I am basically a tolerant, liberty-oriented, and liberal-minded person.  I was delighted to see female priests in the Episcopal church; gay clergy is fine with me; and I have no objection to a Lesbian archbishop.  I even now, under the improbably influence of Brent Cooper, a lawyer in Dallas (who-da thunk it), welcome the prospect of trying a case in front of a jury of  “Millennials”–all including purple haired maidens, women with multiple tattoos in vivid color, and men wearing baseball caps on backward.

In addition, in opposition to all the Yellow Dogs I know–and that’s a lot–I think that most insurance companies, most of the time, are reasonable entities trying to reach a reasonable result that is more or less consistent with the applicable contract of insurance. Similarly, I think that most lawyers–more than 65%–try to obtain a semblance of justice, even in contested matters, even if many of them are far, far, less than perfect or even marvelously good, relatively speaking, in their non-lawyering lives.

It is therefore a personal deficiency of mine–granted one I nonetheless love, honor, and obey–to not just delight but take considerable joy in observing a truly wicked lawyer–an evil one!–washed over by a tide of condemnation. Hearing about a come a uppence is not nearly so pleasurable as “watching”–if only in the imagination–not only a fall from a high place but also a long, trudging  trip on bare feet in the cold, cold rain on gravel roads on the way to the farthest away dumpy house of misery producing, sustaining, and worsening incarceration.

I have gone to confession on this point in which I take pride many times during and since my youth, yet (I do not really try to repent.)  Following vengeance upon the profoundly and deserving unworthy is one of life’s pleasures, like warm cornbread, especially when  you have no role in executing it. (In the current age of massive statin consumption, be careful not to eat too much of it.) Oddly enough, I would defend these wretches in court if s/he have the money* or were a close and beloved relative, like my brothers, my wife, and my children, even if broke.  I’m sure my father would have done it for one or all of us. Even the worse get a defense in the civilized secular world; besides, we have not burned witches in several centuries.

(*The liberality and tolerance I have proclaimed for myself gives out here.  I cannot see how the idea of  pro bono applies since that phrase means “for the good,” and I see no good in this defense.)

Now I finally get to the point.

There is a syndicate of lawyers who are way down there, not far from the lowest of the low.  Part of this is that they inflict suffering on large groups, and will go further if they can. What they do is to acquire copyrights “governing” poor pornography.  They then utilize it to blackmail weak citizens who have downloaded some of their junk.  They do this by finding out who these poor devils are by cyber investigations and then extort money from them, by use of our sacred courts, in exchange for silence.  Usually these victimized ninnies pay what sounds like relative sums, $4500 plus-or-minus, to get out from under. 

There have been at least dozens of these lawsuits around the country using boilerplate Complaints and then settling quickly.  At last various people have represented the populace and triggered genuine court action.

When the courts realized what was going on, they reacted vigorously to some extent with money sanctions and orders requiring what is in effect restitution.  In addition they have required recuperates to report to the courts all other courts where they have been trying to ruin the system and a sizable number of people.  (How does one explain to his wife where the $4500 went when its disappearances cancels the to NYC to see, hear, and sit in the stands for this and then that?)

Thank you Lord, the knights of justice are on the move.  In addition to the foregoing the judges are going to the relevant ethics committees of state bars, to U.S.Attorneys, to state attorney general, and to the FBI. Maybe they should also be going to the right groups that are influential so the “antiquated” provisions of the law of copyright can be discarded.

One of the leading cases is Ingenuity 13 LLC v. John Doe, 2013 WL 1898633 (C.D. Cal., May 6, 2013), Otis Wright, J., and its follower is AF Holdings, LLC v. John Does, 12-1445-9 (JNE/FLN)(D. Minn. Nov. 6, 2013), Franklin Noel, M.J. Judge’s Wright’s opinion contains marvelous charts, maps, and photographs of the “Punks of the Prenda,”–Prenda being the odious law firm of–the central filthy pigs–being led to the slaughters of disgrace, disbarment and imprisonment.  The Minnesota case is far more brief and lacks the visuals.  However, it dealt with five–REPEAT 5!–of these satanically sinful cases.  My first hope regarding the Pythons of Prenda is that they not even have enough money to hire capable defense counsel, not even Harvard’s best.
Originally posted on 11/14/2013 @ 9:23 pmMichael Sean Quinn, PhD, JD, CPCU, Etc. (530)One of Texas's leading insurance scholars, Michael Sean Quinn is a past chair of the Insurance Section of the State Bar of Texas and has a broad legal practice.

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On the Rhetoric of the Ridiculous

Overdoing rhetoric in briefs, motions, pleadings, etc., is poor, tasteless, and below-grade “C” lawyering. There has recently been direct and unequivocal explicit support for this obviously true proposition.  Perhaps the pronouncement of the 6th Circuit will encourage those who do not realize that stridency of semantics, as opposed to restrained assertion and calm clear argument, is almost never a good idea. Let the ideas produce the desired effect; if they don’t do the job, try a different approach if possible. 

Never resort to the crude bluster, cliche-ridden, the always overdone language of the pool-hall loudmouth. Grade C lawyers at this point might say that such a position is absurd.  Such lawyers still would not have learned the lesson.—MSQ

An illustration of this point is to be found in a recent insurance case.  Barbara Bennett et al v. State Farm Mutual Automobile Insurance Company, No. 13-3047, 2013 WL 5312398 (6th Cir. September 24, 2013)

In this case, Ms. Bennett was struck by an automobile as she was walking her dog. As a result of this accident she ended up in the car–not next to on the roadway, not standing next to the car, and not under the car.

She argued that she “occupied” the car under the State Farm policy.  The District Judge held that State Farm’s defense was correct: she did not “occupy” the auto, since she was not in it.  State Farm called Bennett’s position “ridiculous” and did it on the first page of their brief.

The court criticized this linguistic behavior for four reasons: first, where the language was in the brief, second because it was worded as it was; third because State Farm’s argument was fairly obviously invalid; and fourth because State Farm was wrong.

With regards to points #1 and #2 the court, quoting another opinion from which  it wrote its opinion: “There are good reasons not to call an opponent’s argument ‘ridiculous,’ which is what State Farm calls Barbara Bennett’s principal argument here. The reasons include “civility; the near-certainty that overstatement will only push the reader away (especially when, as here, the hyperbole begins on page one of the brief, and that even when  the record supports an extreme modified, ‘the better practice is usually to say out the facts and let the court reach its own conclusion.’ Big Dipper Entm’t, L.L.C. v. City of Warren, 641 F.3d 715, 719 (6th Cir. 2011).”  Trying to, in some sense, compel opinions by the use of “battle-station” rhetoric is ill-advise.*

With regard to the third point,  the court criticized State Farm’s argument.  It argued that coverage analyses proceeded on the basis of how whole types of policies are interpreted: auto policies for example, and the “occupy” language of those types of policies. The court informed State Farm that contracts of insurance are to be interpreted one at a time and not as whole classes. That a court has decided a similar-looking policy in the way the insurer wants it interpreted does not bind a court, even itself.  Nor is the “type of” versus “this language for this situation” valid reasoning.

State Farm also tried to argue that only someone who has an “intrinsic relationship” with a car can be said to “occupy” it, and hence the court ought to be examining whether Ms. Bennett has such a relationship with the car that struck her. Instead, the court observed, there was an authority in Ohio, where this suit was brought, that the intrinsic relationship test was one of several that can be applied “‘where a  gray area exists concerning whether a person was an occupant of a vehicle and thus entitled to coverage. In this case, however, the policy marks out its zone of coverage in primary colors. The policy terms therefore control.”

On this ground, the court reversed the district court and entered judgment in favor of Bennett. And it did this without remanding.

One can wonder about the decision. Oddly enough the court does not include a quote from the policy. That is unusual but not really interesting as to the court’s reasoning. More interesting is the fact that the court does not give a specific argument–perhaps based on a hypothetical–supporting the proposition that being in a car entails the proposition that one is occupying the car.

It also clearly, though impliedly, rejects the idea that the term “on” in this situation is ambiguous. It seems to me that one can be on a car, e.g., on top of a car, without actually occupying the car. The man that washes, waxes, and cleans out my car every Saturday, does not occupy my car all the way through its work. He stands next to the car while is washing it; he climbs up on it to wax the top and gets in it to clean out the interior in various ways. It is plausible to say that only for the third part of the operation does he occupy the car.

Although the following example–nor anything like it–should ever be found in a brief (or anything like it), except as taken from a transcript of testimony. One can easily imagine a couple denying that they occupied the car while having sex on the front hood of the car (or even the roof), but “admitting” that they occupied the car when they did so in, for example, the back seat.

Perhaps–just perhaps–the court is impliedly suggesting that Bennett was occupying the car because she did have an intrinsic relationship with it. After all, she suffered further injuries as a result of being placed in the car–injuries that she would not have received had she not been knocked up onto the car.  I suppose one could argue that if one has been put onto something it occupies it.  One can easily have subscribed to this argument if the word is “into,” not “onto.”

One might oneself not be convinced by the court’s reasoning.  Consider the dog belonging to the 2012 candidate the Republican Party recently ran for president.  It did not occupy the family car when he was attached to the roof of the car as they all drove to Canada for a vacation.  The disclosure of this fact caused a furor. Obviously, part of the general population agreed: the dog did not occupy the car. In some respects, although certainly not in other very important respects, Bennett and the dog share properties.

*I tried “battle” rhetoric first long ago in the presentation of an argument to the 8th Circuit.  It was a covenant not to compete for the case with federal jurisdiction on grounds of diversity.  I had tried the case and lost. Anyway, I opened by informing the court that “This case is one of national significance.”  The head of one of the judges almost jerked up, and he immediately and a bit disdainfully asked, “How? Why?”  My answer had to do with the lack of case authority on how to interpret a “Uniform” act that had been passed in the relevant state.  I actually thought that a specialized uniform act, used in various ways around the country but enacted only here and there, made the matter then at hand one of national significance.  My clients loved it, but. . . . 

 I suppose  I must confess that my address there was not the last time I did that, though all the (few others, I hope and believe) were somehow triggered by a mysterious outside source, and therefore have been instances of unintended rhetorical idiocy so that  I am not really responsible.
Originally posted on 09/27/2013 @ 9:20 pmMichael Sean Quinn, PhD, JD, CPCU, Etc. (530)One of Texas's leading insurance scholars, Michael Sean Quinn is a past chair of the Insurance Section of the State Bar of Texas and has a broad legal practice.

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“Madam. Are you certain today?” [Sketch I]

There is a species of questions with respect to which witnesses (including expert witnesses) must be extra-careful. The category questions certainty. Often the question takes a simple and explicit form. The witness has said something clearly and straightforwardly, whereupon deposing counsel says to the witness:

Q. Are you certain of that?

Many answers are susceptible to this question.  It’s one of those questions where examining counsel does not really care what answer is given. Look at two alternatives:

A#1:  Yes.  I’m certain of that.

This answer will make the witness look arrogant, and it will subject her to impeachment later on at trial.  The impeachment will be presenting a whole group of situations that make the witness have to admit that she is not certain.

It was dark, wasn’t it, true?

You said the man you saw was about 5’6″, how tall is the woman sitting at the next table?

You didn’t have on your sunglasses, did you, even though it was noon in Austin on August 17th, true? 

[And so on and on and on.]

Now look at A#2:

A#2.  No, I am not certain.

Of course, then on direct examination at trial, or in settlement arguments, where the witness may not even be present, the side of the examining counsel will attack the witness for not really having trustworthy testimony.

How/z about this:

A#3. Yes, though not quite completely certain.  No one could be.

Much better.  Maybe best.  What is examining counsel going to ask next? All the choices I can think of sound intrusive, too perfective, even absurd.

Quinn on Answering Another really good way to deal with this problem is to challenge the question.  There are a number of ways to do this.  I will call them QWs after “Questions by Witness.” Try QW#1:  What do you mean by “certain”? Capable counsel might ask this question in response: Q#2  What do you mean by “certain”?  Ways to deal with this second question is to say: A. The term “certain” can be used in a variety of different ways. And the discussion will go on for a while. The witness can look like she’s avoiding giving a reasonable answer. So consider trying these.

A#(i).  I think so.A#(ii). It depends on what one means by “certain.”A#(iii). Well, it’s an empirical matter, not like mathematics, so no reasonable person can be absolutely certain. Given that caveat/limitation/caution, yes, I’m certain.A#(iv).  Certainty is a psychological state.  It has nothing to do with justified true belief.  I have the latter three.

Personally, I like A#(iii).  The witness looks reasonable and it is very difficult to challenge the idea that no one can be absolutely certain about purely empirical matters.

I like A#(iv) too but it’s complicated. Still, probably most people will agree with it.

I have heard “idiot” lawyers try this one:

Q. Are you certain?A. Yes. Q. Are you absolutely certain?

The lawyer has dug a deep hole for himself.

A. There is no such thing.A. Only a dogmatist fool would ever say something like that about this kind of matter.A. I don’t understand the difference between “certainty” and “absolute certainty,” althoughI’m certain you must think there is.

Quinn’s First Comment: This lawyer should get an award from “the local” of “Questionable Dumb Bell.”

A questioning lawyer may object on the grounds that the answer is not responsive, and try to get another answer. Protecting lawyers should argue against this. Here’s one way: “Yes it is. Move on.”Here’s another way. “Please explain your objection. Why isn’t what she said responsive?”  Protecting counsel might consider trying “another” way first and then go to the first way second.

Quinn’s Second Comment:  A witness should be prepared for this kind of question.

Quinn’s Third Comment: Try this. Without saying anything as a preference: “I am certain, though not completely certain.”

Quinn’s Fourth Comment: Try using responsive questions:

Q. What do you mean by ‘certain’?

This may generate a responsive question:

Q. What do you think the ‘word’ means?

A. There are so many meanings, Tell me what you are thinking.

And so forth.

Quinn’s Fifth Comment: Try to shift the discussion to the meaning of “sure.”

Q. Well, OK, you are not certain about X because you view if the world is that one can not really be      certain about anything.  Of course, lots of people would disagree with that.  You know that don’t you?

A. I think so. And lots of people say that sort of thing.

Q. You not willing to say that you know that people disagree with you>

A. Knowledge and certainty are not the same things.

Q. OK. Let’s try it this way.  Are you sure about what you have said?

Elaboration on Quinn’s Comment: Above all, the witness should say something like this, “I’m not sure what the difference is between being sure and being certain.  I’m not sure how to talk about this, and I’m not certain how your question works.  Please give your definitions.”
Originally posted on 09/03/2013 @ 2:46 pmMichael Sean Quinn, PhD, JD, CPCU, Etc. (530)One of Texas's leading insurance scholars, Michael Sean Quinn is a past chair of the Insurance Section of the State Bar of Texas and has a broad legal practice.

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The Insurance Appraisal Process–Part I

Insurance Adjustment and Appraisals

Part I There are two types of appraisals. Those performed by one person, e.g., that of artworks, the value of the real estate, etc.  The others are performed by perfectly stable committees as to size, e.g., those consisting of X number of persons all through the process, and usually there is an odd number. Then there are less than stable committees as to size; those expand if the first member cannot reach a decision. Insurance appraisals are of the last type. They start with two members and then expand to three members of the two original members who cannot reach a solution or do not do so over a reasonable period of time.

One purpose of the appraisal is to reach a solution as to the size of the insured’s damages and the amount the insurance company shall pay.  It is designed and intended to shorten the length of time arguing over disputed amounts both with respect to probability and its amounts.  At least, in theory, the language of the clause explicitly states that the amount of recovery is THE issue. Courts and litigant-participants don’t always either realize.  Or maybe they know it, but just ignore it.  This is a fact I shall ignore in this set of posts. 

In order to discuss appraisal in a meaningful way, it is necessary to have the contractual provision clearly in mind. It is a standard provision included in (at least virtually) all first-party property insurance policies unless deleted.  It is currently found in the ISO “form” property policies, and it has been there for several generations, whether residential or commercial. 

Appraisal clauses are to be found in insurance contracts all over the world and are not restricted to first-party property insurance.  It generally applies to first-party insurance of all types, including for intangible “objects” and/or “processes.”  They are found in the “Conditions” section of the ISO policies.

The ISO language, entitled “Appraisal [,]” is as follows:  

If we and you disagree on . . . the amount of the loss, either may make written demand for an appraisal of the loss. In this event, each party will select a competent and impartial appraiser. The two appraisers will select an umpire. If they cannot agree, either may request that selection be made by a judge of a court having jurisdiction. The appraisers will state separately the value of the property and the amount of loss. If they fail to agree, they will submit their differences to the umpire. A decision agreed to by any two will be binding. Each party will:

Pay its chosen appraiser; andBear the other expenses of the appraisal and umpire equally.If there is an appraisal, we will still retain our right to deny the claim.

Appraisal clauses are enforceable by legal process under a variety of circumstances, usually when an umpire (“Ump”) has decided the issue. It is extremely difficult to avoid the enforcement of an appraisal by judicial process; it very rarely ever happens, although it should happen more often when a principle of sound adjustment appraisal has been violated by one or more of those doing the appraising. Almost always these violations are connected with Umps.  (I will return to this topic.)  Appraisal clauses are enforceable under a great many circumstances, and the finality that often goes with them is quite often enforced. Dividing up the clause and thinking about it step-by-step might be a good idea. The propositions shall be entitled “P,” and numbered, e.g., “P#76”, to create a fictional number for illustration. Some of the following are explicit requirements found right on the surface.  Others are just under the explicit wording:

P#1.    There must be a written demand for an appraisal of the loss.P#2.    There must be evaluations of the amount of the loss by each of the appraisers.P#3.    There is no reason why the appraisers may not try to reach an agreement on their own. The probability of reaching an agreement is increased by there being separate thinking and cooperative mutual discussions and dedication.  An appraisal is not intended to be adversarial advocacy. P#4.    Each appraiser nominated by either side must be competent.P#5.    Each appraiser nominated by either side must be impartial.P#6.    Together with the appraisers “will select” and appoint [or attempt to appoint] an umpire.P#7.    If they cannot do so, either party may request that an umpire be appointed by a judge of a court of jurisdiction.P#8.    Each of the appraisers shall, separately, state [presumably in writing] both the value of the property and [the] amount of loss.P#9.    If their statements are not in agreement [or if they fail to agree otherwise], they will submit their differences to the umpire.P#10.    If two of the three agree then that agreement is the result and it is binding. I now turn to an analysis of the propositions and express opinions. [For obvious reasons, the ump will be one of the two.] The propositions, unamended and unsupplemented, are to be found in virtually all property policies. Of course, they can be changed by agreement, and they can even be eliminated, but both of these are very rare, and they never happen at all in smaller policies. There are some variations, and one will be discussed later.

Part II will be mostly concerned with analyses of the forgoing “Big Ten.”
Originally posted on 09/02/2013 @ 8:28 pmSeries NavigationThe Insurance Appraisal Process–Part II >>Michael Sean Quinn, PhD, JD, CPCU, Etc. (530)One of Texas's leading insurance scholars, Michael Sean Quinn is a past chair of the Insurance Section of the State Bar of Texas and has a broad legal practice.

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Cyber-Insurance & “Established Insurance” Compared–PART #2

All insurance involves the transfer of risk(s).  One party (or one group of parties) obtains value protection from losing–in some matter–something valuable.  This loss can come about in a variety of ways:  a ring is stolen, a key is permanently “misplaced,” a whole set goes now the sewer, a building burns down, a person sustains a bodily injury from a doctor who operated on the wrong wrist, a medical bill that has to be paid, a debtor hasn’t paid a bill, and so forth.  Not all protections from risks are insurance; the use of a security interest, for example, in the loan transaction, illustrates this point. Not everyone who has some sort of transactional assurance of little to no loss has insurance.  Interestingly in England, some of what are uniformly called “insurance policies” in America are sometimes called “assurance policies,” and what is called “insurance companies” in the United States can be called “assurance companies” or “assurance syndicates” in the U.K.  Some might say that surety agreements are not insurance, but that would be a mistake.

The same will be true of cyber-insurance: if a bank makes a mistake; customers’ identities are stolen; the customers sustain actual damages then the bank may be liable and be obligated damages. Some cyber insurance policies may cover the loss.  The bank’s customers may be insureds, or the bank may be the insured.  If only the bank is the only insured, the policy is probably a liability policy or contains a relevant part.  (Sometimes policies are “packages,” and so contain several different kinds of insurance.)

Many liability policies are “occurrence” policies, while others are “claims made” policies.  Each one of these cyber-liabilities will have an enormous effect on what is covered and what is not.

Many policies include a duty incumbent on the insurer to defend the insured in case the insured is a defendant in litigation.  Today, the cost of defense eats up the amount of coverage reduces the monetary size of the policy; and sometimes it does not.

It would be surprising if most cyber-liability insurance policies were not “claims made” type policies, and it is very likely that the policies will be designed so that defense costs eat up and thereby reduce the amount of insurance available to pay the actual loss inflicted on the person claiming a compensable loss.

(A key part of the insurance vocabulary for this distinction is “duty to defend” and “duty to indemnify.  The second of the two duties isn’t exactly what it says it is, but the use of the phrase “duty to indemnity” is more than100 years old.  It was right then but not now.)

A number of tort cases have been brought against different kinds of parties for permitting identity theft. At least usually, these cases are lost because the plaintiffs, those whose identity was stolen, have not sustained actual material losses  Mental anguish without some “genuine injury” (usually physical but sometimes economic only) is not counted as actionable losses.  See Stephen J. Rancourt, Hacking, Theft, and Corporate Negligence: Making the Case for Mandatory Encryption of Personal Information, 18 Tex.  Wesleyan Law Rev. 183, Section II (2011) (helpful list of identity theft cases lost with none won).  See Hammond v. The Bank of New York Mellon Corp., 210 WL 2643307 (S.D. N.Y. 2010). (containing a long list of influential cases where theft of identity cases dismissed since not actual damages).

Most insurance depends upon and requires fortuity.   Most events, the occurrence are not fortuitous, from the point of view of the insured,  are not insurable.  Arson is not insurable if the policyholder starts a fire in his own building.  If I throw my keys down into the sewer, the values of the keys are not insurable.  If A deliberately burns down the building of B, A’s third-party liability carrier may not cover B’s loss, but B’s first-party insurance may.  It might very well, however, pay A’s defense costs.

These points illustrate the difference between most third-party insurance, on the one hand, and first-party insurance on the other.  A’s liability insurance is third-party insurance, whereas B’s insurance on his stuff, his cash under the bed, or health coverage on himself is first-party insurance.

Not all insurance requires fortuity.  This coverage is very narrow, indeed tiny.  Life insurance usually covers some types of suicide.  The type in question is suicide which occurs sometime after the commencement of the policy.  That period is usually two years.  I cannot think of an analogy in cyber insurance[cm_simple_footnote id=”1″].  Of course, life insurance itself will be involved in cyber-insurance arrangements, but it will probably be the same there and then as it is here and now.

Most liability insurance is linked to torts; most cyber-liability insurance is already and/or will be like that.   Some current policies are linked to breach of contract; creditors insurance is like that.  Some policies that cover breaches of contract are included in “mostly-tort-based” liability policies, but not always.  The opposite is also true; there are “mostly-contract-based” policies, and some of them include a few covered torts.

Also arising out of contracts, there are sometimes tort liabilities.  Breaches of the duty of good faith and fair dealing found in all contracts are sometimes considered torts.  If A breaches a contract with B and then breaches the contract, but by the breach physically injures B or injures C in some way or another, there may be a tort between A and C.  There will probably be coverages like this, although cyber- liability insurers will exclude as much as they can of these configurations, or try to pass them off on other insurers, such as standard liability insurance available today.

Most of the torts existing now will, as is, or as adjusted, will be spread across the “cyber-field.”  (I am ignoring damages caused to physical objects or the human body (a form of a physical object, since they are now covered).  Here are at least some examples of tort theories that will be transposed across the “physical” or “real” world to the “cyber” or “virtual” world.

Negligence:  This is the failure of an insured  to do what a normal and prudent person would do under the circumstances or fail to conduct himself in accordance with the standard of care that is generally accepted given the situation  (What counts as damages, what is compensable under insurance policies, and how the size of covered damages are calculated may all be different.)

Defamation Invasion of privacyInterference with contractInterference with the economic positionstrict liability (necessary adaptations replacing the requirement of there being liability only if a physical object–like a toaster–is at least part of the so-called proximate cause)nuisancefraudmisrepresentationerrors and omissions type torts (These are really a kind of negligence, at least usually.  But they are specialized): lawyersaccountantsbrokers of various sortsthird party managers, administrators, and/or quasi-agents (Some insurance adjusters are like this.)designers of codes, etc.encryptions, etcfirewalls and similar devicessimilar safety measuressimplicity

intellectual-property torts: wrongful use, wrongful acquisition, wrongful imitation, etc.  Imagine using computer hacking to obtain a patented plan for something, then destroying the owner’s plan, and then putting the plan to one’s own use and the list goes on for a long time.

No doubt the reader will have noticed that the concept of negligence is a complex and widespread type of concept across all of human behavior and covers an enormous range of possible damages.  The reader may think of anything s/he can which causes damages to someone other than the “actor,” or some related parties, and negligence will exist in cyber-law and cyber-insurance law.  Not all kinds of injuries and therefore not all kinds of damage will be.  This is one place where there may be a whole variety of alterations needed and provided.

In terms of adjusting, altering, changing, and revising cyber-insurance, first-party coverage will be treated and work much the same way.  It will still, almost certainly turn on the insured having a property interest–or something like it–in that which is insured.
Originally posted on 03/22/2013 @ 4:31 pmSeries Navigation<< “Cyber Space” Insurance–Part ThreeCyber-Insurance aka E-Commerce Insurance–Part #1 >>Michael Sean Quinn, PhD, JD, CPCU, Etc. (530)One of Texas's leading insurance scholars, Michael Sean Quinn is a past chair of the Insurance Section of the State Bar of Texas and has a broad legal practice.

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Cyber-Insurance aka E-Commerce Insurance–Part #1

This is the first “chapter” in a string of blogs focusing on cyber insurance.  This one will concern the look of “yesterday’s” policies–the ones used for a long, long time–and the look of a branch of “tomorrow’s, that is, the cyber policies.  Actually, the two groups will look remarkably alike in the organization.  When you think about it, “Really?  How could it be otherwise?”

The next chapter will concern some aspects of substantive similarity.  Other blogs will list and very briefly sketch some of the currently available policies. Somewhere along the way, there will be some definitions and some explorations or explanations of such. Most significantly, there will be chapters discussing the contents of a few actual cyber insurance policies.

There are not many meaningful, focused, or informative publications about cyber insurance.  (That is the name-phrase that will be used here; it has mostly replaced the term “E-Commerce.”) Most available writings are really ads of some sort for somebody some are attorney firms publicizing themselves and conjecturing about the future, and there are some panel discussions which would probably interest almost no one really interested in the nature of the type of insurance.  Another category of the prevailing literature is the pieces written at law firms.  Much of this is a law firm advertising its services, though sometimes that is combined with guesswork or speculations about how cyber-insurance will develop. There are a few specimen policies issued by some of the best insurance companies, but they do not provide meaningful discussion.  A book published on this topic, and it is the only one so far as I can see, is by George S. Sutcliffe entitled E-Commerce and Internet Risks, Laws, Loss Control, and Insurance (Standard Publishing Corporation, 2001).  It has a helpful essay, which includes far too many diverse topics. The appendices, however, have a glossary, a summary of some policies, and some specimen policies.  So far as I can tell, this is the sourcebook. No doubt, one of the reasons for the absence of a detailed study of the dimensions of cyber-insurance is that there are almost no–or even no–reported cases involving coverage disputes. (I, for example, have yet to find one such case on Westlaw; and law reviews have no informative discussions of the matter. This is not to say that there are no cyber cases–for example, cyber tort cases–that are without hints.  Several large law firm members have told me that their firms each have a dozen or so cases, but they also say that none are in or close to litigation. There is also one (“Westlaw-‘reported'”) case involving identity theft in which a bank offered, among other things free identity theft insurance up to $25,000.00 to its customers as part of a remedy following an identity theft incident.  Alas, the plaintiff class rejected the offer.  Hammond v. Bank of N.Y. Mellon Corp., 2010 WL 2643307 (S.D.N.Y., June 25, 2010).  (Of course, one can see why–if a plaintiff thought s/he might be at the door of big damages–would reject a $25k settlement.) So far as I can tell,  in all court-decided cases (thus not including settlements, if any) involving identity theft, the plaintiffs have lost.  For a survey and discussion of these cases, see Stephen J. Rancourt, Hacking, Theft, and Corporate Negligence: Making the Case for Mandatory Encryption of Personal Information, 18 Tex.Wesleyan Review 184, 187-199 (Winter, 2011).  There is a very recent case in which the plaintiff had not yet experienced a loss, but for that reason only, could still proceed if their injuries were not entirely speculative and not off in the far distant further.  This matter is called a matter of “Standing” under federal court jurisprudence. In re SONY GAMING NETWORKS AND CUSTOMER ATA SECURITY BREACH LITIGATION, _____ F.Supp. ____ (S.D.Cal. 2012)(2012 WL 4849054).  Most of the case was dismissed on other grounds, but an actual already existing injury is not an iron-clad requirement for a right to proceed, at least under some circumstances. Now, before I turn to the analysis of policies and make conjectures, aka guesses, as to what their difficult sections might mean, I start with a few fundamentals for the insurance novice. These come from general insurance sources and therefore are not special when it comes to cyber insurance.  At one basic level, insurance is insurance, and so are some other contracts e.g., bonds and ancient bottom try arrangements. So let’s begin. Virtually all primary insurance contracts have roughly the same form.  Excess and umbrella policies do not necessarily, but they often incorporate significant, if not all, provisions found in the primary policy.  Contracts of reinsurance, although they are contracts of insurance, do not follow the same formula. Here, in broad strokes, is a sketch of common sections.  Often different principal sections are identified by the names I use here and by roman numerals. I. Declaration Page (or Sheet).  This part includes the name(s) of the actual insurer and the name(s) of the policyholders. Often it sets forth the premium, the name of the intermediary, policy limits, etc.  Sometimes they have charts or columns, and the policy includes that which is checked off.  The deductible is specified or set up, as is co-insurance if any. Other named insureds may be named elsewhere. II. Insuring Agreement.  This part sets forth what is insured, i.e., a particular vehicle, a particular building, physical objects, one or more banquets, particular weddings, works of art, and so forth.

These agreements are usually for liability (3rd party coverage) or for things, e.g., belonging to the insured (1st party coverage.)  The agreements usually do not recite a fundamental principle of insurance and that is fortuity.  This is an axiom.  Deliberately caused injuries or damages are not covered; arson is not covered; physically smashing something up deliberately, e.g., a computer, fraud, and so forth.  Intentional acts are covered, so long as the loss was not.  There is insurance for those driving too fast, but not if they deliberately run over or smash into something. Sometimes insurance policies offer both liability and first-party insurance, often covering the physical property.  Sometimes the first party insurance may cover abstract properties, and this is true in the area of cyber insurance, in addition to business loss and trade credit insurances.  Bottomry was like this 3000+ years ago. III. Definitions.  There is usually an indication that there are definitions to be found in the policy: quotation marks, bold lettering, italics, etc.  Sometimes there are only a few definitions; sometimes, as in many cyber policies, the number is much larger than most current policies.  Often, at least to the layperson, the definitions are obscure.  (This is not necessarily a matter of great consequence, since definitions in engineering malpractice policies are also quite difficult for the layperson–so much so that expert witnesses often have to be used for the benefit of the jury.) IV,  Exclusions,  This sets forth what the insurance contract does not cover.  Of course, there are exclusions quietly built into the Insurance Agreement, but this is generally not recognized.  The list of exclusions can be relatively short, or it can be quite long, as it is in most cyber insurance policies, specially packaged policies. Policyholders have to prove that they meet the requirements of the relevant Insurance Agreements. Carriers have the burden of proof regarding exclusions; the burden shifts back to the insureds when there are exceptions to the exclusions.  The content of many exclusions in cyber-insurance policies is likely to be substantially different since there will be few or no tangible objects or situations to exclude. (None like this: “We do not exclude the damages caused by your pets eating your bushes.”) V. Conditions.  They have usually conditioned precedents and there are a few conditions subsequent. Among the best known of conditions are the insured’s duty to cooperate in the adjustment process and their duty of remediating losses, that is, using reasonable efforts to keep those losses from getting worse (e.g., things like storm-damaged buildings) from getting any worse. Some requirements, which are listed in the “Conditions” section, are no conditions at all but covenants, i.e., promises. Timely notice of covered events is often not really a condition but a covenant, i.e., promise.  The requirement of cooperation may be like that. Remediation is perhaps not a condition or a promise irrespective of what the policy says, and so forth.  It is not completely determined what contractual requirements are actually conditions and which are not.  Nevertheless, some other common obligations usually classified as conditions are these: subrogation rights, some features of contract termination, some features of cancellation, assignment, the status of other insurance, and more.  Arguments about what is a condition precedent (or subsequent) versus what is a “mere” promise, are not uncommon, and the truth is not determined by the name of the section.  Just because something is found in a section entitled “Condition” does not mean that it is a condition. VII. Endorsements.  There can be all sorts of endorsements:  adding insuring agreements, cutting them, deleting or adding exclusions, adding or subtracting named insureds from the list, adding insured objects, things, or whatever, and much more. For standard policies, there are closets full of standardized endorsements. In large innovative industries, there will be negotiated policies, but not for long.  Purely negotiated policies make profitable underwriting nearly impossible. VIII. Miscellaneous.  A whole variety of things can fit here. This simple list gives one a beginning idea, at least, as to how insurance policies are divided up. The ordered list of entries is not intended to name the order of parts of the policy. Often, for example, the definitions section comes between the Insuring Agreement Section and the Exclusions Section. It also needs to be remembered that some policies are “package” policies, meaning that they provide several different types of insurance all at once, in the same contract.  First and Third Party insurance often appear like this, e.g., in auto insurance, in homeowners insurance, and indifferent large policies. Usually, the differences are easy to recognize.  There is no reason to think that cyber-insurance policies (that is, contracts) will be much different in form.  Rough versions of similar forms run back hundreds of years. 
Originally posted on 03/21/2013 @ 10:02 pmSeries Navigation<< Cyber-Insurance & “Established Insurance” Compared–PART #2Michael Sean Quinn, PhD, JD, CPCU, Etc. (530)One of Texas's leading insurance scholars, Michael Sean Quinn is a past chair of the Insurance Section of the State Bar of Texas and has a broad legal practice.

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The Prudent Expert Witness: Agreements and Performance, #1

I do some expert witness work, so this blog entry contains some experience-based remarks about retainer agreements and some aspects of expert witness performance.

Alas, I have not used formal retainer agreements much.  Usually, they have been in the “back of the envelope” form, or they have been oral.  Part of the reason for this is that a good deal of my work has come from, or through people I know; lots of it comes from lawyers and clients (sometimes theirs and sometimes mine). From time to time, I dictate what I want and have them send me an email, and that seems to work, but it leaves out important matters, I will set forth presently. A few times my informality has been a bad idea. As a result, I have repented (more or less). So, I will discuss what belongs in a form agreement for expert services, as I see it. I will also discuss some of what I regard as, features of sound performance. Sometimes, at least, matters of sound performance can be included in the retainer agreement. The following are lessons based on issues I have had to learn the hard way.

Lesson One:  Get a clear description of the scope of the assignment and then change the scope, both outwardly and inwardly, if and when it changes. 

Lesson Two:  Find out what experienced experts are charging in “your” area and start there. Warn of probable changes which should be expected over time. Often lawyers resist paying you more than they are billing. This is probably a reasonable idea with which to cooperate, at least most of the time, but only if their fees are reasonably high.  Charitable expert witnessing is to be avoided.

Lesson Three: Make sure the retainer is both reasonable and sufficient. Consider making the retainer amount stay ahead of the payment of bills. (My retainer is $X; it must stay at $X at all times.” This agreement is frequently not possible—or at least too difficult–to arrange. 

Lesson Four:  Insist that the bills be paid on time. A way to do this is:  “If I have not received a check within 30 days of my billing you, I will perform no further work until paid.”  Often, I cannot make this happen.  Sometimes I try to get paid on a quicker temporal schedule.  That seldom works.

Lesson Five: Try to get their client or the lawyers themselves to pay all out-of-town expenses.  Sometimes one can get this and sometimes not.

Lesson Six: Try to get people to come and see you.  They will want to do this anyway if your office is in an attractive city.Exception:  You really want to go there.  Sometimes the taking of a spouse is a good thing for mostly non-professional reasons.

Lesson Seven: Expect corporations to pay you faster than people and people faster than insurance companies.

Lesson Eight: Consult with the lawyers about the contents of your reports, etc.  Do not let them assist you with prose, except with problems of prose: spelling, grammar, etc.   Let the lawyer assist you by stating facts you have missed, not understood, and/or not appreciated.  Don’t always believe them.  Confirm everything yourself.  Do not accept the lawyer’s intense use of colorful language even if you believe it.  You are a reporter and a historian, not an advocate.  This one has been very hard for me and I was kicked out of a case by the judge once for making this mistake.

Lesson Nine: Always remember that experts’ opinions take an “If-then” form.  It should never take a “This is ‘It'” form.  Undisputed facts are exceptions.  Obvious and undeniable facts are another.

Lesson Ten:  It is law-school-level truth that expert witnesses are not permitted to testify about the law.  Don’t bet on it.  For one thing, if you are testifying about some industry practice, you may have to refer to the law by talking about what is generally understood about the law.

Virtually all of these “Lessons” have, not only practical implications but can—in various ways—be set forth, to some extent, in retainer letters. On this matter, tact and restraint are required.             
Originally posted on 03/11/2013 @ 8:18 pmMichael Sean Quinn, PhD, JD, CPCU, Etc. (530)One of Texas's leading insurance scholars, Michael Sean Quinn is a past chair of the Insurance Section of the State Bar of Texas and has a broad legal practice.

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Creations and Insertions into Existing Contracts Part II

In my last post on insurance law, I discussed the idea that it is not possible to create formerly non-existing clauses or coverages in an already existing policy, i.e., insurance contracts.  I wrote on only what is all, or virtually all, the problem, namely, when the insured criticized for having tried to (or having blundered into) perform such a creation. Here in Part II, I turn to the insurer. The other day, in a deposition, I was asked whether I had ever heard of the axiom that “Insurers cannot create coverage in their policies.”  I said that I had never heard of that axiom applied to insurers and that, in any case, the axiom would depend on what the word “creation” meant and what the invoked idea was.  She, the taker of the deposition, looked at me with a combination of astonishment and contempt.  In and of itself, that combination was not a matter of concern–of any consequence, really. 

One cannot have real new or unrecognized ideas without the rigid-minded or the uninformed to hold you in contempt, and it does not matter when I am right or when I am wrong. Those who do not believe in the value of innovation are pretty much all like that, and this is especially true in the law. Besides, very few cases consider insurers and their “power” to create new provisions in their own contracts of insurance.—MSQ

Of course, an insurer may not create new coverage in an already existing policy if it is injurious to the insured.  The paradigm is simple.  Suppose an insurer provides coverage A, B, and C to its insured in a given contract.  Now suppose that absent any dispute over coverage, the insurer decided for some reason that it “really” only offered coverage A and B.  In other words, it deleted coverage C from the policy. This would actually be creating new coverage, namely: A & B & ~C.  Of course, these combinations are groups–sets, as it were–but that makes no difference.  There is such a thing as creation by elimination.  In a painting, the deletion of a figure creates a new painting, and–in any case–it is a creation.  Just as the real objection to creation-by-insurer is based on the fact that the insurer gets hurt, the objection to this anti-creationism is that the insured gets hurt.  Now, consider the opposite.  What if the insurer created coverage that was to the benefit of the insured?  It is doubtful that the insured would object.   Of course, an Anti-Creationist could still say that these things cannot be done according to the fundamental principles.  Of course, this proposition is false.  Parties can agree to changes in contracts, and the benefited party may be considered cooperating–and almost certainly would be–or that party might have waived any objection s/he might have. Now, why might an insurer do this?  There are lots of reasons, some questionable and some not.  I shall mention only one reason, and that one is not subtle and perfectly acceptable.  Consider an insurer, that noticed another insurer using the same policy, was excluding something, and that insurer researched the case law on the subject and found that there were two cases supporting the actions of the other insurers.  Suppose the insurer in question looked at the language of the contract and said to itself, we are not sure what to do here. We did not intend not to insure this; we intended to insure it. We “the underwriting department,” together with senior executives, do not care that this is a standard policy used elsewhere in the industry. Hence, straight forward we will consider it covered. We should go back and get the six (6) cases we “fouled up,” and make them conform to our view.  It seems to me that this is a paradigm of policy coverage creation.
Originally posted on 03/08/2013 @ 5:41 pmMichael Sean Quinn, PhD, JD, CPCU, Etc. (530)One of Texas's leading insurance scholars, Michael Sean Quinn is a past chair of the Insurance Section of the State Bar of Texas and has a broad legal practice.

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Lawyers, Election Law, Jurisprudence, and Proper Governance


Factions and therefore political parties are something that acutely concerned many of the “Founding Persons,” of our republic e.g., both Washington and Madison, among many others. 

Political parties are a paradox. At the same time, they are both required for large democracies and a threat to them. 

In elections, the applicable law must be followed–something all reasonable lawyers and most other citizens know. 

One wonders if parties and political figures alike have a moral obligation–all republics and all democracies include moral or ethical obligations as to political conduct as part of their constitutive structures–to conduct elections in accordance with other principles as well election laws.  —MSQ

Suppose it is within the law for a candidate to actually or impliedly threaten opposing candidates and those who support them with jail (prison) terms simply for their opposing him/her. Most of us would agree that this is not an acceptable way conduct political campaigns in a republic or democracy. It seems to me that knowledge of this is especially true of lawyers. 

Now, what about the following statement, whether clearly and explicitly made or clearly implied:

“If I do not win this election, I will refuse to leave office and simply take over. Votes cast be damned.” —MSQ

It might be within free political speech to say such things, but is it within the sound jurisprudence of election law?

Wouldn’t ethical principles forbid this kind of threat and negativity?

Does it not undermine fundamental principles of both democracy and the principles which make a country a republic?

Does it not disrespect the country and its essence as well as its constitution?

Does it not remind historically oriented lawyers of “Natural Law,” something which was guiding principles of the foundation of our republic?
Originally posted on 09/25/2020 @ 5:20 pmMichael Sean Quinn, PhD, JD, CPCU, Etc. (530)One of Texas's leading insurance scholars, Michael Sean Quinn is a past chair of the Insurance Section of the State Bar of Texas and has a broad legal practice.

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Expert Witness–Testing for Legal Sufficiency


The Texas Supreme Court recently wrote a case which surely contains the most important discussion of thinking about expert witnesses it–or any other court anywhere, for that matter–has set forth for many years. Houston Unlimited, Inc. Metal Processing, [Defendant-Petitioner] v. Mel Acres Ranch [Plaintiff -Respondent], 57 Tex. Sup. Ct. J. 1223m 2014 WL 4116810 (August 22, 2014.)* It is not only a discourse on juridical epistemology; it is also a how-to manual for both judges and advocating lawyers.  I will discuss details in another post (or other blogs). For now, here, I shall quote one of its most important observations:

“Experts who testify on behalf of parties to a lawsuit are subject to biases and potential abuses that are not always present outside the courtroom, and the courtroom itself may afford a veneer of credibility not present in other contexts. Legal sufficiency review requires courts to ensure that a jury that relies on an expert’s opinion has heard factual evidence that demonstrates that the opinion is not conclusory on its face.”Houston Unlimited, Inc. Metal Processing, [Defendant-Petitioner] v. Mel Acres Ranch

*This opinion can be found on the Court’s website. It is easily locatable.

**As shall be shown elsewhere, the wording is a bit misleading and could have been done more accurately from a semantic point of view.
Originally posted on 11/18/2014 @ 3:01 pmMichael Sean Quinn, PhD, JD, CPCU, Etc. (530)One of Texas's leading insurance scholars, Michael Sean Quinn is a past chair of the Insurance Section of the State Bar of Texas and has a broad legal practice.

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All Witnesses Lie

The first part of the following comes from a piece of fiction.  Many people believe it to be true.  I have little experience in criminal law, but I’m not so sure that it is true in civil litigation, as I shall suggest.  The fiction begins with the first quotation mark and ends with the last one.

Everybody lies.  Cops lie. Lawyers lie. Witnesses lie.  The victims lie.

A trial is a contest of lies.  And everybody in the courtroom knows this.  The judge knows this.  Even the jury knows this.  They come into the building knowing they will be lied to.

They take their seats in the box and agree to be lied to.

The trick if you are sitting at the defense table is to be patient.  To wait.  Not for just any lie.  But for the one you can grab on to and forge like hot iron into a sharpened blade.  You then use that blade to rip the case open and spill its guts out on  the floor.–MSQ

That’s my job, to forge the blade.  To sharpen it.  To use it without mercy or conscience.  To be the truth in a place where everybody lies.”

Michael Connelly, The Brass Verdict: A Novel p. 3 (New York: Little, Brown, 2008).  (This is a crime novel in which the lead character is a criminal defense lawyer.  He has appeared in at least one more ofConnelly’s novels.)

Here is one of my doubts.  There are degrees of lying. Connelly doesn’t seem to realize this. There is such a thing as big, and there is such a thing as small.

One of them is the out-and-out radical lie. (“I was not unfaithful to my husband, at all ever, though he was to me, as he told me many times when I would not haves sex with him, because I couldn’t.  He was too drunk.”)

And there are regular lies. (“I did not run that light.”)

There are more restrained lies. (“I don’t think I ran the light.”). And there are levels of these, just are there are for each of the listed categories.

There are lies of exaggeration. (“Last year, my wife weighed 216 lbs, before she lost weight.”)

Exaggeration has an opposite; it could be called lies of “Negative-ggeration.” These tend to be on the small size.  Maybe it’s because the “distance” between the degree of the lie and a zero-level of lying is always smaller than if the lie goes in the “opposite” direction.

Then there are subtle lies.  These are different, since they might be of various sizes. Big ones are great for impeachment; little ones are not.

Connelly may be right that every real trial contains some of these.  It might even be that in a big money trial every important member of the cast of witnesses tells at least one, at some level or other.  But I think he is suggesting that for every witness, there is at least one radical lie from that witness.

I doubt it, and I am not lying.  My statement is not even a “restrained” lie.

A Small Lie Here & There Do Not Really Add Up To Much Impeachment.  It Can Look Overly Hostile, Since It Is So Common.  However, What Counts As Small Depends On The Size And Nature Of The Case.  A Whole Long List Is Different; It’s The Opposite.–MSQ
Originally posted on 10/22/2014 @ 9:26 pmSeries Navigation<< LAWYERS & LIES: Part Four–On NegotiationsLAWYERS AND LIES: PART TWO >>Michael Sean Quinn, PhD, JD, CPCU, Etc. (530)One of Texas's leading insurance scholars, Michael Sean Quinn is a past chair of the Insurance Section of the State Bar of Texas and has a broad legal practice.
Read more from the same author:LAWYERS AND LIES: PART TWOTHE NATURE OF LEGAL AGENCY AND THEREFORE LAWYERSProblems of Judges: Criminal–Performance & VictimHits: 11

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American Lawyers Have to Lie

Here is what a leading Yale Law School scholar says about lawyers lying.  He says that it is “part of the “systematic interpretive engagement with the professional obligations of adversary advocates. . . .” It is part of the “ordinarily immoral conduct to which lawyers are professionally committed. . . .”

Of  course this is not the whole story he tells in his 250 page (not including endnotes) very complicated and often brilliant book, though one difficult to read.

Here we go.

Unlike juries and judges, adversary lawyers should not pursue a true account of the facts of a case and promote a dispassionate application of the law to these facts.  Instead, they should try aggressively to manipulate both the facts and the law to suit their clients’ purposes.  This requires lawyers to promote beliefs in others that they themselves (properly) reject as false.  Lawyers might, for example, bluff in settlement negotiations, undermine truthful testimony, or make legal arguments that they would reject as judges.  In short, lawyers must lie. [p. 3, emphasis added.]

[L]awyers are professionally obligated to lie and cheat [i.e., treat people unfairly], both under the positive law of lawyering as it stands and under any alternative regime of professional regulation that remains consistent with adversary adjudication’s basic commitment to a structural separation between advocate and tribunal. . . . The center of gravity of my argument remains the genetic structure of adversary lawyers, and in particular the separation between advocates and tribunals that constitute adversary adjudication’s core[.] [p. 4]

[P]rofessional ethics requires lawyers to betray their own senses of truth and justice in ways that contravene the ethic of self-assertion that dominates ordinary morality[.] [p. 5]

[L]awyers’  professional obligations to mislead and to exploit are incidents not of any specific, elaboration of the adversary ideal[,] but rather of that ideal itself.  The arise ineliminably out of the structural separation between advocate and tribunal, and the associated principles of lawyer loyalty and client control, that belong to every conception of adversary advocacy, no matter what its limits. [p. 8]

Daniel Markovits, A Modern Legal Ethics: Adversary Advocacy in a Democratic Age  (Princeton: Princeton University Press, 2008).   The author is a law professor at Yale, and for those of you who care about this kind of thing, he comes from a distinguished family amongst the law school professoriate, and elite economists.
Originally posted on 10/22/2014 @ 9:12 pmSeries Navigation<< LAWYERS & LIES: PART THREEMichael Sean Quinn, PhD, JD, CPCU, Etc. (530)One of Texas's leading insurance scholars, Michael Sean Quinn is a past chair of the Insurance Section of the State Bar of Texas and has a broad legal practice.
Read more from the same author:LAWYERS & LIES: PART THREETHE NATURE OF LEGAL AGENCY AND THEREFORE LAWYERSProblems of Judges: Criminal–Performance & VictimHits: 11

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The RESTATEMENT is as good as any other source. Here is what § 1(1) says:

“Agency is the fiduciary relationship which results from the manifestation of consent by one person to another that the other shall act on his behalf and subject to his control and consent by the other so to act.”

Notice that agency is in general a voluntary relationship. It is to be conceived in fundamentally dyadic ways. The agent acts on behalf of the principal. And the principal has the right to control the conduct of the agent. In fact, the law of many states, including Texas, is that a principal has the right to control the details of an agent’s activities. See State Farm Mut. Auto. Ins. Co. v. Traver, 980 S.W.2d 625, 627 (Tex. 1998). There is a school of thought and a strand of the law, which creates a division of labor between clients and lawyers. It has been variously described as “ends-means,” substance-procedure, strategy-tactics, or objective-means[,]” Wolfram at 156, with the client in control of what comes before the hyphens and the lawyer in control of what comes after the hyphens. TxDR 1.02(a)(1) provides that “a lawyer shall abide by a clients decision . . . concerning the objectives and general methods of representation[.] Cmt. #1 for this rule states the following: “The lawyer should  assume responsibility for the means by which the client’s objectives are best achieved thus, a lawyer has very broad discretion to determine technical and legal tactics, subject to the client’s wishes regarding such matters as the expense to be incurred and concern for third-persons who might be adversely affected.” Similarly, Hazard and Hodes comment on these matters in their commentary, THE LAW OF LAWYERING. Some Central Rules (etc.) of the Law of Agency: Duties of Agents. The most central of all is this one: Agents are always bound by a “Fiduciary Rule.” An Agent (“A”) has a duty to his Principal (“P”) to act solely and only for P’s benefit in all matters related to the agency, absent an informed agreement between P and A to some other effect. Here are some components of that Rule: A. A is always a fiduciary of P. (All agents are fiduciaries of their principals, but not all fiduciaries are agents.) B. A is not a fiduciary with respect to everything pertaining to P but only that which is within the scope of the agency. C. Every agency has some scope, whether express or implied. D. The scope of an agency is not always obvious or easy to determine. E. “However, an agent may be in such a confidential relationship to the principal that he has a duty of disclosure and fair dealing as to all matters.” RAg § 390 Cmt d.  This kind of rule will apply to some lawyers under some circumstances. F. Agents are in general not in a fiduciary relationship with their principals before the formation of the contract of agency and while they are negotiating the fee arrangements. The fee agreement is not (usually) within the scope of the agency. Sub-parts: 

“If, however, as in the case of attorney and client, the creation of the relation involves peculiar trust and confidence, with reliance by the principal upon fair dealing by the agent, it may be found that a fiduciary relationship exists prior to the employment and if so, the agent is under a duty to deal fairly with the principal and arranging the terms of the employment.” Id. at Cmt. e. Fees of agents can be percentages, e.g., of profits.

G. Obviously, agents must subordinate their interests to the interests of their principals, at least with respect to anything affecting matters within the scope of the agency. Sub-parts

For this reason, A may not compete with P, if the competition would affect matters within the scope of the agency, absent a fully informed agreement. A may not undertake an activity for a third party (“X”), where A’s activities for X are outside the scope of his agency arrangements with P, if those activities for X would have consequences for matters within the scope of A’s relationship with P, absent fully informed agreement.

H. A cannot serve the interests of someone other than P, if that service would adversely affect the interests of P, insofar as they pertain to matters within the scope of the agency, absent . . . . I. A’s duty to P are the same as those of a trustee to a beneficiary. J. A may lawfully injure the interests of P if A is acting in good faith, is acting outside the scope of the agency, and the interests of P are not interests related to the scope of the agency. K. If A acquires confidential information pertaining to P as a result of the existence of the agency relationship, you may not use that information to the disadvantage of P.(For this reason, A may not compete with P, if the competition would affect matters within the scope of the agency, absent a fully informed agreement. L. Because they are fiduciaries, agents have a duty of uberrima fidei (or, uberrima fides, or uberrimae fidae) with respect to their principals. Here is how the terms are defined: “Of the utmost good faith, a term applied to a category of contracts and arrangements where each party must not only refrain from misrepresenting to the other but must voluntarily and positively disclose any factor which a reasonable person in the position of the other party might regard as material in determining whether or not to undertake the contract. This requirement applies to contracts of guarantee, insurance, partnership, family arrangements, and certain others, but not such contracts as sale.” David M. Walker, THE OXFORD COMPANION TO LAW 1245 (1980). Or this:

“The most abundant good faith; absolute and perfect candor openness and honesty; the absence of any concealment or deception, however slight. A phrase used to express the perfect good faith, concealing nothing, with which a contract must be made; for example, in the case of insurance, the insured must observe the most perfect good faith towards the insurer.”BLACK’S LAW DICTIONARY 1690 (1968). See Mayes v. Mass Mut. Life Ins. Co., 608 S.W.2d 612, 616-17 (Tex. 1980), citing Stipcich v. Metro. Life Ins. Co., 277 U.S. 311(1927).

What might “utmost good faith” mean? Obviously something more than merely good faith, the Latin phrase for which is usually bona fides. The Latin phrase is not much used in discourse upon the law of agency, but if agents are fiduciaries with respect to their principals, then they have a duty of utmost good faith.  

A duty of utmost good faith requires that high level of good faith none higher than which the community can conceive. Otherwise, what would utmost really mean? In the end, if this suggestion actually were taken up by a court, a court would affirm my suggestion, but then temper with some remark about how everyone had to be reasonable (realistic, common sensical [if that’s a word], &c.) at all times. The court’s position would be inconsistent. –MSQ

 M. A fiduciary (and therefore an agent so hence a lawyer) can fail to succeed as a fiduciary and not be subject to blame.  Probably, if A has made a very reasonable attempt to act for the benefit of his P, then he is not blameworthy. Energetic trying counts for something. There is some blame if he is merely reasonable and not very reasonable. If he is negligent there is more blame. Some genuine trying counts for something, just a little less. At least the last one is a failure to be a fiduciary, but it is not a violation of the fiduciary duty. The violation is still not a refusal or even a refraining.
Originally posted on 10/17/2014 @ 4:44 pmMichael Sean Quinn, PhD, JD, CPCU, Etc. (530)One of Texas's leading insurance scholars, Michael Sean Quinn is a past chair of the Insurance Section of the State Bar of Texas and has a broad legal practice.
Read more from the same author:LAWYERS & LIES: PART THREELAWYERS AND LIES: PART TWOProblems of Judges: Criminal–Performance & VictimHits: 11

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Problems of Judges: Criminal–Performance & Victim

Judicial Poison

An Ohio judge, 72 years old, was poisoned by his wife. She used antifreeze that she poured into his drink. The marriage has lasted 45 years up until then. She did it as a device to secure medical treatment for him, not just for the poisoning but for other medical problems, as well. One wonders what the other medical problems were.  Any chance it was alcoholism?  She pleaded guilty to “felonious assault.”

October 2014. A Pa. judge, age 41, faced minor criminal charges when she side-swiped a car after crossing the center line and then took off. The other driver followed her and claims to have observed several other similar swerves.  On the other driver, there was a smell of booze.

The side-swiper was a “Magisterial District Judge,” no less. The charge was obstruction of justice. His lawyer said that this was private and did not reflect the way she would discharge her judicial duties.

To be sure, the charge is unusual, but doesn’t it fit? And surely it is better, in some ways, for her than DUI/DWI. Then again, maybe not.  If a judge obstructs justice in any part of his/her life, perhaps that person should not continue being a judge.  Better a drunk judge than a one with proclivities to injustice.

September 2014. A municipal judge in Philly, Pa. 61 years old, plead guilty to various federal charges–the usual, I guess mail fraud, wire fraud, etc.–arising out of his offering his “services” (judicial influence) in exchange for campaign contributions. He is scheduled for sentencing in January 2015, and the prosecutors are said to be recommending 2 yrs.

Municipal judges in Pa. must have a lot of judicial power since it was a gun charge involved. In some states, the usual type of case many judges hear is tipping over on a sidewalk while tying your shoes.

September 2014. A Nevada judge gave up his law license and his judgeship after pleading guilty to one count of a 19-count indictment, to wit: a wire fraud conspiracy charge. The case arose out of a $3M investment scheme. I guess he made a bet on an investment, of sorts. The prosecution will, it is reported, suggest 27 months at his January sentencing, and J. keeps his $150T yearly pension. (He must have been a judge a long time. Maybe he just got bored and decided to gamble.

If I were in LV, where he was a judge, I would bet he’s squealing. Wouldn’t you?
Originally posted on 10/14/2014 @ 8:38 pmMichael Sean Quinn, PhD, JD, CPCU, Etc. (530)One of Texas's leading insurance scholars, Michael Sean Quinn is a past chair of the Insurance Section of the State Bar of Texas and has a broad legal practice.

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In-House Counsel–Future Growth v. Inferior Status–Part I

In the last several years approximately 50-58%  of larger companies have moved legal work in-house.  That is what this blog is about.  Part II will concern new work for in-house legal departments in large businesses.

The “bring-in” might be as much as $6.9B according to WSJ on September 15, 2014.  Granted this is only a small fraction of the  $100B+ corporations will spend on legal fees this year. Still, “[c]orporate law departments also are tackling increasingly complex matters that were once the province of major law firms. Some are hiring seasoned attorneys with pedigrees from big law firms to come work inside companies, where they advise on  everything from mergers and acquisitions to advertising rules and antitrust matters.” See B6.

I wouldn’t be surprised if this didn’t happen more in the insurance industry.  If so it will involve larger in-house departments doing larger and larger defense-of-the-insured cases.

Why? Lower cost? Obviously. Supervising the brigade’s contract lawyers hired by the companies? WSJ says so, and the brigades will grow to divisions or armies in the next decades if the trend continues. Shorter hours: Maybe. Room to rise? Wouldn’t be surprised. Less management? Bet so. More flexible time off? Don’t know. Easier access to corporate meetings in exotic places? Possible. Cyber-based research tools? I wonder.  All of the above? Virtual certainty.

As disappointed as I am to have to admit this, Richard Susskind, one of the world’s leading egotistical narcissists—not far behind Ralph Lauren–if his marketing ploys are any indication, turns out to be right about this. This will become “more true” if the trend continues.  Myself, I’m convinced that it will. (With regard to Susskind, I can still say that his current book, TOMORROW’S LAWYERS: AN INTRODUCTION TO YOUR FUTURE (Oxford U.P. 2003) erroneously says a number of condescending and false things about in-house lawyers of previous and current generations.)
Originally posted on 10/14/2014 @ 7:49 pmMichael Sean Quinn, PhD, JD, CPCU, Etc. (530)One of Texas's leading insurance scholars, Michael Sean Quinn is a past chair of the Insurance Section of the State Bar of Texas and has a broad legal practice.

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Quinn Quotes

All aphorisms and adages are false when taken to be universal. Some adages have wisdom.~Michael Sean Quinn, PhD, JD, CPCU, Etc.Tweet

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