Hypothetical Ethical Challenges and Suggestions on How to Navigate Them

March 16, 2018

The panel discussed key ethics issues that confront lawyers in the advertising and marketing business. Hypothetical situations were proposed and leaders in the field shared their perspectives on how to handle the potential ethical conflicts.

ANA Law Conference attendees: Scroll down for CLE materials

A lawyer’s brother works for a struggling government contractor. The lawyer is asked to represent a client in bidding for government work that the lawyer knows his brother’s employer will also be bidding on. What is the conflict?

Rick Kurnit, Partner at Frankfurt Kurnit & Selz PC: Personal interest conflict is in many senses the most subjective. Your brother could lose his job depending how this bidding process goes. There is both a significant relationship and a significant stake; it’s not just incidental. You, as the lawyer, need to consider how likely is it that you can zealously represent your client to the fullest extent of the law. How might your obligation be compromised? If you feel that your relationship with your brother is going to get in the way of your relationship with your client, then it’s a conflict. If you can deliver your services without compromise, you must describe the situation to your client and understand that they may choose to not to retain you.

A lawyer represents an ad agency in a dispute with a supplier. If the supplier is liable to the agency, a portion of the damages will need to be paid by a secondary supplier, which is also a client of the lawyer. The lawyer is not representing the secondary supplier in this matter because it is not a party to the matter. What is the conflict?

Ronald Urbach, Chairman of David & Gilbert LLP: This an interesting hypothetical, and we could fill in some examples. Let’s say the ad agency is your client and a production company is the supplier. The secondary supplier is an edit house that works with the production company. Your law firm represents the ad agency and the edit house, and there is an ongoing dispute between the production company and the agency. Maybe it’s a dispute about some creative materials, and perhaps the production company claims the problem is because of the edit house. The ethical determination is critical, but there is a business determination to consider as well. From a business perspective, if the firm’s conflict checks pick up that the edit house is a client, what do you do with that information? Assuming you can resolve that from a business perspective, what is the ethical obligation? There is some case law that suggests the firm would not be able to represent the parties in that situation. The consequence of the law firm being involved is that the edit house would pay money to the production house. Also consider that should this situation happen, what would your client’s reaction be? It’s the intersection between business reality and ethics which makes this complex.

A lawyer represents a challenger in a comparative advertising case at the National Advertising Division (NAD) of the Advertising Self-Regulatory Council. While the NAD proceeding is pending, the challenged advertiser is acquired through an asset purchase by another one of the lawyer’s clients. What is the conflict? Would the answer be different if the challenged advertiser had been acquired through a stock purchase as opposed to an asset purchase?

Christopher Sloan, AVP and Senior Corporate Counsel at Liberty Mutual Insurance Co.: This is an example of a thrust-upon conflict, where the facts are pushed on the lawyer, and the circumstance is not something that is anticipated or planned for. If it’s an asset purchase, you are acquiring the assets and liabilities, and you’d likely have a potential conflict situation. If it’s a stock purchase, depending on how much control is left by the acquiring company, you may not have a conflict if there is a true separation and it’s an affiliate purchase or an affiliate connection with the entity.

A lawyer’s engagement letter with a client provides that when all matters have been completed for the client it is agreed that the attorney/client relationship has ended. The lawyer completes all matters for client, sends invoice to client marked “Final,” and then undertakes a new matter against client that is unrelated to the matters the lawyer handled for the client. The lawyer subsequently receives a letter from the client asking for the lawyer to advise the client’s external auditor of any loss contingencies. What ethical obligations do you have in this context?

Stuart P. Ingis, Chairman of Venable LLP: There are multiple ethical obligations here. You have one duty that still exists to the previous client, one that exists to the current client, and you have to be truthful to the auditor. There are two choices: you can respond or not respond. If you’re going to respond, the response should be limited to the time of engagement from the first matter because you cannot disclose anything about the ongoing, new matter. The other option would be to not respond. You cannot prejudice your current client by letting your previous client know of a matter that is not yet public.

A lawyer represents client in litigation in Western District of Pennsylvania. The client is incorporated in New Jersey but the adversary is a Pennsylvania company, which is the reason the litigation is in Pennsylvania. An associate admitted in both Pennsylvania and New Jersey is working on the case for the adversary, and with client consent, interviews with the lawyer’s firm in its Trenton office. After a notice of the associate’s move is made in advance to all parties in the litigation, the associate joins the firm in Trenton. What is the conflict? Would the answer be different if the associate joined in the lawyer’s firm’s Pittsburgh office?

Doug Wood, Partner at Reed Smith LLP: Pennsylvania would say this is a conflict, and the New Jersey rules would say it’s not. The laws of where the conflict is filed dictate the answer to this question. In this case, Pennsylvania laws would need to be upheld.

Your client is sued together with a co-defendant with whom your client dealt in a contract that is now in dispute. Your client and the co-defendant also dealt with another company in connection with the contract but that company is not a party to the suit brought by the plaintiff. When you issued a legal hold notice, you failed to notify the non-party. Was there spoliation?

Carla Michelotti, President of Carla Michelotti, LLC: That’s going to be an issue. You need to go over and above to make sure you’re not guilty of spoliation of documents, emails, and text messages. You need to send out hold letters. This can easily happen in the advertising community because the complexity of the advertising ecosystem includes advertising clients, ad agencies, production companies, and freelancers. You need to make sure the letters are sent out to the potential third party who may be important witnesses or have documents that are material to the litigation. You need to educate people about the importance of holding those documents.

Q&A with Doug Wood, Partner at Reed Smith LLP; Stuart P. Ingis, Chairman of Venable LLP; Rick Kurnit, Partner at Frankfurt Kurnit & Selz PC; Carla Michelotti, President of Carla Michelotti, LLC; Christopher Sloan, AVP and Senior Corporate Counsel at Liberty Mutual Insurance Co.; Ronald Urbach, Chairman of David & Gilbert LLP

Q: In vague terms, what are the worst legal ethical violations you’ve seen?

Doug Wood: I don’t think I’ve seen any egregious ethical violations, but I’ve seen some really stupid business decisions. It gets back to disclosure and talking to your clients. They’re a lot more understanding than you think they are, and they hate to be surprised.

Q: What are the ethics issues raised by new technology used by advertisers?

Carla Michelotti: Within the supplier communities, you need to think about confidentiality and attorney/client privilege. The number one risk in technology is people.

Christopher Sloan: In the Internet of Things, so many devices are collecting information about you. Technology is changing rapidly, and the privacy concerns can become an ethical issue. At what point do you need to update disclosures regarding the information you’re collecting and what you’re doing with that information?

Rick Kurnit: Technology has sped up communication so much. Clients have certain response time expectations, and sometimes there isn’t time for the conflict check.

CLE Materials


"Hypothetical Ethical Challenges and Suggestions on How to Navigate Them." Doug Wood, Partner at Reed Smith LLP; Stuart P. Ingis, Chairman of Venable LLP; Rick Kurnit, Partner at Frankfurt Kurnit & Selz PC; Carla Michelotti, President of Carla Michelotti, LLC; Christopher Sloan, AVP and Senior Corporate Counsel at Liberty Mutual Insurance Co.; Ronald Urbach, Chairman of David & Gilbert LLP. 2018 ANA Advertising Law & Public Policy Conference, 3/16/18.

You must be logged in to submit a comment.