Monthly Archives: February 2011

A Little Bit of Legal Ethics

As many of our readers know, She-Hulk‘s alter-ego, Jennifer Walters, is an attorney, and many issues of that comic feature courtroom and law firm scenes.  I was reading She-Hulk (2005) #1 and was struck by a scene that gives us a chance to talk about something a little unusual: legal ethics.  Since there are relatively few comic book characters who are lawyers, this topic doesn’t come up very often, but it’s an issue that is near and dear to many lawyers’ hearts (or at least their pocketbooks).

I. The Facts

In the comic, Walters is out for a jog when she encounters a woman being assaulted by two men.  Although she is unable to transform into She-Hulk, she dispatches the assailants with martial arts.  It is then revealed that Spider-Woman and Captain America were on the scene, but did not intend to intervene unless Walters needed assistance.  So far, so good: nothing wrong with an attorney engaging in a bit of defense of others.

But then Walters commits a significant ethical lapse.  She tells the rescued woman “Miss, I should inform you that I’m an attorney.  And I’d be more than happy to represent you if you feel that these ‘heroes’ and their delayed response has in any way caused you emotional distress.”  You may be wondering what’s wrong about this.  Isn’t that what an attorney would do?  Perhaps surprisingly, the answer is ‘no.’

(NB: We’re aware that Walters was mostly just good-naturedly ribbing the Avengers, but ethical principles shouldn’t be breached even for the sake of a joke.  Also, as an aside, the ‘emotional distress’ claim is nonsense in this case as the Avengers owed the woman no particular duty to rescue her.  See this post for more.)

So what did Walters do wrong?  She solicited a potential client in person.  What’s worse, she did so immediately after the potential client had been assaulted and, allegedly, emotionally distressed.  So how is an attorney supposed to know what (not) to do?  And how can non-attorneys know when an attorney is breaking the rules?  For that we turn to the “law of lawyering,” a term we assure you we did not just make up.

II. The Law of Lawyering

The legal profession is primarily regulated at the state level, so the ethical rules that bind attorneys vary from state to state, but 49 of the 50 states have adopted some variation on the American Bar Association Model Rules of Professional Conduct.  Most states have basically adopted the Model Rules wholesale.  New York, where the events of the comic took place, was one of the last states to adopt the Model Rules (as the New York Rules of Professional Conduct), and in fact it was still using the old New York Lawyer’s Code of Professional Responsibility at the time the comic was written.  However, as it turns out the result is the same under either set of rules.

The current New York Rules of Professional Conduct have this to say about solicitation under Rule 7.3:

(a) A lawyer shall not engage in solicitation:

(1) by in-person or telephone contact … unless the recipient is a close friend, relative, former client or existing client; or

(2) by any form of communication if: …

(iv) the lawyer knows or reasonably should know that the age or the physical, emotional or mental state of the recipient makes it unlikely that the recipient will be able to exercise reasonable judgment in retaining a lawyer

So this kind of in-person solicitation is prohibited in New York (and the rules are similar in most states), and even if the woman fell into one of the exceptions, Walters still should have known that the woman’s emotional state made it unlikely that she could exercise reasonable judgment so soon after being the victim of a crime.  And in fact there are special rules about that kind of thing, per Rule 7.3(e):

(e) No solicitation relating to a specific incident involving potential claims for personal injury or wrongful death shall be disseminated before the 30th day after the date of the incident, unless a filing must be made within 30 days of the incident as a legal prerequisite to the particular claim, in which case no unsolicited communication shall be made before the 15th day after the date of the incident.

So even if the woman fell into one of the exceptions and her judgment wasn’t impaired, Walters still should have waited.

There is, by the way, a long history of prohibiting this kind of in-person solicitation, which is also called “barratry.”  In fact, it’s still a crime in some jurisdictions, including New York where it’s a misdemeanor.  N.Y. Judiciary Law § 479, 485; See also Tex. Penal Code § 38.12.  The Supreme Court has held that these kinds of rules are a permissible regulation of commercial speech.  Florida Bar v. Went For It, Inc., 515 U.S. 618 (1995).

It’s worth pointing out that these rules are not arbitrary. People who are solicited for business while they are experiencing acute distress are less likely to be able to make an informed decision about who would be best to retain.  Even if you aren’t distressed it can be hard to make a fully-informed, free decision about representation while a fast-talking attorney is trying to talk you into choosing them.

People being solicited are also less likely to make a good decision about whether or not they want to retain counsel at all. What could seem like an absolutely terrible accident at the scene can turn out to be not that big of a deal. And what someone wants to do while in the throes of anger or fear may be very different from what they want to do a few days later. But once the legal process is started it can be difficult and expensive to stop. It’s a lot better for everyone if suit is never filed in the first place if it isn’t going to go anywhere. So there is a compelling social reason for prohibiting the solicitation of legal business in the immediate aftermath of an accident: we want people to make calm, rational decisions about whether or not they want to sue and who they want to be represented by.

III. The Consequences

Cases of attorney misconduct are handled by the state disciplinary authority, in this case the discipline and grievance committees appointed by the Appellate Division of the New York State Supreme Court.  Although victims of attorney misconduct may file complaints, the purpose of a disciplinary hearing is to punish misconduct, not to compensate victims.  However, the victim may have a separate civil claim against the attorney, as in a legal malpractice case.

In New York, attorney discipline includes caution, admonishment, reprimand, censure, suspension, and disbarment. How bad does it look for Walters?  As far as we know this is her first disciplinary offense, and solicitation is far from the worst thing an attorney can do (e.g. lying, stealing from clients, and jury & witness tampering are all much worse).  New York disciplinary decisions are not the easiest thing to research, but our guess is that she would likely receive a letter of caution, an admonition, or possibly a reprimand.  Attorneys have received worse punishments for solicitation in New York, but it’s usually in conjunction with misrepresentation or other aggravating circumstances.

A letter of caution is an informal, confidential notice of disapproval.  It goes in the attorney’s file but it’s not public.  It’s basically a warning.  An admonition is a formal disciplinary action but it’s still confidential.  A reprimand is similar to an admonition except the matter may also be referred to the court for further action.

As mentioned above, Walters may also be guilty of a misdemeanor.  The woman Walters solicited probably wouldn’t have a civil claim against her, though, so that’s a small consolation.

IV. Conclusion

Attorney discipline and malpractice are serious issues.  A few hundred attorneys are disbarred and a few billion dollars in legal malpractice damages are awarded every year.  All attorneys should take care to uphold the highest ethical standards, and superhero attorneys are no exception.

Law and the Multiverse Mailbag IX

In today’s mailbag we have a question about Superman, diamonds, and taxes.  As always, if you have questions or post suggestions, please send them to james@lawandthemultiverse.com and ryan@lawandthemultiverse.com or leave them in the comments.

Martin asks “if Superman crushes carbon and makes diamonds, is that taxable income?  I would think if he made it into a ring and gave it to Lois the government might want a percentage.”

There are two questions here.  First, are the diamonds taxable income for Superman (or Clark Kent) and second, are they taxable income for a recipient such as Lois Lane?

The answer to the first question is “probably not.”  A traditional, almost fundamental principle of income tax is that a gain in value must be realized before it can be taxed, although the definition of “realized” has expanded over the years, somewhat eroding the principle.  The Internal Revenue Code provides that one example of income is “gains derived from dealings in property.” 26 USC 61(a)(3).  ‘Dealings’ are not defined in the statute, but § 1001(a) defines the computation of “the gain from the sale or other disposition of property.”  It seems clear that improving the value of the carbon is not such a taxable event, since there is neither a sale nor disposition of the property of any kind.  An analogy might be made to a painting that appreciates in value; the increase in value is not taxed until the painting is sold, given away, etc.

If the diamonds are given to Lois Lane, however, that is obviously a gift, which has its own set of special rules.  In the US, gifts are generally not taxable income for the recipient.  26 USC 102(a).  But there is a gift tax that is ordinarily paid by the giver.  26 USC 2501(a)(1) and 26 USC 2502(c).  However, there is a significant exclusion for gifts that currently stands at $13,000 per-recipient per-year.  Thus the question is, presuming the diamonds were given as a gift today, would they exceed the exclusion?

Obviously this depends on the size and quality of the diamond and the state of the diamond market, but for example the diamond given to Lana Lang in Superman III appears to be about 3.5 to 4 carats and of very good quality.  Looking at stones for sale on Blue Nile, a similar diamond would cost somewhere between $150,000 and $400,000, depending on the particulars, which is far beyond the gift exclusion.  So how much would Superman be on the hook for?  The answer is “a lot.”  For example, if the ring were valued between $150,000 and $250,000, then the gift tax would be $38,800 plus 32% of the excess beyond $150,000, so potentially as much as $70,800.

But is the fair market value of the diamond simply that of an ordinary diamond of like size and quality?   The general rule for computing the value of gift of property is given in 26 C.F.R. § 25.2512-1: “The value of the property is the price at which such property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell, and both having reasonable knowledge of relevant facts.”  The unusual origin of the diamond is almost certainly a relevant fact, and if diamonds created by Superman are rare, which seems to be the case, then this particular diamond would command a significant premium, and the tax would be correspondingly higher.

This is a problem, since Clark Kent probably doesn’t make enough money to pay the tax, and Superman probably doesn’t want to get tangled up with the IRS.  It is possible to perform a “net gift” for which the recipient pays the tax, but it is unlikely that Lana has the money for that either.  She could sell the ring to pay the tax, of course, but that would defeat the purpose of the gift.  Alternatively, Superman could give her several diamonds with the intention that she keep one as a ring and sell the others to pay the taxes on all of the diamonds.  As complicated as that would be, it might be the only way to keep things above-board.

Note: No discussion of gift tax is complete without mentioning the unified credit of 26 USC 2505. It may not solve the problem here, however.  First, the value of the diamond may easily exceed the credit, especially if Superman gives them out on a regular basis.  Second, Superman may have made other gifts that already used up the credit; he has certainly been around long enough to have done so.

That’s all for this week!  Keep your questions coming in!

Superheroes and Contempt

A few dozen issues into Iron Man’s original Tales of Suspense run, Senator Harrington Byrd (presumably R-NY, weird as that now sounds) made Tony Stark’s life a living hell. Byrd didn’t approve of Stark’s “playboy” lifestyle and was uncomfortable having so many defense contracts going to Stark Industries. His main threat to get what he wanted out of Stark was threatening him with contempt of Congress.

This, as it turns out, is a real thing, associated with Congress’s ability to compel people to appear before congressional committees and subcommittees to answer questions and provide documentation. The Supreme Court first recognized this as an inherent power of Congress in 1821 with Anderson v. Dunn, 19 U.S. 204 (1821). The common law form was replaced by statute in the middle of the nineteenth century, and the current statute is 2 U.S.C. § 192, which provides that a person who refuses to cooperate can be fined up to $1,000 and spend up to a year in jail.

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Time Travel, Suspended Animation, and the Statute of Limitations

Several readers have asked about the interaction between things like time travel and suspended animation with the statute of limitations.  For example, if a character commits a crime, is frozen for the duration of the statute of limitations, then thawed out, are they still culpable?  Or what about a character that commits a crime with a 10 year statute of limitations in 2000 then travels forward in time to 2010?  At first it might seem like these are solid (if somewhat unfair) ways to cheat justice, but let’s take a closer look.

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Law and the Multiverse Mailbag VIII

We’ve got some great issues for the mailbag this week, including immortality and copyright and Bizarro, court translators, and competency.  As always, if you have questions or post suggestions, please send them to james@lawandthemultiverse.com and ryan@lawandthemultiverse.com or leave them in the comments.

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Lost and Found

A common trope in comic books and other literature is the hero (or villain) who accidentally stumbles across a magical artifact or other source of power.  One famous example is Tolkien’s The One Ring, but examples abound in comics as well.  Alan Scott found his namesake Green Lantern in the remains of a train wreck.  Dara Brighton, protagonist of The Sword, finds the namesake weapon in a hidden basement.  Cain Marko, aka The Juggernaut, finds the ruby that gives him his power in a temple in Korea.

In the comics it is taken for granted that these characters are the rightful possessors of the artifacts.  “Finders keepers,” right?  And in the case of the Green Lantern and the Juggernaut’s ruby there also seems to be an implicit invitation to take the artifact.  But what are the legal principles at work here?

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Superhero Organizations and Business Entities

One question that has come up a number of times is what kind of business entity would be best for superhero organizations like the Avengers or the Justice League. This was a bit too much for a mailbag, so here’s a full-length post on the subject.

To discuss this adequately we’ll have to take a brief look at the different kinds of business entities and their pros and cons.

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Law and the Multiverse Mailbag VII

Today we have questions about supervillain gadgets and imposing unwanted powers on people.  As always, if you have questions or post suggestions, please send them to james@lawandthemultiverse.com and ryan@lawandthemultiverse.com or leave them in the comments.

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Superheroes and International Law

International law is one area of the law that we haven’t talked about all that much yet, with the exception of this post on supervillain lair locations. We’ve also talked about immigration and even export control laws, but these are actually considered part of domestic law because their subject matter is essentially the management and control of national borders. True international law has to do with the law of nations, also known as “public international law” and conflict of laws, i.e. deciding which law applies in a given situation, known as “private international law.” International law also includes things like treaties and the UN, i.e. the agreements that nations have with each other in their sovereign capacities.

There are a number of places where comic book stories run up against various international law issues, including trans-national groups like S.H.I.E.L.D. and the actions of superheroes in other countries. Most of the issues we’ll discuss here have to do with public international law, as private international law is 1) way more technical, and 2) not nearly as controversial. Private international law grew out of international commerce to a significant degree, as merchants importing and exporting goods needed to be able to resolve disputes across and between international borders. While the status of human rights and national sovereignty are deeply ideological, merchants 1) mostly just want to know what the law is rather than what it ought to be, and 2) aren’t predisposed to tolerate long and drawn out theoretical disputes. They get in the way of business. So private international law is, by and large, pretty efficient. But as our heroes aren’t generally engaged in, say, the carriage of goods by sea, public international law is where our focus will lie.

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The Martindale Mike Podcast

Our series of podcast appearances continues with the most recent edition of the Martindale Mike podcast over at Martindale.com.  Mike Mintz does a great, fun podcast, and we think you’ll enjoy it.  Thanks again to Mike for inviting us on.