This is not a joke.  This is a good thing.  Beginning in the compliance periods with deadlines in 2015 all Pennsylvania lawyers will be required to obtain 2 ethics credits during each year in order to maintain our licenses.  Our total CLE hours will remain twelve per year.  These changes were adopted by Regulation changes by the Pennsylvania Continuing Legal Education Board this month.  In addition, the Pennsylvania Supreme Court has by Order changed Pa.R.C.L.E. Rule 108(e) to provide that Lawyers may obtain six credits via alternative means (rather than live in-person) rather than four.  This allows half the CLE credits to be obtained through distance learning and/or computer based education.

The CLE Board Chair Kenneth Argentieri states "We hope that these changes will help lawyers to better serve their clients and the administration of justice in our Commonwealth.  Ethics and professionalism is the heart of what we do."

As an ethics instructor I wholeheartedly agree.  Although I do not agree with the lawyer jokes, and I am of the opinion that lawyers are more ethical than we are given credit for, more ethics credits will not hurt anyone and will hopefully help Pennsylvania lawyers avoid future ethical issues.

If you have any questions about ethics or are in need of a presenter please contact me at jmcguire@c-wlaw.com.
 
 
The noisy withdrawal has long been a tool for attorneys in balancing their legal and ethical responsibilities with their
knowledge of a client’s improper activity.  It has also become a common issue for CPAs.  The basic concept is that the professional having become aware of a client’s improper activity (such as employee theft) withdraws from the representation and notifies the proper authority of their withdrawal.  The withdrawal is done in such a way that the authorities are alerted to the fact that there may be a problem. If the client has caused the professional to give their professional opinion on some false information or pretenses the withdrawal will often be accompanied by a withdrawal of the opinion.

This is most often noticed in large public company settings because of the public scrutiny that can essentially arise in almost any situation.  Further, the Securities Exchange Commission (“SEC”), particularly through the Sarbanes-Oxley Act of 2002 [“SOX”],has requirements, in certain circumstances, for a noisy withdraw.  The SEC even has an Office of the Whistleblower.  http://www.sec.gov/whistleblower

SOX requires that attorneys report “evidence of a material violation of securities law or breach of fiduciary duty” to the chief legal counsel or chief executive officer of the company.   If there is no appropriate response then report to the board of directors or appropriate committee of the board of directors.   This is referred to as “up the ladder”reporting.  In addition, it is both a good practice and requirement to attempt to resolve the issues with the client before making a noisy withdrawal.  
 
SOX requires a noisy withdrawal by an outside attorney if the company has not responded appropriately, the violation is ongoing or about to occur, and the likely result will be substantial injury to the investors.  In this situation, the attorney has one day to withdraw, indicating that the withdrawal was “based on professional considerations,” and must disaffirm any statements the attorney has made to the SEC which may be false or misleading.  In house attorneys must disaffirm but are not required to resign their employment.  
 
An issue arises as to how one disaffirms a statement and what confidential client information may be disclosed.  The SEC permits the disclosure of confidential information without the client’s consent. However, this rule is in conflict with various state rules.  The important thing is to make the withdrawal and any disaffirmance while revealing as little confidential information as possible. It is quite possible that the intent can be accomplished without revealing any confidential information.


The SEC has expanded the requirement for noisy withdrawal to CPAs in certain circumstances as well. Without getting into all the details, investment advisors, who are qualified custodians, must have an audit. The auditor is required to notify the SEC within one business day of any material discrepancies and make a noisy withdrawal.

There are other circumstances in which a noisy withdrawal would likely be appropriate for both attorneys and accountants, and following the SEC rules would go a long way to demonstrate that an accountant or attorney handled the matter properly.  The law in this area is still developing so if you find yourself in this situation, handle it very carefully.

I can be contacted at jmcguire@c-wlaw.com.