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Line between advocates and advisors blur

Diane Karpman

By Diane Karpman

Ambiguity plagues our society. Life was much easier when there were bright lines, only two kinds of ice cream and lawyers came in two varieties, advocates and advisors. This historic distinction is graphically illustrated in England, with barristers who wear wigs and robes, and solicitors who dress like human beings.

This distinction resonates throughout the profession. For example, causation requirements for plaintiffs in legal malpractice may differ, depending on whether the lawyer was performing as a litigator or advisor, but this is issue is blurry right now. The Supreme Court just heard oral argument in Viner v. Sweet regarding this issue, and a decision is expected shortly.

Most lawyers generally perform in the counseling "mode." When a lawyer acts as an advisor, he has to reflect upon the future ramifications of his conduct. Often, a tax opinion letter or other document an attorney drafts is designed to encourage third party investments. Since the letter was intended to induce third party or non-client reliance, suits against drafters by non-clients are somewhat justifiable.

The bright line segregating advocates from advisors is fading, and a new type of hybrid lawyering is emerging in the profession. It could be labeled as a "third way" of lawyering, much like Prime Minister Tony Blair's "third way." These "third way" lawyers, or "regulatory counsel," are involved in pervasively regulated industries like financial institutions, publicly traded corporations, pharmaceuticals or healthcare.

Attorneys representing pervasively regulated clients absolutely know that their documents will face stringent governmental scrutiny by ad-ministrative regulators. Their position is not as uncertain as typical transactional lawyers, whose documents may forever remain in darkness, yet these lawyers may not be truly adversarial with the regulators.

Clearly, questionable representations or errors on compliance documents could result in tremendous financial losses for their clients, such as a hospital losing Medicare or mistakes resulting in full-blown audits. Some authorities maintain that there are enhanced duties of candor owed by lawyers operating in the regulatory landscape that are akin to the duty of candor to the court. In some states, that duty of candor to the tribunal can even trump the duty of confidentiality owed to the client. This argument maintains that since lawyers are aware of the negative impact caused by erroneous disclosure or compliance, they have a heightened duty to be accurate and truthful.

There are no special rules etched in stone for lawyers interacting with governmental regulators, and "cooperation" with a regulator can suddenly become strategic posturing for future litigation. Regulators are not immune from mistakes, or misconstruing their mandate; they too can become overly zealous or simply be wrong.

It would probably be easier if we actually wore wigs. Then at least clients, third parties, regulators and judicial officers would get clear signals of the role in which we were engaged. But we would lose the edge that skillful use of ambiguity sometimes provides in terms of leveraging a client's changing position. And, don- ning a wig exacerbates "bad hair days."

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