by Kristin L. Yokomoto

There are constantly emerging technologies that can provide lawyers with processes and automation to deliver legal services. While these technologies offer many benefits that can help to increase efficiency, minimize mistakes, and decrease labor costs, there are also associated risks and pitfalls. And, as technology evolves, so too does the concept of a lawyer’s duty of technology competence. Technology competence includes an understanding of the technology that a lawyer currently uses in his or her practice, the additional technology available, and the technology that a client or prospective client uses or owns. Lawyers who are not technology competent may be putting their clients and themselves at a disadvantage, as well as at the risk of a malpractice action.

American Bar Association and Thirty-Six States

Recognizing the emergence of technology, its impact on the practice of law, and the importance of lawyers understanding technology, the American Bar Association (ABA) modified its Model Rules in 2012 to make clear that a lawyer’s duty of competence includes both a substantive knowledge of the law and the competent use of technology. Comment 8 to Model Rule 1.1 provides: “To maintain the requisite knowledge and skill, a lawyer should keep abreast of changes in the law and its practice, including the benefits and risks associated with relevant technology . . . .” (emphasis added).

Since then, thirty-six states have followed the ABA and have adopted some version of Comment 8 to Model Rule 1.1 concerning technology competency. In 2016, Florida went one step further and became the first state to require lawyers to complete three hours of continuing legal education specifically on technology every three years. Approved courses cover topics such as personal injury trials and technology, patent eligibility of software innovations, and cybersecurity. In 2019, North Carolina followed suit and now requires lawyers to complete one hour of continuing education devoted to technology training every year.

California Legal Opinions and Rules of Professional Conduct

While California has not yet expressly referred in the Rules of Professional Conduct to a technological component of a lawyer’s duty of competence, the State Bar of California’s Standing Committee on Professional Responsibility and Conduct (COPRAC) has issued opinions involving technology. One such opinion discusses whether a lawyer violates the duties of confidentiality and competence by using technology to transmit or store confidential information when the technology may be susceptible to unauthorized access by third parties. COPRAC concludes in the opinion that the lawyer must take steps to, among other things, evaluate the level of security associated with that technology, the legal ramifications to a third party who intercepts, the degree of sensitivity of the information, the possible impact on a client of an inadvertent disclosure of any confidential information, the urgency of the situation, and the client’s instructions. COPRAC Form Opn. 2010-179. As such, lawyers should avoid accessing and transferring client information using the public Wi-Fi on a plane, at a hotel, or in any other public place because communicated information may not be protected and, thus, such use may violate the duty of confidentiality.

COPRAC also opined that lawyers should develop and maintain the competencies necessary to understand and work with electronically stored information and related technology, especially as it relates to e-discovery requests. COPRAC Form. Opn. 2015-193. Lawyers should also be mindful that their use of technology, such as lawyer blogs, to promote their law practice by offering to provide legal services, even implicitly, may be considered advertising subject to ethical rules and the State Bar Act. COPRAC Form. Opn. 2016-196. COPRAC has issued additional opinions related to technology, such as lawyers hosting websites that allow visitors to submit legal questions, operating a virtual law office, and using social networking. COPRAC Form. Opns. 2005-168, 2012-184, and 2012-186, respectively.

There are also technology references in the newly adopted California Rules of Professional Conduct. For example, Comment 2 to Rule 1.4 and Rule 1.16(e) expressly permit a lawyer, upon request from a client or upon a lawyer’s termination of representation, respectively, to provide documents to a client by email. Also, Rule 4.4 requires a lawyer who receives inadvertently produced material by email that appears to be confidential to immediately notify the sender. And, with respect to advertising, Rule 7.2(a) clarifies that a lawyer may advertise services through email and the Comment to Rule 7.5 clarifies that the rule prohibiting lawyers from making false or misleading communications includes the use of logos and website domains. The disciplinary responsibility of lawyers to supervise subordinate lawyers and nonlawyers as provided in Rules 5.1 and 5.3 would extend to ensuring that they understand the technology used by the law firm.

Judges

The ABA has also commented on the impact technological literacy has on the effectiveness of a judge, especially as more court-approved forms in various languages help to make the courts accessible to more people. Judges are also faced with technology issues, such as ruling on requests for search warrants for electronic data, issues of evidence, and discovery involving digital assets. Additionally, disputes often involve highly complex technological issues. And with law clerks conducting legal research online instead of the libraries, the world in which judges act has expanded to include a virtual one.

Types of Technology and Artificial Intelligence

Types of technology used by today’s lawyers include the technology used to run a law firm and practice such as email and scanning documents; data security to protect client confidentiality; technology used to present information to the court; electronic discovery which is the electronic aspect of identifying, collecting, and producing electronically stored information in response to a request for production in a lawsuit or investigation; saving client information on the cloud and other third-party service platforms; and the use of social media such as Facebook, LinkedIn, and blogs.

There is also the growing area of artificial intelligence (AI) that is transforming the legal profession. Lawyers are using AI to perform legal research and due diligence, review documents and contracts, and even predict legal outcomes based upon years of legal data on similar cases. However, there can be confidentiality concerns with using AI. A simple example is using Alexa (Amazon), where the user’s voice is recorded, transcribed, and stored on Amazon’s servers. For years, every recording, often unbeknownst to the user, has been subject to manual review by the company’s human workers. Only recently did Amazon add a disclaimer to inform users that human ears may be listening and a feature where users can opt out.

The use of AI may also border on the unauthorized practice of law (UPL). Because AI can also serve to increase access to justice for those who are unable to afford a lawyer, the California State Bar Board of Trustees has developed a Legal Task Force to, among other things, review the consumer protection purposes of the prohibition on UPL and assess the impact of the definition of UPL on the use of AI. As AI continues to impact the practice of law with sophisticated algorithms, this task force may lead to changes in the definition of UPL which could permit nonlawyers to use and develop more AI without violating California Business & Professions Code Section 6125.

Digital Assets

Technology competence may also be implicated for lawyers who practice estate planning and trust administration due to the growing area of digital assets. Estate planning for digital assets is different from planning for the distribution of a person’s house or business. The planning arena for digital assets was unclear for years. Because of the privacy laws and other liability concerns, service providers often would not allow loved ones and other fiduciaries (successor trustees, executors, power of attorney agents, guardians, and conservators) to access the deceased’s digital assets. This has changed with California’s enactment of a variation of the Revised Uniform Fiduciary Access to Digital Assets Act, known as Cal-RUFADAA, which became effective on January 1, 2017, and codified in California Probate Code Sections 870-884.

A digital asset is defined as any electronic record in which an individual has a right or interest. Digital assets include email accounts, texts, intellectual property rights that are created and stored digitally, user names and passwords, domain names, websites, blogs, documents on cloud-storage systems, banking accounts, utility accounts, social networking accounts (such as Facebook), photograph sharing accounts (such as Instagram), stored video accounts (YouTube), stored music accounts (iTunes), stored financial information (Intuit), online purchasing accounts (Amazon), and virtual assets such as bitcoins.

Some digital assets may only be of a personal sentimental value, such as photos and journals, and some may have a monetary value, such as frequent flyer miles or manuscripts. A 2011 McAfee survey found that the average person has over twenty-five passwords, there are more than thirty-million Facebook accounts that belong to people who are deceased, over 85% of U.S. adults use the internet, and over 72% of U.S. adults use a social networking site. And, according to a report by Zion Market Research, the global digital asset management market was valued at around $2.5 billion in 2017 and is expected to reach approximately $8.1 billion by 2024.

Two separate issues are involved with digital assets. First, the legal side, which is how to distribute the ownership of the digital assets; and second, the technology side, which is how to ensure access to the digital assets upon a user’s death. Estate planners need to understand both components to competently and diligently explain the issues to a client so that he or she can make informed decisions as to who they want to access their digital assets upon incapacity or death. Estate planning lawyers need to know how to draft the proper provisions in a person’s Will, Trust, or Power of Attorney and those who help fiduciaries to administer the deceased’s estate need to be able to help them to access the digital assets.

Through Cal-RUFADAA, an individual may now use the following methods to provide direction regarding the disclosure of digital assets upon death: a person may use a service provider’s online tool. If one is not provided, then a person may give direction in his or her Will, Trust, or Power of Attorney. In the absence of both, a website’s terms of service would govern how to disclose information. As part of the estate planning discussion, clients need to be advised to create an inventory of their digital assets, list where and how they are held, along with the usernames, passwords, and answers to secret questions and be able to describe what they want to achieve with these assets. Then, clients need to ensure that their fiduciary will be provided with information on how to access the client’s accounts and passwords.

Digital assets also include cryptocurrency, such as the BitCoin, which is a digital currency that uses blockchain technology to create a decentralized, immutable, public ledger. Due to the potential value of such assets, it is important that an estate planning lawyer understand how to plan for the distribution and valuation of them, and for the administration of them upon death. A critical part of cryptocurrencies is the private key, which is a code and the only way to recover those assets. If the person dies without leaving information about how to access his or her keys, there is no central mechanism to recover them, meaning the value of the cryptocurrency may be lost forever.

While many people want their heirs and other beneficiaries to have access to their digital assets such as their online bank accounts, manuscripts, and cryptocurrencies, they may not want their spouse or children to have access to all digital assets, such as private email accounts or photos. Accordingly, it is pivotal for estate planning lawyers to discuss the law and options with each client. Such discussions can be sensitive when planning for a married couple if one spouse consents to the other spouse’s having access to digital assets, such as email, and the other spouse does not consent to the same scope of access. A lawyer could end up facing a potential conflict of interest and be prohibited from representing both spouses.

Digital assets are an important part of a person’s legacy and they should be treated with the same care as a person’s real property and business. The Cal-RUFADAA reconciles a user’s interest in privacy with the economic or sentimental value of their digital assets and impacts every estate plan prepared in the internet age. Accordingly, a lawyer’s duties of competence and diligence require that an estate planning lawyer understand the various types of digital assets and be able to explain to clients their options so that they can make informed decisions on their fiduciaries’ access to such assets upon incapacity or death.

Conclusion

It is imperative for attorneys to understand the ways in which technology influences the practice of law in California. First, COPRAC has issued opinions on a lawyer’s obligation to understand certain technology. Second, the California State Bar Board of Trustees is considering whether UPL rules should be modified considering the developments in AI. And third, California enacted the Cal-RUFADAA to provide clear rules relating to a person’s digital assets. While technology continues to advance faster than developments in the ethical rules and California laws, lawyers should consider their duties of competence, diligence, supervision, and maintaining confidentiality when implementing and using technology. Although not required, a lawyer may consider taking some of the many continuing education courses related to ethics and technology as offered by various State-Bar-approved providers to protect client information and the lawyer’s practice.

Kristin L. Yokomoto is a partner at Albrecht & Barney in Irvine where she focuses her practice on estate planning, trust administration, and probate. Kristin is a Certified Specialist in Estate Planning, Trust and Probate Law by the State Bar of California Board of Legal Specialization. She is a member of the OCBA’s Professionalism & Ethics Committee and the former Chair of STEP Orange County, an international organization dedicated to succession planning. The views expressed herein are her own. She can be reached at ky@albrechtbarney.com.