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Wisconsin weighs in on the ethics of cloud computing

Stacked3This week's Daily Record column is entitled "Wisconsin weighs in on the ethics of cloud computing ."  My past Daily Record articles can be accessed here.

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 Wisconsin weighs in on the ethics of cloud computing 

In March, Wisconsin joined the ranks of many other jurisdictions and addressed the ethics of lawyers using Web-based computing in their practices. At issue in Wisconsin Formal Ethics Opinion EF-15-01 was how lawyers could ethically use cloud computing services to store confidential client information.

At the outset, the committee acknowledged that the issue was not whether lawyers could use cloud computing, but instead, how to go about ethically using cloud computing services: “As cloud computing becomes more ubiquitous and as clients demand more efficiency, the question for counsel is no longer whether to use cloud computing, but how to use cloud computing safely and ethically.”

The committee agreed with the other jurisdictions that have addressed the issue and concluded that lawyers may ethically use cloud computing in their practices: “(C)loud computing is permissible as long as the lawyer adequately addresses the potential risks associated with it … (L)awyers must make reasonable efforts to protect client information and confidentiality as well as to protect the lawyer’s ability to reliably access and provide information relevant to a client’s matter when needed. To be reasonable, those efforts must be commensurate with the risks presented. Lawyers must exercise their professional judgment when adopting specific cloud-based services, just as they do when choosing and supervising other types of service providers.”

The committee explained that client consent is not required, but in certain cases, may be advisable and also addressed a lawyer’s obligations in the event of a breach: “While a lawyer is not required in all representations to inform clients that the lawyer uses the cloud to process, transmit or store information, a lawyer may choose, based on the needs and expectations of the clients, to inform the clients. A provision in the engagement agreement or letter is a convenient way to provide clients with this information … If there has been a breach of the provider’s security that affects the confidentiality or security of the client’s information, SCR 20:1.4(a)(3) and SCR 20:1.4(b) require the lawyer to inform the client of the breach.”

Importantly, the committee confirmed that absolute security is not required and is an impossibility, since “(l)awyers are not required to guarantee that a breach of confidentiality cannot occur when using a cloud service provider, and … are not required to use only infallibly secure methods of communication.”

The committee then explained that lawyers do have a duty to make reasonable efforts to secure client data and identified factors to consider when assessing the risks. According to the committee “(t)hese factors, which are not exclusive,” include:
• the information’s sensitivity;
• the client’s instructions and circumstances;
• the possible effect that inadvertent disclosure or unauthorized interception could pose to a client or third party;
• the attorney’s ability to assess the technology’s level of security;
• the likelihood of disclosure if additional safeguards are not employed;
• the cost of employing additional safeguards;
• the difficulty of implementing the additional safeguards;
• the extent to which the additional safeguards adversely affect the lawyer’s ability to represent clients;
• the need for increased accessibility and the urgency of the situation;
• the experience and reputation of the service provider;
• the terms of the agreement with the service provider; and
• the legal and ethical environments of the jurisdictions in which the services will be performed, particularly with regard to confidentiality.”

Finally, the committee wisely noted that an elastic standard of reasonableness was required and the factors listed were simply recommendations since “lawyers’ ethical duties are continually evolving as technology changes.” Specific requirements would soon become obsolete.

Moreover, the risks vary with the technology involved, the type of practice and the individual needs of a particular client. Lawyers must exercise their professional judgment in adopting specific cloud-based services, just as they do when choosing and supervising other types of service providers, and specific requirements would do little to assist the exercise of professional judgment.”

Also of note was Appendix A to the opinion, which included a useful and in-depth summary of the various cloud computing ethics opinions issued thus far from other U.S. jurisdictions. The Appendix alone is a useful source of information, while the opinion as a whole provides valuable insight into the issues presented when lawyers use cloud computing tools in their practices and provides a measured and thoughtful framework for lawyers seeking to implement any type of new technology into their practices.

Nicole Black is a Rochester, New York attorney and the Legal Technology Evangelist at MyCase, intuitive web-based law practice management software for the modern law firm. She is also the author of the ABA book Cloud Computing for Lawyers, co-authors the ABA book Social Media for Lawyers: the Next Frontier, and co-authors Criminal Law in New York, a West-Thomson treatise. She is the founder of lawtechTalk.com and speaks regularly at conferences regarding the intersection of law and technology. She publishes four legal blogs and can be reached at niki@mycase.com.


New York State Bar on virtual law practices

Stacked3This week's Daily Record column is entitled "New York State Bar on virtual law practices."  My past Daily Record articles can be accessed here.

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New York State Bar on virtual law practices  

 

 

Last week I discussed Schoenefeld v. State of New York, 25 N.Y.3d 22. In that case, the New York Court of Appeals interpreted the bona fide office rule as it relates to New York lawyers seeking to practice law from a virtual office, where the lawyer is located outside of the state. The court concluded that the clear language of New York’s bona fide office rule required “nonresident attorneys to maintain a physical office in New York.”

Shortly after that decision was handed down, the New York State Bar Association Committee on Professional Ethics examined the ethical obligations of an attorney licensed to practice law in New York but who was seeking to practice law from a virtual law office while residing in Virginia. In Opinion 1054 (April 10, 2015) the committee addressed this issue: “May a lawyer admitted only in New York and Pennsylvania practice in the federal courts in Virginia and before the Administrative Board of Veterans Affairs from a ‘virtual office’ in Virginia?”

The focus of the committee’s analysis revolved around choice of law issues and the circumstances under which the Virginia ethical rules would control the attorney’s conduct as opposed to the New York rules. After reviewing the facts and relevant law, the committee concluded that “the inquirer is deemed ‘licensed to practice’ in Virginia, and the New York disciplinary authorities would ordinarily apply the Virginia Rules of Professional Conduct to his conduct.”

Accordingly, he was permitted to operate a virtual practice in Virginia since “the Virginia State Bar Association ha(d) opined that he may practice from an office address in Virginia, as long as he limits his practice to federal court, and indicates on his letterhead, business cards and website that he is licensed to practice law only in New York and Pennsylvania.”

However, the committee noted that because he was practicing from a location in Virginia, his ability to solicit New York legal clients was necessarily limited by the New York rules regarding virtual practices and the requirement that New York lawyers have a bona fide office within the state. The committee explained that in its prior opinion, 1025 (2014), it concluded that New York courts have long held that Judiciary Law §470 requires attorneys who practice, but do not live, in New York, to have an office here.

The committee then referred to the Schoenefeld case from last month and opined: “Assuming the inquirer is soliciting business from New York residents, the inquirer must comply with various duties imposed by the Rules, see N.Y. State 1025 (2014) (listing duties under various Rules, and noting that there is no “virtual law office exception” to any of the Rules).”

However, the committee noted that after the New York Court of Appeals issued its decision in Schoenefeld, the matter was returned to the Second Circuit Court of Appeals for its determination as to the constitutionality of Judiciary Law §470. Obviously the outcome of that case may affect the status of the bona fide office requirement and the committee’s future conclusions in that regard.

So stay tuned, folks. In due time, the ability of New York-licensed attorneys to operate virtual law practices serving New York clients may change. But for now, an office within New York continues to be required.

Nicole Black is a Rochester, New York attorney and the Legal Technology Evangelist at MyCase, intuitive web-based law practice management software for the modern law firm. She is also the author of the ABA book Cloud Computing for Lawyers, co-authors the ABA book Social Media for Lawyers: the Next Frontier, and co-authors Criminal Law in New York, a West-Thomson treatise. She is the founder of lawtechTalk.com and speaks regularly at conferences regarding the intersection of law and technology. She publishes four legal blogs and can be reached at niki@mycase.com.


NY Court of Appeals on bona fide office requirement

Stacked3This week's Daily Record column is entitled "NY Court of Appeals on bona fide office requirement ."  My past Daily Record articles can be accessed here.

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NY Court of Appeals on bona fide office requirement 

 

As the practice of law changes and technology makes it easier than ever to practice law from anywhere, states are being forced to grapple with the issue of virtual lawyers and the bona fide office requirement that exists in many states. This rule requires that lawyers have a physical office in the state in which they would like to practice.

So lawyers with virtual practices who live in, for example, New Jersey, but are registered in New York and would like to represent New York clients, are forbidden from doing so unless they rent or own physical office space in New York.

Many believe that this requirement is antiquated in light of new technologies that change the way that lawyers can deliver legal services. Advocates of the rule contend that it is necessary for a number of reasons — among them to protect legal consumers and to ensure that lawyers registered in New York state can be easily served with judicial process.

New York’s bona fide office rule recently came into question in Schoenefeld v. State of New York, 25 N.Y.3d 22. In this case, the United States Court of Appeals for the Second Circuit certified the following question to the New York Court of Appeals: What are the minimum requirements a lawyer must satisfy in order to meet the statutory directive that nonresident attorneys must maintain an office within the state “for the transaction of law business” under Judiciary Law § 470?

The plaintiff in this case asserted that the bona fide office provision could be interpreted to simply “require nonresident attorneys to have some type of physical presence for the receipt of service — either an address or the appointment of an agent within the state.”

In reaching its decision, the Court of Appeals considered the legislative history and purpose of the statute along with case precedent. The court explained that contrary to the plaintiff’s contention, the rule was not promulgated solely to provide an address for the service of process: “(E)ven if one wanted to interpret the term ‘office’ loosely to mean someplace that an attorney can receive service, the additional phrase ‘for the transaction of law business’ makes this interpretation much less plausible. Indeed, the Appellate Division departments have generally interpreted the statute as requiring a nonresident attorney to maintain a physical office space.”

Accordingly, the court concluded that the clear language of the statute required “nonresident attorneys to maintain a physical office in New York.” The court explained that it was declining to re-write the rule and instead deferred to the legislature to “take any additional action deemed necessary.”

I think the court made the right decision given the plain language of the statute, but do hope that the legislature addresses this issue soon. The impact of technology on the practice of law and on the delivery of legal services is undeniable.

The legal landscape is changing and the recent decision in Washington state to allow limited license legal technicians to advise clients on certain areas of the law is just one more example of this. The innovative use of technology to streamline and reduce the costs of legal services is key competing in an increasingly crowded legal marketplace and lawyers failing to do so may very well be left in the dust.

Providing virtual legal services is one obvious way for lawyers to reduce overhead and overall costs. If New York lawyers are prevented by the operation of an antiquated statute from providing low-cost transactional legal services to a population in need of them then many of these potential clients will turn to websites that provide low cost wills and forms directly to the consumer. New York lawyers will be left out of the equation. I’m quite sure that’s a result that no one wants. So here’s to hoping that the legislature sees the light and revises New York’s bona fide office rule.

Nicole Black is a Rochester, New York attorney and the Legal Technology Evangelist at MyCase, intuitive web-based law practice management software for the modern law firm. She is also the author of the ABA book Cloud Computing for Lawyers, co-authors the ABA book Social Media for Lawyers: the Next Frontier, and co-authors Criminal Law in New York, a West-Thomson treatise. She is the founder of lawtechTalk.com and speaks regularly at conferences regarding the intersection of law and technology. She publishes four legal blogs and can be reached at niki@mycase.com.