In-House Counsel, Legal Ethics, Litigators

2 Examples Of Ethics Arbitrage

The rules of legal ethics vary significantly among jurisdictions; could a clever lawyer represent a client more effectively by exploiting these differences?

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People do risk arbitrage. And currency arbitrage. And endless other kinds of arbitrage.

I’ve ginned up a whole new field: Ethics arbitrage! (Please note that I’m not recommending the tactics that I discuss below. The tactics just crossed my mind recently, and I thought it would be interesting to raise the concept with a broad audience.)

Here’s what I’m thinking: The rules of legal ethics vary significantly among countries. (The rules vary among American states, too, but I’m not sufficiently clever to create hypotheticals that exploit those differences. I guess that’s why we have a “comments” bar down at the bottom of this column.) Could a clever lawyer represent a client more effectively by exploiting the different legal ethics rules in different countries?

Here’s an example:

In Switzerland, a litigator cannot speak to a witness before the witness takes the stand. (Swiss lawyers get nervous about simply calling the witness to say that the trial will take place at 9 a.m. on Wednesday at the courthouse on Main Street.) The witness is supposed to take the stand unprepared and give his unvarnished recollection of what happened. Anything that might affect that memory (including seemingly innocuous stuff, such as meeting with the witness to show him the email that he wrote three years ago and thus jogging his memory) is considered to be impermissible coaching.

In England, litigators are free to meet with witnesses and to work closely with them to craft the witnesses’ direct testimony. English litigators thus go through all the old emails — and everything else — with each witness to be sure the witness’s written statement is comprehensive and accurate. But litigators would violate the local rules of ethics if they conducted mock cross-examination of the witness. That’s considered to be impermissible coaching.

In the United States, the very thing that is unethical in England — conducting mock cross — is not just routine, but almost mandatory. It would border on malpractice for an American lawyer handling an important litigation matter to put on the stand a witness who had not been vigorously cross-examined in multiple practice sessions to ensure that the witness was ready to testify. Lawyers don’t tell witnesses to lie during those preparation sessions, of course; lawyers simply ensure that witnesses anticipate the questions and can answer them all accurately, calmly, and coherently.

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Here’s today’s question: Is it appropriate for a litigant to take advantage of those variances in ethics rules to improve the litigant’s chance of success in a dispute?

Let me start with the ethics arbitrage that I plainly would not do:

American client is sued in London. Client knows full well that those clownish litigators in London won’t properly prepare the witnesses to testify at trial. So client hires two law firms. It hires a firm in London, to handle the case generally, and the client secretly (without telling anyone in London) hires a second law firm in New York, to prepare the witnesses. A month before trial, the client flies its witnesses to New York, where the witnesses undergo “proper” preparation for trial, including days of mock cross-examination. The witnesses then fly back to London, where they never mention their American experience to anyone, and they perform spectacularly well at trial.

My question is this: Would that be ethical? (Does it matter if the client involves no lawyers at all in the client’s decision to retain two law firms on different continents? Suppose the client has an in-house American lawyer who makes the decision? An in-house English lawyer?)

I’m not sure whether that conduct would be ethical, but I certainly wouldn’t recommend it (or do it myself), for two reasons. First, the conduct feels unethical. Even if hiring an American firm to evade the English rules of ethics is not expressly prohibited, the conduct comes too close to the line for my personal comfort.

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Second, assuming the hiring of two firms is ethical, it is undoubtedly dangerous. If an English judge — raised in the English environment and accustomed to English ethics rules — were to learn that witnesses had been subject to mock cross-examination before trial, the English judge would surely view that as improper coaching and the resulting testimony as suspect. In any battle of credibility, your “well-prepared” witnesses would lose.

That’s my first example of ethics arbitrage.

Here’s my second example of ethics arbitrage, which might strike folks as a closer question. (I’ve never done this — or even confronted it — in practice myself, but it seems like an interesting issue.)

Your client is involved in an international arbitration that will be conducted (in the English language) in Geneva, under an English choice-of-law provision. Who should you hire to represent the client?

A Swiss firm, which may not prepare your witnesses at all?

An English law firm, which may prepare your witnesses inadequately (to your American eyes)?

Or an American law firm?

I hear you shouting in unison: “No, Herrmann, you idiot!” (At least all of my readers can agree on one thing.)

Then the chorus breaks in half. One half sneers: “The English choice-of-law provision implicitly grafts English rules of ethics into the proceeding. It would be unethical to conduct mock cross-examination before presenting a witness to testify at that arbitration.”

The other half of you are shouting (after the part about me being an idiot, of course): “English lawyers understand that they’re not bound by English rules of ethics when proceedings are not being conducted in English courts. In an international arbitration, the English lawyers would prepare witnesses entirely differently than they would for English court proceedings.”

I guess I’d have to think about (or maybe even research) the ethics question; the answer isn’t self-evident to my poor mind.

As to how English lawyers would act if they were unencumbered by English rules of ethics, I suppose reasonable minds could differ there, too. Perhaps the Brits would turn American in a heartbeat, and they’d [mock] cross-examine the living daylights out of the witnesses before putting them on the stand. Or perhaps the Brits would feel constrained, even in an arbitration, by a lifetime of ethical education; the British lawyers wouldn’t “tamper” with the witnesses. Or maybe the Brits wouldn’t feel constrained by ethics, but they wouldn’t be any good at conducting mock cross-examination, because they’d never done it before.

What do you think, dear reader? Am I an ethical disaster? (Okay, okay: Maybe I shouldn’t go out of my way to invite abuse.) Or would “ethics arbitrage” be an interesting topic for some student writing a law review note, or for some professor pursuing tenure?

Mark Herrmann is Vice President and Deputy General Counsel – Litigation and Employment at Aon, the world’s leading provider of risk management services, insurance and reinsurance brokerage, and human capital and management consulting. He is the author of The Curmudgeon’s Guide to Practicing Law and Inside Straight: Advice About Lawyering, In-House And Out, That Only The Internet Could Provide (affiliate links). You can reach him by email at inhouse@abovethelaw.com.

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