Assignment 3: George Costanza Has Been Offered

Assignment: Assignment 3 George Costanza has been offered a position as

George Costanza has been offered a position as CEO of Kramerica, a large multinational electronics corporation. Costanza and the president of the Kramerica board, Cosmo Kramer, meet to discuss the terms of the agreement. They sketch out a compensation plan that includes a hefty salary and stock options worth several million dollars. In the spirit of cooperation, Kramer suggests that they use the same attorney to draw the agreement and agrees to have Kramerica pick up the tab. They set up a meeting with Elaine Benes, a well-respected local business attorney.

In the initial meeting, Kramer tells Benes, “We have already outlined all the key factors in George’s contract and just need you to help us formalize the terms. Now I want you to consider yourself as acting for George and for Kramerica, but Kramerica will be solely responsible for your fees. So what do you say, can you help us move this thing forward?” Benes responds that she would be happy to help them out. She explains that she charges $185 an hour for her services and provides Kramer with a written fee agreement. The parties then discuss the specifics of their deal.

Shortly, thereafter, she phones Costanza to clarify some of the terms. In particular, she wants to know how long the vesting period is supposed to be for the stock options. He says, “Well. To tell you the truth, we never really discussed that. Make it two years. The fact is, I have already committed to move to Sydney in two-and-a-half years when my daughter graduates from law school here. I plan to work for another company over there. Please don’t mention that to Cosmo.” Benes then calls Kramer and asks him what he thinks the vesting period is supposed to be. Kramer says, “I guess we forgot to spell that out in our prior discussions, but Kramerica’s standard vesting policy is 20 percent after three years, another 30 percent after five years, and then the balance after seven years. Just put that in.” After talking to Kramer, Benes decides, in fairness to both parties, to “split the difference.” She writes up the agreement and presents it to both parties to sign. Has Benes acted properly under the rules of professional conduct?

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The scenario involving Elaine Benes's conduct as a legal professional raises important questions regarding adherence to the rules of professional conduct, particularly in the context of conflicts of interest, confidentiality, and fair representation. Analyzing her actions provides insight into whether she maintained ethical standards, especially given her dual role and the nature of her client representation.

In the legal profession, the American Bar Association’s Model Rules of Professional Conduct serve as a guiding framework. Rule 1.7 addresses conflicts of interest concerning current clients, emphasizing that a lawyer must avoid representing clients with conflicting interests unless certain conditions are met. In this case, Benes's role was to formalize an employment agreement involving Costanza and Kramerica, with the understanding that Kramerica would be responsible for her fees. The key issue revolves around whether her dual knowledge of the negotiations and her interactions with both parties created a conflict or compromised her independence and objectivity.

Benes initially agreed to assist based on the understanding that she would formalize the agreed-upon terms. Her fee arrangement, which explicitly states Kramerica would cover her billings, might suggest that her primary client was Kramerica. However, the fact that she was also communicating directly with Costanza, clarifying the vesting period, points to potential ethical concerns. Under Rule 1.7, a lawyer should not represent a client if there is a significant risk that the representation will be materially limited by the lawyer’s own interests or responsibilities to another client, unless informed consent is obtained from all parties.

In this scenario, Benes's conversation with Costanza about his personal plans—specifically his move to Sydney—introduces a conflict of interest or, at the very least, questions regarding confidentiality and loyalty. Her knowledge of Costanza's intended two-year timeline for the vesting period, which he explicitly requested her not to disclose, might compromise her impartiality if this information were revealed or used adversely. Although she did not explicitly act against her client’s interests, discussing a material term of the contract with one party, without the other’s knowledge, can be problematic. It risks breaching confidentiality and undermines her duty of loyalty owed to her clients.

Furthermore, Benes's decision to “split the difference” after consulting with Kramer reflects her attempt to balance conflicting interests. While compromise may sometimes be necessary, such a move must be grounded in transparency and the informed consent of all clients, not solely based on her judgment to be “fair.” The manner in which she managed the differing positions—especially considering the sensitive nature of the vesting period and Costanza’s personal plans—raises questions about whether she upheld her ethical obligations of transparency and independence.

Another point of concern is the adequacy of her communication and whether her actions might have constituted a breach of her duty of confidentiality. If Benes discussed matters related to the client’s personal plans or unpublished terms without explicit consent, she may have violated her obligation under Rule 1.6 to maintain client confidences. Even if her intention was to facilitate a fair agreement, such disclosures, especially about non-disclosed, material terms, risk erosive damage to her client's position and her professional integrity.

In conclusion, while Elaine Benes acted with the intention of creating a fair and balanced agreement, her conduct raises ethical concerns under the professional conduct rules. Her conversations with Costanza regarding sensitive contractual terms and personal plans, without full disclosure and consent, compromised her duty of loyalty and confidentiality. Moreover, her decision to “split the difference” without underlying transparency may not align with the ethical standards requiring honest and fair representation. Therefore, her conduct, though perhaps well-intentioned, was not entirely proper under the rules of professional conduct, highlighting the importance of maintaining strict boundaries, transparency, and loyalty when managing dual-party legal representations.

References

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