Source: https://www.fmglaw.com/FMGBlogLine/category/professional-liability/page/2/
Timestamp: 2019-04-21 11:03:49+00:00

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In Salinas v. Atlanta Gas Light Company, the Georgia Court of Appeals’ recently examined whether Georgia Natural Gas (“GNG”) and Atlanta Gas Light Company (“AGLC”) were “affiliates.” Both AGLC and GNG were owned and controlled, either directly or through an intermediary, by a company named AGL Resources, Inc.
In Salinas, AGLC sought to dismiss Plaintiff’s claims and compel arbitration. In support of its argument, AGLC relied on a term in GNG’s service agreement that required the Plaintiff to arbitrate any disputes with GNG’s “affiliates.” However, since the term “affiliate” was not defined in GNG’s agreement, the Court of Appeals looked at how the term “affiliate” is defined in the Georgia Code, Black’s Law Dictionary, and other jurisdictions, and ultimately determined that the term is ambiguous. The Court of Appeals construed the agreement against GNG—the drafter of the contract—and as a result, AGLC could not demand arbitration of Plaintiff’s dispute.
While the Court of Appeals did not set-out a specific definition for “affiliate,” the Court’s analysis provides a couple of practice tips to anyone involved in drafting, reviewing, or enforcing contracts, including commercial agreements, government contracts, or insurance policies.
Define Your Terms: The Salinas Court may not have had to address the meaning of “affiliates” if the Agreement had defined the term. But, since the term was not defined, the Court looked elsewhere, including other jurisdictions, the Georgia Code, and the dictionary to determine its meaning. Including a definitions section is an easy way to set out the agreed-upon meaning of a term throughout a contract, and should not be overlooked.
Be Explicit: If there is a certain sibling or parent corporation that should be a beneficiary of a contract, consider listing the specific “affiliates” to which the contract or agreement should apply.
Check Your State’s Code: The Court noted that the term “affiliate” is defined over 20 times in the Georgia Code, and the definitions vary. For example, in the context of financial institutions, an affiliate is an entity that controls the election of a majority of directors, trustees of a financial institution, or an entity that owns or controls 50 percent or more of the financial institution. O.C.G.A. § 7-1-4 (1). In Georgia’s Corporations Act, the definition of affiliate is broader: “a person that directly, or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a specified person.” O.C.G.A. § 14-2-1110 (1). Depending on the type of corporate entity, “affiliate” may not include every entity in a corporate structure, and certain rules regarding ownership and control may be relevant.
If you need help with this issue, or any other commercial law questions, Jake Carroll practices construction and commercial law, is licensed to practice in Georgia and Florida, and is a member of Freeman Mathis & Gary’s Construction Law and Tort and Catastrophic Loss practice groups. He represents corporations and manufacturers in a wide range of litigation and corporate matters involving breach of contract, business torts, and products liability claims. He can be reached at [email protected].
 347 Ga. App. 480; 819 S.E.2d 903 (2018).
 See also O.C.G.A. § 18-2-71 (1) (B) (“Affiliate” has multiple definitions, including “[a] corporation 20 percent or more of whose outstanding voting securities are directly or indirectly owned, controlled, or held with power to vote by the debtor or a person who directly or indirectly owns, controls, or holds with power to vote 20 percent or more of the outstanding voting securities of the debtor[.] …”).
What Are The Ethical Rules For Legal Blogs In California?
Blogging by an attorney may be a communication subject to the requirements and restrictions of the Rules of Professional Conduct and the State Bar Act relating to lawyer advertising if the blog expresses the attorney’s availability for professional employment directly through words of invitation or offer to provide legal services, or implicitly through its description of the type and character of legal services offered by the attorney, detailed descriptions of case results, or both.
A blog that is an integrated part of an attorney’s or law firm’s website will be a communication subject to the rules and statutes regulating attorney advertising to the same extent as the website of which it is a part.
A stand-alone blog by an attorney, even if discussing legal topics within or outside the authoring attorney’s area of practice, is not a communication subject to the requirements and restrictions of the Rules of Professional Conduct and the State Bar Act relating to lawyer advertising unless the blog directly or implicitly expresses the attorney’s availability for professional employment.
A stand-alone blog by an attorney on a non-legal topic is not a communication subject to the rules and statutes regulating attorney advertising and is not subject thereto simply because the blog contains a link to the attorney or law firm’s professional website. However, extensive and/or detailed professional identification information announcing the attorney’s availability for professional employment will itself be a communication subject to the ethical rules and statutes.
See California Rules of Professional Conduct 7.1 and 7.2 and Business and Professions Code sections 6157-6159.2; State Bar of California Standing Committee on Professional Responsibility and Conduct, Formal Opinion Interim No. 12-0006.
In O’Gara Coach Company, LLC v. Joseph Ra, 2019 Cal.App. Lexis 12, the California Court of Appeal clarified the grounds on which a law firm can be disqualified. The Court reversed the decision of the trial court and disqualified Richie Litigation PC from representing Joseph Ra, a former executive of O’Gara Coach Company, LLC, in litigation involving Ra and O’Gara Coach. The Court held that disqualification is warranted because Darren Richie, the founder of Richie Litigation, formerly served as O’Gara Coach’s president and chief operating officer, and in those roles, he served a primary point of contact for the company’s outside counsel and possessed “confidential information, protected by O’Gara Coach’s attorney-client privilege, concerning Ra’s allegedly fraudulent activities at issue in this litigation.” The Court disqualified Richie Litigation even though Richie was not a licensed attorney when serving as O’Gara Coach’s president and chief operating officer and never had an attorney-client relationship with the company. The Court further held that vicarious disqualification of the entire firm, not only Richie, is warranted under the doctrine of imputed knowledge.
The litigation between O’Gara Coach and Ra arose from a lawsuit filed by Marcelo Caraveo, a former customer of O’Gara Coach, alleging wrongful conduct by O’Gara Coach, Ra, and others relating to Caraveo’s acquisition of luxury vehicles from O’Gara Coach. Ra filed a cross-complaint against O’Gara Coach for indemnity, and O’Gara Coach filed a cross-complaint against Ra, Caraveo, and others alleging that Ra and Caraveo “were the primary architects” of a fraudulent scheme involving the sale, leasing, and financing of vehicles.
Richie’s employment with O’Gara Coach terminated in 2016. In May 2017, Richie filed articles of incorporation for Richie Litigation which named Robert Lu as the sole officer and director. In June 2017, Lu substituted as counsel of record for Ra. In August 2017, Richie was admitted to the California State Bar.
O’Gara Coach emphasizes the paramount importance of protecting client confidences and the attorney-client privilege to ensure the “integrity of the judicial process.” An attorney must not only be mindful of his or her own prior relationships with an opposing party, but also of the prior relationships between other attorneys in his or her firm and an opposing party. Without thorough conflict checks, firms may subject themselves to disqualification and other costly repercussions from their clients.
If you have any questions or would like more information, please contact Brett Safford at [email protected].
On December 5, 2018, the California State Bar Task Force on Access Through Innovation in Legal Services held its first meeting and started a long process to modernize ethical rules that currently inhibit lawyers from fully using innovative technologies and services from non-lawyer businesses. Under the Current Rules of Professional Conduct for California lawyers, attorneys risk professional discipline and malpractice liability when using services and software offered by non-lawyer technology businesses, even though those services and software offer significant potential to improve access to and delivery of legal services.
Earlier this year, the State Bar charged the Task Force with recommending rule modifications to allow collaboration and technological innovation in legal services, including use of artificial intelligence and online legal service delivery models. The Task Force is specifically tasked with scrutinizing existing rules and regulations concerning the unauthorized practice of law, lawyer advertising and solicitation, partnerships with non-lawyers, fee splitting, and referral compensation. The Task Force must submit its recommendations to the State Bar Board of Trustees before December 31, 2019.
As any effective rule changes remain years away, lawyers must be aware of and comply with the current rules that restrict lawyers seeking to collaborate with and use technology from non-lawyer businesses. The Rules of Professional Conduct are often implicated when lawyers collaborate with non-lawyer businesses offering technology-driven legal services and software. These rules include those premised on harm to clients that flows from incompetent legal service (Rule 1.1), non-lawyer ownership of law offices and the unauthorized practice of law (Rules 5.4 and 5.5), and the dissemination of biased and/or misleading information (Rules 7.1-7.3).
To the extent that lawyers violate any of the aforementioned rules by using technology-driven legal services and software offered by non-lawyer businesses, they may be subject to State Bar discipline.
If you have any questions or would like more information, please contact Paige Pembrook at [email protected].
Come January 1, 2019, California lawyers who participate in mediations will need to provide written disclosures to their clients explaining mediation confidentiality. Further, California lawyers must get written acknowledgment from clients that they understand mediation confidentiality before participating in mediation. This requirement does not apply to class actions, however. The new law is a new statute in the Evidence Code pertaining to mediations–Section 1129.
The following disclosure satisfies the new law, so long as it is in 12-point font, in the preferred language of the client, and on a stand-alone, single page. Both the attorney and client have to sign and date the disclosure.
All communications, negotiations, or settlement offers in the course of a mediation must remain confidential.
Statements made and writings prepared in connection with a mediation are not admissible or subject to discovery or compelled disclosure in noncriminal proceedings.
A mediator’s report, opinion, recommendation, or finding about what occurred in a mediation may not be submitted to or considered by a court or another adjudicative body.
A mediator cannot testify in any subsequent civil proceeding about any communication or conduct occurring at, or in connection with, a mediation.
This disclosure must be provided to clients and signed as soon as reasonably possible before the client agrees to mediate. However, not obtaining a proper signed acknowledgment from a client is not a basis to set aside an agreement prepared for, in the course of, or pursuant to mediation. (Evid. Code, § 1129, subd. (e)). Attorneys can be disciplined for not complying with the new law, however. (Evid. Code, § 1122,, subd. (a)(3)).
What prompted this new law? First, it addresses the lack of client awareness of confidentiality at mediation. Second, attorneys were able to avoid mediation professional liability claims through the cloak of confidentiality. To address attorneys escaping mediation liability claims, a communication, document or writing related to the attorney’s compliance with the new law is admissible in an attorney disciplinary proceeding (unless the document discloses something said or done during mediation).
In sum: If a California lawyer plans to mediate, he or she should prepare the above disclosure and calendar the client’s prompt signature before the mediation.

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