Ethics

On Wednesday former outside counsel for Qualcomm will have their second opportunity to show cause why they should not be sanctioned for discovery failures in patent litigation against Broadcom.  If I read the captions correctly, the court has set aside all or parts of three days for the hearing.

At the last hearing counsel were not allowed to disclose confidential and privileged information in their defense.  This time they are, and they have done so at length in their papers. The hearing therefore will provide a rare window into relations between sophisticated clients and their highly talented counsel. 

Judge Major was superbly prepared at the last hearing and no doubt will be again.  The case is in very good hands. I will comment on the substance of the proceedings after the court rules.  Two ex ante thoughts seem appropriate, though.   

1.  Beware hindsight bias.  When people know the outcome of an uncertain event they tend to overestimate the likelihood of that outcome from an ex ante perspective.  Once we know what happened evidence pointing in that direction seems more salient and other evidence less so; it is easy to construct narratives explaining why the known result occurred and harder to do so for things we know did not happen.  A financial meltdown is easy to explain after it happened; very few economists predicted it.

Just as there is no "fraud by hindsight," in Judge Friendly's famous phrase, so there is no malfeasance by hindsight. The risk here is that once it is known that a large number of documents were not produced it is tempting to conclude that someone must have known about them all along.  As the term implies, hindsight bias is a flaw in reasoning and should be guarded against. 

This risk does not apply to assessing counsel's actions with regard to things they knew, of course, but it is important to bear in mind with regard to things they learned later on.

2. Sticks are important, but carrots are important, too.  I have taught this case in detail to a seminar of extremely skilled students, covering about three hours of class time.  Naturally we focused on the junior lawyers.  My strong impression from this experience is that it is important to send two distinct messages: (1) The rules apply all the way down the line, even to junior people; and (2) If you do the right thing, you will be all right. 

The carrot is important because junior lawyers already spend much of their lives as deer in headlights.  Threatening them with sanctions for wrong action can exacerbate that effect unless the threat is accompanied by assurances that they can escape sanctions through right conduct.  In extreme cases, a junior lawyer believing he will be sanctioned either way might decide to cover up misconduct rather than disclose it, betting that the coverup will lessen the risk of discipline by lessening the risk of detection.  It is important to counter such fatalistic impulses.

More later.

DM