Bagman, Fixer, Lobbyist, and Lawyer: Can Michael Cohen Combine All These Roles?

Once a legal unknown, Michael Cohen made it last week to the front pages of both the New York Times and the Wall Street Journal. Charges swirl around him as the personal fixer for President Trump and the alleged bagman for the payment of hush money by Trump to porn star Stormy Daniels. Daniels’ attorney, Michael Avenatti, has accused Cohen of violating the federal bank fraud statute, and the Department of Justice has identified Cohen as the subject of a criminal investigation.

This brief column will not attempt to evaluate Cohen’s criminal liability (if any), but it will offer a conclusion on a more modest issue: An attorney cannot do what Cohen at least tried to do without violating ethics rules that are clearly set forth in both the ABA’s Model Rules of Professional Conduct and the State of New York’s Rules of Professional Conduct.

What did Cohen do that was unethical? Forget the hush money and focus on what he was paid to do. According to the New York Times on May 9:

“Major corporations including AT&T, Novartis and the law firm Squire Patton Boggs collectively paid him over $2 million for advice about navigating the suddenly foreign terrain of Mr. Trump’s Washington.”

Nice work if you can get it! But can a lawyer (and Cohen is licensed in New York) receive such payments for helping others lobby his client? More specifically, the New York Times reports:

“Novartis, the Swiss drug maker, said it had paid Mr. Cohen $1.2 million after he approached the company early last year promising insights into Mr. Trump’s views on health care.”

But Cohen already was (and may still be) President Trump’s personal lawyer. Can you receive fees for giving “insights” into your client’s thinking?

At least two basic rules of legal ethics may stand in the way. First, under the New York Disciplinary Rule 1.7 (“Conflict of Interest: Current Clients”), which is quoted in part below:

“A lawyer shall not represent a client if a reasonable lawyer would conclude that either:

(1) The representation will involve the lawyer in representing differing interests; or

(2) There is a significant risk that the lawyer’s professional judgment on behalf of a client will be adversely affected by the lawyer’s own financial interest, business property, or other personal interests.”

Obviously, Novartis wants to know what President Trump is thinking, and Cohen may know something from his frequent contacts with the president. It is in Cohen’s personal economic interest to both (1) reveal what he knows and (2) seek more information from one client (Trump) to reveal to the other client (Novartis). Certainly, Novartis and Trump have “differing interests.” Ideally, conflict of interest rules should prevent a lawyer from hiring himself out either to lobby his client or to pass on sensitive information from his client to others seeking to lobby that client.

If these provisions are in any way unclear, the rules on “confidentiality of information” are less ambiguous, and they go well past information covered by the attorney-client privilege. ABA Model Rule 1.6 recognizes that a lawyer must protect the confidences and secrets of a client, and New York Rule 1.6 defines “confidential information” to include information “likely to be embarrassing or detrimental to the client if disclosed.” New York Rule 1.6 then states that:

“A lawyer shall not knowingly reveal confidential information…or use such information to the disadvantage of a client or for the advantage of the lawyer or a third person, unless…the client gives informed consent…”

The conclusion seems unavoidable: A lawyer for a client who is also a lobbyist or adviser to another person lobbying that client is revealing or using confidential information for the lawyer’s own “advantage.”

Conceivably, a lawyer for Cohen can make a colorable argument that the term “confidential information” (which is critical to the New York rule) does not include everything that Trump told Cohen. After all, Trump probably did not regard Cohen as a serious policy adviser but may have just gossiped with him. Still, the relationship between Trump and Cohen was particularly sensitive, and it is undesirable that a lawyer be able to define narrowly which statements made to him by his client constitute “confidential information.” If legal ethics are to make sense, the lawyer should not be able to act as a conduit of information from his client to others willing to pay for that information.

Once, if there were a gap in the rules, the Bar could rely on old ABA Canon 9, which instructed that “a lawyer should avoid even the appearance of impropriety.” Arguably, Cohen is a walking impropriety. But that broad standard was repealed when the ABA substituted its Model Rules of Professional Conduct for its old Model Code of Professional Responsibility. The “appearance of impropriety” standard was deemed to be too vague. Still, if the reach of the current Model Rules is too narrow to cover a lawyer seeking to sell information about his client to potential lobbyists (including just information about the client’s attitudes, feelings, and biases), we have a problem. If one can do what Cohen was seeking to do – even if we describe it euphemistically as merely selling “insight” into his client’s “thinking” – public respect for the legal profession will diminish. And it was never that high to begin with! Yes, the bureaucrats who administer legal ethics are underfunded, reactive, and seldom push the envelope. But this is a case where they should. The profession should say with a clear voice that lawyers cannot act in this way.

This post comes to us from John C. Coffee, Jr., the Adolf A. Berle Professor of Law at Columbia University Law School and Director of its Center on Corporate Governance.