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. It could kill our deal.”
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? Discuss.
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