There is more to Karavidas, too, much more. But for those of us interested in mapping a regulatory future, that basic holding provides a vital starting point. It signaled the end of the Administrator charging anything but violations of the Rules – no more duty breaches, no more “overreaching,” and most significantly, no more “conversion” – the quotes around those two signifying their status as disciplinary terms of art developed and refined over hundreds of cases and several decades. That in itself was a major shift.

Seen a bit differently, Karavidas represented the Court’s full endorsement of the 2010 Rules as the full expression of the standards governing Illinois lawyers’ conduct. It can be difficult to conceive of how there could have been significant doubt about that; but clearly the Court felt that the purview of ARDC regulation had gone too far afield, and needed a redefinition, a simplification. To that end, the Court for the first time articulated a difference between Rule violations and “civil offense[s]…for which a civil remedy is available to aggrieved parties” (Karavidas, par. 69)

So, now, if a lawyer does something that gets her sued, then the civil lawsuit happens; discipline need not follow. Again, that can sound like something of a truism, but consider that the great majority of disciplinary investigations are begun by “aggrieved parties,” some of whom have already begun pursuing civil remedies against the lawyer (and some who have already been unsuccessful in pressing their claims). Some of them are very aggrieved, and they may want to pursue relief on different fronts, including through the disciplinary system. Aggrieved parties will look for leverage wherever they find it. But now, unless their grievance leads to clear and convincing evidence of a violation of the Rules, it need not and should not be the basis for discipline, removing or reducing that leverage.

It would be fascinating to study the effects of Karavidas from a data-driven, evidence-based viewpoint. We know that there are forces at work that are depressing the numbers of requests for investigations the Administrator receives and the formal complaints the Administrator receives and files, but it is by no means clear, at least anecdotally, that Karavidas’ curtailing of the Administrator’s purview is the prime factor. The Administrator has continued to charge misconduct in cases with allegations similar to those in Karavidas, but with stronger proof that the respondent-attorneys violated a rule (especially Rule 8.4(a)(4), prohibiting dishonest conduct). The Administrator has also devised a method of charging misconduct that attempts to meet the Court’s admonishment in Karavidas that disciplinary complaints “clearly and unambiguously inform a respondent of the specific acts with which he is charged and the specific rules that he is alleged to have violated” (Karavidas, par. 72).

Karavidas militates toward and requires a precise approach to conceiving of and charging attorney misconduct. That approach should be the foundation for every idea for change and reform in the Illinois ethics system from here forward. The Court has determined that the concept of public protection on which the disciplinary system is built requires a sharp focus solely on whether attorney conduct violates the Rules. That determination does different things for different actors in the system: it focuses regulators on core concepts, and it frees lawyers to think more clearly about their risks and responsibilities.

If, for example, a lawyer who operates a nonlegal business need no longer worry about the activities of the business becoming the subject of disciplinary regulation, then that lawyer may feel more free to innovate in the operation of the business. This is of course not an argument that lawyers, or anyone, should feel free to act without scruples. The removal of regulatory consequences for conduct outside the Rules of Professional Conduct is not a removal of all morality, or of the potentially significant ramifications that can flow from civil disputes over lawyers’ conduct. But the Court’s redefinition of disciplinary standards and their potential consequences remains, nearly six years after the Karavidas opinion, a signal development.

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