[textbook]Traversing the Ethical Minefield Problems, Law, and Professional Responsibility by Susan R. Martyn (z-lib.org)(1) (1)

pinnacle in challenging Harry. It was every bit as bad as when a physician told you that he
had never seen such a condition before, precisely what you didn’t want to hear. And now,
sitting behind Harry’s back, Harry’s silence was exactly what Peter didn’t want to hear.
Answer me, he thought. Tell me there’s a solution.
Finally, Harry slowly turned to face Peter, his voice choked with emotion as he began,
“Peter, I don’t know what to say. You know I didn’t want you to take the directorship. I
was even more upset when you and the rest of our partners bought into the resort deal. So I
don’t want you to think this is an ‘I told you so.’ But the real problem for me, Peter, and
the reason I’ve taken so long staring out the window at Billy Penn, is that I don’t think I
can advise you on this. I’m a partner at Caldwell & Moore. Our client is Hanscom
Industries. The questions you’re asking me go to your role as a director, to Hanscom’s
duties to its investors, some of whom are my partners. The conflicts of interest diagram is
like the path of the struck ball in three-cushion billiards. And that doesn’t include the
interests of Caldwell & Moore; the firm will very likely end up a defendant in a 10b-5
action, an action whose centerpiece is going to be your board membership and our
partners’ purchasing of these investment interests.”
“I feel sick that I would be forced to even say these words to you. But frankly, the best
advice I can give you right now is to call up Alan over at White & Mager. If he has no
conflicts, maybe you can gain counsel from him, counsel that would preserve whatever
confidentiality you will need, counsel who will represent only you. You better just hope
that the Union American policy comes through.”
Peter was aghast. In the space of two hours he had been attacked by two of his closest
friends. He couldn’t consult his own partner. He had to start worrying about liability and
insurance and defense.
Of course, as usual, Harry was right. But that fact gave him no comfort. As he rose
from the chair, he searched helplessly for the right words. Tears welled up as he avoided eye
contact with Harry. He mumbled a hapless thank you and slowly, oh so slowly, left the
room, knowing he would be forced to admit it was the money.
Problem
10-1. It is crunch time. The initial public offering (IPO) of Giggle is almost ready to
proceed, but the client has run out of cash to pay counsel. Martyn suggests a 3 percent
allocation of shares in lieu of the outstanding balance. The client gleefully accepts. The IPO
is a success. Martyn, as a major shareholder of Giggle, is asked to serve on the board.
Should Martyn & Fox celebrate?
2. Gifts Model Rule 1.8(c) RLGL § 127
Problem
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