Thursday, October 02, 2008

And, over at the Legal Profession Blog . . . .

I've reproduced a letter that a friend sent to me (see post here) to illustrate how obstreperous some attorneys can be. I'm not so sure that the reference to Dallas is gratuitous--you might want to watch this clip (here) from the song "Dallas, Texas," on the Austin Lounge Lizards' Highway Cafe of the Damned CD.

This reminds me of Judge Markell's opinion in In re Martinez, 393 B.R. 27 (Bankr. D. Nev. 2008), in which the court sanctioned the attorneys for Wells Fargo (and Wells Fargo itself) for refusing to correct a stipulation allowing relief from the automatic stay ON THE WRONG HOUSE. As the opinion explains,
This court is concerned that Cooper Castle and its lawyers sacrificed their professional independence to the demands of a large institutional client. They should have counseled Wells Fargo to agree to vacate the mistaken stipulation, and informed them that any other course of conduct was unreasonable and one in which they could not participate. Instead, they followed Wells Fargo's instructions without apparent regard to their professional obligations. In short, rather than remain as independent professionals counseling Wells Fargo, Cooper Castle and its lawyers instead chose to become unthinking agents for Wells Fargo's ends.
Failing to cooperate when the circumstances clearly call for it is a Very Bad Idea.


Anonymous said...

Last time I checked, attorneys couldn't withdraw orders that gave their clients rights without the clients permission. I would suggest reading the whole case. A stipulation was signed by both sides and entered as a court order. I would hope that your position isn't that a lawyer should file a rescission of any order WITHOUT their clients permission or worse in contradiction of the clients order. This opinion made little sense about this matter.

Richard Peck said...

Dear Anon:

If you read the whole Martinez decision, you no doubt noticed the absence of a dispute that the stipulation was executed by mistake. You already recognize that a stipulation is a contract because you noticed it was signed by both sides. Substantial authority supports the proposition that a stipulation signed by both parties is effective ab initio, with or without the judge's signature, for precisely that reason.

You must also recall that the doctrine of mutual mistake allows a court to void a contract that is executed as a result. Even without the doctrine of mutual mistake, 11 USC 105(a) grants a bankruptcy judge such as Judge Markell the power to do just about anything he damn well pleases in the name of equity.

Since there is no dispute the stipulation is a mistake, a motion to vacate it would undoubtedly be granted. In that light, let's look at the "client's rights." Wells Fargo had a stipulation it knew the court would vacate. What's that worth, exactly? (Think of Lehman Brothers stock.)

Just because a client has an attorney doesn't mean Rule 11 goes away. If an attorney tells a client there's no legal basis to oppose a motion and the client says do it anyway, the attorney has every right (and ought to have the professional backbone) to insist the client agree up front to pay any sanction that might result.

More often than not, the client could give a rat's ass about legal ethics -- just win, baby. But all clients care about money. So, in client-speak,"I can oppose it, but the judge is going to grant it no matter what, so you might as well save your money." Why spend money to lose when I can lose for free?

Far too many attorneys use the "I would if it were up to me, but my client won't allow it" gambit to try to camouflage either their unprofessional conduct or their just plain laziness. The stipulation was executed by mistake. Wells Fargo couldn't have given its counsel authority to make a mistake, could it? So wasn't the stipulation signed without Wells Fargo's Authority? Why would the attorney need Wells Fargo's consent to correct his or her own mistake? Of course, he or she doesn't.

Without 'fessin up to a mistake, I surmise that had the attorney simply told Wells Fargo,"The judge's going to vacate the stipulation no matter what we do. I can oppose it if you want, but I recommend you save your money -- you've got better places to spend it," "consent" would have been no problem. That's part of the advice clients pay lawyers to give. Those who shy away from giving it do neither themselves nor their clients a good service.