SLIPPERY DECKS AND SLIPPERY SLOPES: ETHICAL ISSUES IN THE CONTEXT OF MARINE CASUALTY LITIGATION.

• Author: Burts, Gregory M.

Table of Contents I. INTRODUCTION 2 A. MORAL ETHICS V. LEGAL ETHICS 2 B. MALA PROHIBITA V. MALA IN SE 2 II. ETHICAL OBLIGATIONS OF THE ATTORNEY'S CLIENT 3 A. ETHICAL OBLIGATIONS OF THE INSURANCE BROKER 4 B. ETHICAL OBLIGATIONS OF THE P&I CLUB 5 C. ETHICAL OBLIGATIONS OF CORPORATE CLIENTS 6 i. SPOLIATION IN THE AGE OF "BIG DATA" 6 ii. ELECTRONICALLY STORED INFORMATION AND SPOLIATION 7 III. MARINE CASUALTY INVESTIGATIONS 9 A. A BRIEF HISTORY 9 B. MARITIME CASUALTY INVESTIGATIONS IN THE UNITED STATES 9 IV. THE MARINE CASUALTY INVESTIGATION PROCESS 10 A. THE INCIDENT RESPONSE PLAN--PREPARING FOR DISASTER 10 B. ETHICAL ISSUES SURROUNDING WITNESS INTERVIEWS AND RECORDED STATEMENTS 11 i. WHAT TO DO WHEN WITNESSES LIE 13 ii. EX PARTE COMMUNICATIONS AND THEIR CONSEQUENCES 14 C. ATTORNEY-CLIENT PRIVILEGE 15 D. WORK-PRODUCT DOCTRINE 16 i. WORK-PRODUCT DOCTRINE AND PLAINTIFF/WITNESS STATEMENTS 17 ii. WORK-PRODUCT DOCTRINE AND ROOT CAUSE ANALYSES/INCIDENT REPORTS 20 V. CONCLUSION 21 I. INTRODUCTION

1. MORAL ETHICS V. LEGAL ETHICS

   Perhaps no case better illustrates the dichotomy between moral ethics and legal ethics than Spaulding v. Zimmerman. (2) In Spaulding, defense attorneys withheld their exclusive knowledge of a plaintiff's aneurysm because such disclosure was forbidden by the rules of professional conduct in their jurisdiction, "and [instead] knowingly chose to leave the plaintiff to a likely death." (3) The attorneys' decision not to disclose this information was the result of the "contemporary positivist approach to legal ethics, which made disclosure in Spaulding ethically impermissible, and therefore, unthinkable." (4) Spaulding thus serves as an example of how positivist law can serve as an amoral constraint on legal ethics, particularly in situations where "seemingly morally justified conduct does not fit the governing rule." (5)

   Ethical rules, especially legal ethical rules are a contradiction-in-terms. Ethics cannot be reduced to rules, and rules cannot satisfactorily define ethical obligations. (6) In legal cases, particularly those involving marine casualties, situations often "arise which will not fit within an existing rule." (7) Under the current positivist approach to legal ethics, attorneys are often "forced into a choice between narrowly-defined" legally ethical but morally unethical behavior or morally ethical but legally unethical "disobedience." (8) Given the ABA's long-standing commitment to reducing legal ethics into a body of "formally adopted codes having no necessary relationship to ethics or morality," today's proctor in admiralty must study these rules, however detached from moral ethics they may be. (9)

   It may be that the above discussion is nothing more than an example of the distinction between malum prohibitum ("prohibited evil") (10) and malum in se ("evil in itself"). (11) However, even if this were true, it would not explain why the ABA's Model Rules of Professional Conduct, many of which are properly classified as mala prohibita, often fail to conform with mala in se.

2. MALA PROHIBITA V. MALA IN SE

   Rarely encountered outside the doctrinal confines of criminal law, and often not without harsh criticism, mala prohibita v. mala in se refers to the distinction between acts that are punishable "merely because [they are] prohibited by statute," (12) i.e., acts contrary to positive law, and acts that are wrong because they are "inherently immoral," i.e., acts contrary to natural law. (13) As explained by Perkins and Boyce, "[a]n offense malum prohibitum is not a wrong which is prohibited, but something which is wrong only in the sense that it is against the law." (14) Malum in se, on the other hand, is an offence that to the "ordinary man ... is sinful or immoral." (15) As the analysis of Spaulding shows, see supra, attorneys often face the choice of committing malum prohibitum in order to avoid committing malum in se, simply because of the ABA's subordination to legal positivism and its consequent rejection of natural law and morality as a framework for governing professional conduct.

   With this dichotomous relationship between legal ethics and moral ethics in mind, let us now examine how such notions apply to both the admiralty attorney and his clients.

   2. ETHICAL OBLIGATIONS OF THE ATTORNEY'S CLIENT

   If you ask the typical corporate maritime attorney what his role in society is, he will likely explain to you that his task is to batten "down the hatches against possible future litigation." (16) If you ask a business man what the role of an attorney in society is, he will probably tell you that while "he doesn't give a damn about the implications of legal concepts," the attorney's role is simply to prevent the state, or other business men from visiting "unpleasant material consequences" upon him. (17) Both of these views are partially correct.

   With regard to the attorney's view, even if he somehow renders a contract or a casualty "completely litigation-proof," he may yet "fail to provide a workable arrangement capable of achieving" the ultimate ends initially contemplated by the client for whom he toils. (18) The businessman's view, while perhaps overly simplistic, is likely closer to the truth as to the attorney's proper role in society. That is, if "the central purpose of law is to furnish baselines for human interaction," then the attorney's task should be nothing more than "reducing the relations of men to reasoned harmony," by tempering and regulating social interactions, facilitating deals, and organizing the efficient flow of commerce. (19)

   Accordingly, if the law is to "furnish [the] baselines against which [a man is] to organize his life with his fellows," (20) then attorneys, as arbiters of the law, have an ethical duty to ensure that the clients they work for "reach common ground as well as common language" with their counterparties. (21) In a perfect world, this would be accomplished by encouraging clients and their counterparties to avoid reducing business transactions into zero-sum games, and the attorney would instruct his clients, if necessary, of their own ethical obligations to other members of society. Thus, not only must the attorney understand his own ethical obligations as a member of the Bar, no matter how reductionist or inflexible, he must also understand his client's ethical obligations according to whichever occupation his client may have. Accordingly, we will now proceed with a brief discussion on the ethics pertaining to three of the most common clients likely to be encountered by the proctor in admiralty: (1) insurance brokers; (2) P&I clubs; and (3) corporate clients.

1. ETHICAL OBLIGATIONS OF THE INSURANCE BROKER

   The lion's share of marine policies today are "effected by insurance brokers, whose business is to act as middlemen between those merchants and shipowners who wish to" insure their property, and "the private underwriters or public insurance companies." (22) The professional conduct and ethical obligations of the broker are governed in accordance with the laws of the respective country, and sometimes the company, in which the broker resides or works for. For instance, if the broker is based in the United Kingdom, but is not a member of Lloyd's, then his duties will be governed by the Insurance Brokers Registration Council, "which administers a Code of Conduct." (23) However, if the UK-based broker works for Lloyd's, then his duties and obligations will governed by a "separate Code of Practice" unique to that institution. (24) In the United States, "brokers are regulated only by state law, and there is no national scheme of broker registration and regulation." (25)

   Since the broker is usually only an agent of the assured and not the underwriter, "he owes no duty in the transaction to the latter, on which an action for negligence can be founded." (26) Thus, because of the agency relationship between brokers and assureds, "the entire body of agency law with its doctrines of authority, due care, and fiduciary" duty are brought into play. (27)

   As a practical matter, the duty of reasonable care "blends inextricably with the duty to carry out the instructions of the assured." (28) However, a broker acting under a general order to procure insurance "is not bound to do more than effect" an insurance policy of "the form in general use at the time and place to which the order refers." (29) Nonetheless, if a broker accepts instructions to procure insurance for an assured but fails to do so, for whatever reason, he must immediately inform the assured of such failure, or else the assured may be deprived of the opportunity to procure insurance elsewhere. (30) Failure to keep the assured informed on these and other matters may expose the broker to harsh legal consequences, including third-party liability. (31)

   In Louisiana, a cause of action exists against a broker "who fails to act diligently to procure insurance." (32) In such a situation, the assured may recover from the broker "the loss he sustains as a result of the [broker's] failure to procure the desired coverage," but only if the actions of the broker "warranted an assumption" by the assured "that he was properly insured in the amount of the desired coverage." (33) Similarly, a broker who accepts instructions from an underwriter to assist "with the investigation of a claim" but fails to obtain the informed consent of the assured prior to doing so will also breach his duty of reasonable care as well as his fiduciary duty to the assured. (34) The broker "must [therefore] avoid conflicts of interest unless they are fully disclosed and consented to by" the assured. (35)

2. ETHICAL OBLIGATIONS OF THE P&I CLUB

   In contrast to the common law agency rules and institutional codes of conduct governing the professional behavior of insurance brokers, see supra, a P&I club's relationship with its members is governed to a large extent by "the rules of natural justice." (36) Perhaps the best illustration of...