On Wednesday, I obtained a letter from Bryan M. Sullivan, a accomplice at Early Sullivan Wright Gizer & McRae LLP, who’s the lawyer of Kevin Morris (who’s the lawyer for Hunter Biden). The letter warns that I might face a defamation motion if I don’t retract (or if I repeat) my criticism of Morris’s representational relationship with Hunter. Placing the private invectives apart, Sullivan did provide a few particulars on the doable protection of Morris in a pending ethics grievance introduced by a conservative authorized group.
One 12 months in the past, I wrote a column discussing how Morris and others reportedly met to plan out a scorched earth technique to assault and threaten critics. The Washington Put up reported that the dialogue included concentrating on or threatening critics with defamation lawsuits.
In his letter, Sullivan assaults my reference to ethics guidelines as unworthy of a professor in addition to “blatantly deceptive and simply dangerous lawyering.” That tirade about my lack of information and ideas is adopted by a requirement for a direct retraction and provides “when you repeat your baseless expenses, you perceive that accusing somebody of violating the regulation is defamation per se.”
I can’t subject a retraction regardless of the threats of Morris and Sullivan. I did, nevertheless, publish one other column repeating my objections to Morris’s blurry representational claims.
The trouble in such threats is to silence or chill critics of their criticism of a rich, highly effective public determine like Mr. Morris.
Since Morris might repeat such threats towards different columnists and critics, I needed to offer a full account of his claims that his transactions along with his shopper are completely in compliance with California bar guidelines. For that motive, it is a bit prolonged however it might assist others receiving such letters from Morris and Sullivan.
Sadly, after I responded to the counter arguments by Sullivan below the ethics guidelines, he expressly refused to deal with obvious issues in making use of exceptions to the overall rule towards legal professionals paying private prices of their purchasers.
The Unique Column
The letter was triggered by my column in The Hill by which I criticized Morris for sustaining an array of alleged totally different roles whereas serving as counsel. Notably, the letter doesn’t seem to disclaim the roles, however focuses on a quick reference to the overall rule towards paying private prices of purchasers.
Right here is the unique graph:
Attorneys aren’t imagined to pay the payments of their purchasers. Particularly, California Bar Rule 1.8.5(a) states that “[a] lawyer shall in a roundabout way or not directly pay or comply with pay, assure, or signify that the lawyer or lawyer’s regulation agency can pay the private or enterprise bills of a potential or present shopper.” They’re required to take care of clear representational boundaries. That is additionally now the topic of a new bar grievance filed by a conservative authorized group this week.
Sullivan means that Morris shouldn’t be topic to this common prohibition as a result of he might declare exceptions to the rule towards such cost of private prices or payments of a shopper. He said:
“In your Column, you reiterate the wrong, uninformed, and frivolous declare made within the latest California bar grievance that Mr. Morris violated California Bar Rule 1.8.5(a) by allegedly ‘paying the payments’ for Mr. Morris’ shopper, R. Hunter Biden. In doing so, you utterly ignored the remaining parts of Rule 1.8.5 by which it’s expressly supplied in subsection (b).”
There actually are such exceptions or allowances however a few of us reject their applicability to Morris or to those funds or loans. Certainly, we consider that Morris’s ill-defined representational relationship is exactly what these guidelines attempt to keep away from. As mentioned under, these considerations had been magnified by Morris’s latest deposition the place he appeared to wrestle to separate issues falling below his roles as good friend, donor, investor, and lawyer.
Rule 1.8.5(b)
Sullivan primarily objected that his shopper might declare exemption below Rule 1.8.5(b). I disagree, however first right here is that second provision.
However paragraph (a), a lawyer might:
(1) pay or comply with pay such bills to 3rd individuals,* from funds collected or to be collected for the shopper because of the illustration, with the consent of the shopper;
(2) after the lawyer is retained by the shopper, comply with lend cash to the shopper based mostly on the shopper’s written* promise to repay the mortgage, supplied the lawyer complies with guidelines 1.7(b), 1.7(c), and 1.8.1 earlier than making the mortgage or agreeing to take action;
(3) advance the prices of prosecuting or defending a declare or motion, or of in any other case defending or selling the shopper’s pursuits, the compensation of which can be contingent on the end result of the matter; and
(4) pay the prices of prosecuting or defending a declare or motion, or of in any other case defending or selling the pursuits of an indigent particular person* in a matter by which the lawyer represents the shopper.
I nonetheless don’t see how this exception would apply to those funds. Once more, I despatched questions on these provisions and their situations to ask how Morris might justify his declare for an exemption. Sullivan refused to produce these solutions.
Mr. Sullivan included solely the primary three provisions. The primary provision references a circumstance when a lawyer pays payments “from funds collected or to be collected for the shopper because of illustration.” If reviews are correct, Morris is alleged to have given Hunter thousands and thousands for taxes and bills. It isn’t clear what illustration would generate thousands and thousands to repay such cash as a mortgage.
The second provision refers to a written settlement on cost that may be made, however notes that the settlement should be reached “earlier than making the mortgage or agreeing to take action.” As mentioned under, it doesn’t seem that such an settlement on the loans existed throughout a part of the representational interval. As to the later written settlement, Morris admitted that the mortgage wouldn’t be due till 2025, after the following election, and could possibly be excused by Morris. Furthermore, as Sullivan acknowledged, any failure to adjust to these guidelines permits Hunter to unilaterally void the situations below California precedent cited within the letter.
The third provision refers to advancing the prices of the litigation to the extent that they’re contingent on “the end result of the matter.” Once more, it’s not clear what matter that might be and whether or not the prices paid had been certainly within the thousands and thousands.
Sullivan’s letter omitted the fourth provision, which refers back to the applicability to an indigent particular person. Whereas Hunter was in debt, it’s onerous to see how he was indigent given his varied belongings and holdings.I particularly requested Sullivan if Morris handled Hunter as an indigent particular person regardless of his belongings and lavish way of life. The rule was modified round six years in the past to take away limitations for purchasers who couldn’t afford to face litigation. This rule has been topic to appreciable dialogue by California bar members and specialists. Nevertheless, analysts on the time warned that this utilized solely to the indigent and never even to professional bono purchasers.
Lastly, the rule additionally has a provision that expressly states that:
“Prices” inside the which means of paragraphs (b)(3) and (b)(4) aren’t restricted to these prices which might be taxable or recoverable below any relevant statute or rule of courtroom however might embody any cheap* bills of litigation, together with courtroom prices, and cheap* bills in getting ready for litigation or in offering different authorized providers to the shopper.
Be aware that this provision particularly refers back to the third provision particularly cited by Sullivan. The amount of cash that has been attributed to Morris would appear to exceed any “cheap” price below this rule. I additionally requested Sullivan if Morris was claiming that supporting Hunter’s bills and paying his taxes fell into this definition.
Sullivan merely states that “in California, there isn’t any prohibition on an lawyer lending cash to their shopper regardless of your misguided try to offer the looks of some form of prohibition.” In actuality, Rule 1.8.5(a) does state the overall bar on such funds. There’s additionally an exception, however I disagree that the exception would apply to Morris’s funds and loans.
Rule 1.8.1
Which will clarify why, after citing Rule 1.8.5, Mr. Sullivan’s letter additionally refers to Rule 1.8.1 offering partially: “A lawyer shall not enter right into a enterprise transaction with a shopper, or knowingly purchase an possession, possessory, safety or different pecuniary curiosity antagonistic to a shopper.” Sullivan notes that the rule permits for such enterprise transactions with purchasers with knowledgeable written consent.
You will need to observe that this rule doesn’t take care of giving purchasers cash to cowl private bills or taxes. It considerations enterprise transactions with a shopper below very particular situations. It isn’t clear if Sullivan is arguing that the loans to Hunter Biden are a enterprise deal made for the pecuniary good thing about Morris. As mentioned under, there seems to be a mixture of loans and acquisitions associated to his shopper.
Sullivan stresses that any association was not antagonistic. After all, it presupposes that some or all of those funds had been enterprise transactions below Rule 1.8.1 and never a price below Rule 1.8.5.
The usage of Rule 1.8.5 raises different considerations. Morris reportedly was launched to Hunter at a Democratic fundraiser and later began to offer him cash whereas serving as his counsel. If he additionally did enterprise with Hunter, the query is whether or not he acquired any belongings of Hunter that had been the topic of federal or congressional investigation. It could elevate considerations if he noticed an excellent enterprise alternative in any distressed belongings of a shopper. Nevertheless, Sullivan wouldn’t affirm whether or not they attributed a lot of the funds to enterprise dealings with Hunter.
Within the Home transcript under, Morris admits that, after he began his illustration of Hunter, he didn’t have any written settlement coping with the loans and funds. Regardless of being instructed that he was going to be requested in regards to the loans, Morris couldn’t recall how a lot cash he has given Hunter in loans. Then that they had this telling change:
Q Was that mortgage settlement, that [sic] in place in January of 2020 once you first started giving loans out to Hunter Biden?
A No, we documented it somewhat later.
Q Whenever you say “somewhat later,” what’s somewhat later?
A I don’t bear in mind, counsel.
Q A 12 months later? Six months later?
A It might need been.
…So, once more, simply to make clear, as a result of your lawyer requested, however I need you to reply the query once more. It’s your testimony that in January of 2020, once you first started giving loans to Hunter Biden, there was no written mortgage settlement in place at the moment, appropriate?
Mr. Morris. Right.
So Morris didn’t safe a written settlement earlier than making these loans and was not even positive when the settlement was ultimately crafted later in the midst of his illustration.
Morris and Sullivan insist that that is all in compliance with the principles. They’re suggesting {that a} lawyer can simply give huge quantities of cash to a shopper to cowl the whole lot from taxes to non-public bills with none written settlement detailing the situations and expectations with the shopper. Morris couldn’t bear in mind if that settlement got here as a lot as a 12 months later.
Lastly, the transcript refers to Morris investing or assuming curiosity in entities related to Hunter’s international companions or companies. It isn’t clear what monetary curiosity Morris assumed with regard to any actual property owned by Hunter. I particularly requested Sullivan about such transactions. These enterprise pursuits seem to have arisen after Morris delved into his shopper’s funds as his counsel. His shopper was in apparent monetary misery on the time. You will need to decide if Morris assumed curiosity or bought belongings resulting from his information of Hunter’s previous dealings.
Once more, there’s a telling change with Morris of his possession of 10% of Bohai Harvest RST LLC (BHR), via his acquisition of curiosity in Skaneateles LLC. These are enterprise pursuits related to Hunter Biden. Be aware the obvious confusion of Morris in his information and claims of privilege (emphasis added):
Q What sort of firm was Skaneateles?
A I imply, I don’t know. An LLC, I feel.
Q However did it promote shirts? What was it? I imply, what was the aim of the corporate?
A I feel it’s — once more, I’m not — you understand, I’m to not the purpose positive, however it was an LLC and — you understand, I feel it — Hunter really had a quite simple company construction personally. I feel this was one which was for some objective that I can’t bear in mind. I — you understand, anyway.
Q Have you learnt what Hunter Biden’s position was with Skaneateles?
A No. I feel he was the only, sole member of an LLC.
Q And are you conscious of an funding fund Bohai Harvest?
A Sure.
Q What’s that? It’s a Chinese language — it’s a hedge fund of Chinese language Nationals, I consider, that elevate cash to make investments in public-private, and infrastructure packages.
…
Q And are you aware what sort of investments that BHR makes?
A I knew higher at one time. I bear in mind going via them. I don’t bear in mind precisely what they had been. I feel they had been — I don’t know. I feel they had been infrastructure.
Q However in some unspecified time in the future, you had been conscious of the several types of tasks that the Chinese language Nationwide fund was investing in?
A Oh, effectively, yeah. Once I was reviewing the funding I used to be going to make, I did it in — as a part of my diligence on evaluating that transaction.
Q Did there come a time once you took over the curiosity for Skaneateles, which held BHR, the funding in BHR?
A The best way I feel it was, counsel, that I acquired, I acquired Skaneateles, which as I perceive it owned the BHR piece.
Q What else did Skaneateles personal?
A I don’t know.
Q Does it personal the rest?
A I don’t assume so.
Q However sitting right here right this moment, you’re not precisely positive what Skaneateles —
A I’m fairly positive it doesn’t have the rest.
Q And does it sound correct to say that Skaneateles held a ten p.c stake in BHR?
A It sounds proper.
Q So that you at present personal that 10 p.c stake in BHR?
A Right, via considered one of my company entities.
Q Which bought Skaneateles, which held the BHR funding?
A Uh-huh.
Q Have you learnt once you — when did you buy Skaneateles?
A Was it — I — you understand, in 2021.
Q How did it come up that you just had been going to buy Skaneateles? Or why did you purchase Skaneateles of all the businesses that Hunter Biden was concerned with? Why that one?
A That’s privileged. I’m not going to reply that due to attorney-client privilege.
Mr. Sullivan. No, no, no, why did you purchase it? Like what?
Mr. Morris. I’m not going to reply it.
Q No I’m going to ask about your communication —
A The —
Q The communication is privileged.
Mr. Sullivan. Can we go off the file for two minutes of the —
Mr. Off the file. [Discussion off the record.]
…Q You’re superb. Again on the file. Why did you purchase BHR?
A I did the transaction as a result of, you understand, I evaluated it as a businessman, and I believed it was one thing that could possibly be a really profitable funding. I — you understand, however I did diligence on the belongings. I knew what — I knew what Hunter paid for it at first, and I noticed, and I nonetheless see upside.
Q What did you pay for Skaneateles?
A I feel. 157K.
…Mr. Liner. You don’t know when. Have you learnt once you really purchased this curiosity?
Mr. Morris. No….
Q Did you will have a written settlement with Hunter Biden concerning the sale of Skaneateles?
A I don’t know. I don’t consider so. Or — I don’t know. In all probability, yeah. In all probability, it was the — I might think about I needed to — okay, yeah. The reply is sure.
Mr. Liner. You had authorized counsel as effectively.
Mr. Morris. Right. Lots of them.
Q Does that contract permit for Hunter Biden to buy again BHR at a sure time level?
A That I don’t — I can’t inform you, Counsel.
Mr. Liner. Which means you don’t know?
Mr. Morris. Which means I don’t know.
That is an change after Morris was instructed weeks upfront that he could be requested about his funds, loans, and agreements with Hunter Biden. But, Morris continues to be not clear on what agreements he had along with his shopper or key particulars on these transactions. He isn’t even positive if he’s holding an asset (that’s the topic of congressional inquiry into his shopper’s dealings) that he would possibly simply give again to his shopper in some unspecified time in the future.
Abstract
Mr. Sullivan additionally insists that, below California Rule 1.7, there isn’t any battle of curiosity in any of those dealings and that they’re actually not antagonistic to Hunter Biden. That can require extra info on the complete array of enterprise, private, and authorized preparations that Morris maintained along with his shopper.
Ultimately, we’re left with extra questions than solutions, even after Morris’s lengthy deposition. The six fundamental questions on the applicability of claimed exceptions for funds or loans to purchasers might have clarified a few of these factors. Nevertheless, Sullivan refused to reply and accused me of making an attempt to trick him and his shopper. He objected that I used to be “clearly partaking in that outdated trick to pry into various issues and misconstrue my letter, which we are going to ignore.”
There is no such thing as a trick — new or outdated. Mr. Sullivan is contesting the applying of the cited rule to his shopper. There’s a common rule stating legal professionals “shall not” pay private bills as quoted within the column. California Bar Rule 1.8.5(a) (“[a] lawyer shall in a roundabout way or not directly pay or comply with pay, assure, or signify that the lawyer or lawyer’s regulation agency can pay the private or enterprise bills of a potential or present shopper.”). There are exceptions, however I overlook how they’d cowl Morris’s funds or loans. Certainly, the applicability of exceptions requires underlying situations that would add to the considerations for a few of us on the multifaceted relationship between Morris and Biden.
The assertion of Sullivan and Morris that any of that is defamation is itself unsettling. They’re now suggesting that exceptions to a common rule towards paying private prices of purchasers are relevant to those funds. I disagree. Whereas his public determine standing below New York Occasions v. Sullivan requires satisfaction of the particular malice customary, that greater customary shouldn’t be essential to discard this declare. That is an interpretative disagreement in a matter of nice public curiosity and columnists are allowed to specific their opinions on Morris’s conduct.
The unique column solely made passing reference to this rule, however the menace has allowed for a extra complete dialogue of the rule and doable counter arguments. For many who could be focused subsequent by such letters from Sullivan or Morris, I hope that this evaluation will reinforce your individual place in discussing these points. Morris could be higher served by providing solutions reasonably than threatening lawsuits.
Clearly, as we study extra, this can be an ongoing dialogue on the ethics of this relationship. This is a matter that has come up in apply for many people below totally different variations of this rule. Nevertheless, given our California legal professionals who’re regulars on this weblog, I stay up for discussing these points additional in whether or not Morris’s relationship is constant and compliant with California bar guidelines.
Right here is the transcript so that you could learn Morris’s personal phrases explaining his representational association with Hunter Biden: Morris_Redacted
