ETHICS QUARTERLY

A Service of the SDCBA Legal Ethics Committee

June 2005 Vol. 2, No. 2

INTRODUCTION This is the sixth edition of the Ethics Quarterly. This edition covers cases from March 15, 2005 to June 15, 2005. Committee members Art Wilcox, of Feldhake Roquemore LLP, Ed McIntyre of Solomon Ward Seidenwurm & Smith LLP and Zeke Cortez, prepared this edition. Art Wilcox served as the Coordinating Contributor and prepared the Commentary. On September 29, 2005 at 5:30 p.m., the Ethics Committee will present a seminar entitled “Files in Jeopardy: An Interactive Program.” The 90-minute program will be held at the Bar Center and will address the ethics of retaining and releasing client files. Watch for more details in the coming months. Comments or inquiries about the Ethics Quarterly should be directed to Committee Chair Dan Eaton at eaton@scmv.com.
CASE NOTES
2.2.1	Rule 1-100 (B)(3): Definition of Lawyer
Case:	Rodrigues v. Superior Court (2005) 127 Cal.App.4^th 1027
Issue:	Is the word “attorney” in CCP §473(b), granting relief from default due to attorney fault, construed as broadly as the term “lawyer” in Rule 1-100(B)(3) to mandate relief from fault based on attorney licensed in a foreign country?
Holding:	Yes. CCP §473(b) does not by its terms require California licensure on the part of the “attorney” providing an affidavit of fault. “[W]e have found no authority of any kind suggesting that the unadorned term ‘attorney’ intrinsically implies California licensure. In the absence of such an implication, either in the term itself or the manner of its use in section 473, there is no basis for engrafting such a limitation onto the statute.” (Id., p. 1036.)
Notes:	A Portuguese attorney submitted a response to the Superior Court written in Portuguese and apparently consistent with responsive pleadings in Portugal. The Court rejected, as contrary to public policy underlying §473, the contention that no relief should be allowed based on a foreign attorney’s affidavit because foreign attorneys are not subject to discipline for disobeying the orders of California courts. “[W]e agree with the trial court that the Legislature’s goal of preventing innocent clients from losing their day in court due to the attorney’s professional error should not be circumvented because the attorney cannot be compelled by the specter of California disciplinary proceedings to comply with a California court order.” (Id., p. 1037.) The trial court had agreed with the defendants that the term “attorney” in §473(b) was equivalent to “lawyer” in Rule of Professional Conduct 1-100(B)(3), which includes a person eligible to practice law in the highest courts of a foreign country. (Id., p. 1031.)

2.2.2	Evidence Code §§953 & 954: Attorney-Client Privilege
Case:	People v. Urbano (2005) 128 Cal.App.4th 396
Issue:	Does the attorney-client privilege apply to a criminal defendant’s incriminating comment and gesture to his attorney in the courtroom during a break in his preliminary hearing where the comment was audible, and the gesture visible, to the alleged victim who also was in the courtroom?
Holding:	No, even if the defendant claims he intended to communicate only to his attorney. “Since [the defendant], sitting next to his attorney in the jury box when court was not in session and lawyers were engaged in conversation throughout the courtroom, spoke to his attorney loudly enough that [the alleged victim], openly present in the last row of seats in the courtroom, overheard his comment and saw his gesture, we . . . hold the attorney-client privilege was inapplicable.” (Id., p. 403.)

2.2.3	Rule 3-310: Avoiding the Representation of Adverse Interests
Case:	Sullivan v. Dorsa (2005) 128 Cal.App.4th 947
Issues:	Does the law imply an attorney-client relationship between an attorney engaged by a property trustee and the property owners so as to create a conflict of interest, and is an attorney who breaches the prohibition against representation of adverse interests automatically barred from claiming fees?
Holding:	No. “We will not lightly assume that an attorney engaged by a partition referee owes the same duties to the owners that he owes to his own clients, including the referee. We note that in general, an attorney engaged by a trustee does not thereby become an attorney for the trust’s beneficiaries.” (Id., p. 964, emphasis in the original, citing Wells Fargo Bank v. Superior Court (2000) 22 Cal.4th 201, 213 and other cases.) The Court further held that the attorney was entitled to his fee notwithstanding his preexisting relationship with a prospective purchaser of the property. The property owners failed to show “that any violation of the rules governing representation of adverse interests was serious enough to compel a forfeiture of fees.” (Id., p. 965, emphasis in the original, relying on Pringle v. La Chapelle (1999) 73 Cal.App.4th 1000, 1005-1006 and Clark v. Milsap (1926) 197 Cal. 765.)

2.2.4	Rule 3-310: Avoiding the Representation of Adverse Interests
Case:	United States v. Ketner (C.D.Cal. 2005) 370 F.Supp.2d 1045
Issue:	Must an Assistant United States Attorney be disqualified from prosecuting a defendant where his prior firm represented the defendant in a different proceeding in which the prosecutor had had no involvement and where the prosecutor was virtually unknown to the attorneys in his prior large law firm who had handled the matter?
Holding:	No. Neither standard ethical rules nor the potentially higher ethical standards that apply to AUSA’s to avoid even the appearance of a conflict require his disqualification absent a showing of access to confidential information in his former firm. “While the ebb and flow of lawyers among departments and offices may be a reality of today’s practice in large law firms, it is clear that [the AUSA] never had any access to confidential information. The protection of client confidences is the principal value when dealing with a case involving successive representations, and the Court is satisfied on this record that that value has not been sacrificed here.” (Id., p. 1048.) Given that the public trust is not in danger, the “Court sees no point in creating insuperable problems for lawyers whether public or private who make career changes.” (Id., p. 1050.) The Court went on to quote at length Adams v. Aerojet-General Corp. (2001) 86 Cal.App.4^th 1324, 1336 about the practical problems a “nonrebuttable presumption of imputed knowledge from an attorney’s former firm” would cause. (Ibid.)
Note:	In relying heavily on Adams v. Aerojet-General Corp. for the proposition that “the private practice of law has changed dramatically, and the California decisions treating ethics issues have recognized this fact,” the Court noted that Adams had been authored by now-Ninth Circuit Judge Consuela Callahan while she served on the California Court of Appeal. (Id., p. 1047 and note 1.)

2.2.5	Bus. & Prof. Code §§ 6200 et seq.: Mandatory Fee Arbitration Act,
Case:	Corell v. Law Firm of Fox and Fox (2005) 129 Cal.App.4^th 531
Issue:	May an attorney who is dissatisfied with an award in a Mandatory Fee Arbitration under Bus. & Prof. Code §§6200 et seq. seek trial de novo to reject the arbitration award, dismiss that action and attempt to force the client to initiate commercial arbitration under attorney’s fee agreement?
Holding:	No. Under Bus. & Prof. Code §§6200, et seq. and Herbert Hawkins Realtors, Inc. v. Milheiser (1983) 140 Cal.App.3^d 334, an attorney cannot dismiss a fee action in order to avoid the mandatory fee award and the arbitral process as a whole. The arbitration fee award is binding. The Court applied case law addressing the effect of abandonment of de novo proceedings following judicial arbitration under the Code of Civil Procedure. “[A]bandonment of de novo proceedings by the party that has invoked them to supersede the award may well be treated as a retraction of that rejection of the award rather than as effecting a mischievous escape from it.” (Id., pp. 537-538, citation and internal quotation marks omitted.)

2.2.6	Bus. & Prof. Code §6200, et seq.: Mandatory Fee Arbitration Act
Case:	Law Offices of Dixon R. Howell v. Valley (2005) __ Cal.App.4^th __
Issues:	Is dismissal of law suit by attorney against former client mandatory when attorney fails to give notice of a client right to arbitrate a fee dispute as required by MFAA? May a client assert MFAA rights—without actually availing himself of arbitration—to delay and ultimately prevent the resolution of a fee dispute with the former attorney?
Holding:	No and No. When attorney fails to give client requisite MFAA notice (Bus. & Prof. Code § 6201(a)), sues client and client raised that failure as a defense but never asserted any desire to arbitrate, dismissal of attorney’s law suit was not mandatory but discretionary under Richards, Watson & Gershon v. King (1995) 39 Cal.App.4^th 1176. (Id., p. __.) The correct interpretation of “shall be a ground for the dismissal of the action” for failure to give notice is that dismissal is within the discretion of the trial court. (Id., p. __.) In finding that the client waived his right to MFAA arbitration by waiting until the eve of trial to move to exclude all evidence of the attorney’s fee claim based on failure to provide 6-201(a) notice, the Court held that the client’s waiver of his right to arbitrate under the MFAA were not limited to those grounds set forth in the statute, but included, with some modification, the non-statutory grounds applicable to waiver of arbitration rights outside of the MFAA set forth in Sobremonte v. Superior Court (1998) 61 Cal.App.4^th 980. “There is nothing in the statute suggesting that the only way a client may waive arbitration (if the attorney does not give notice) is by filing an action or pleading seeking either resolution of a fee dispute or affirmative relief against the attorney for malpractice or professional misconduct. (See §6201, subd.(d).) A holding that there are no nonstatutory grounds for waiving MFAA arbitration rights would permit a client – even one aware of its right to arbitration under the MFAA despite not receiving a section 6201(a) notice – to use the attorney’s failure to give notice as a means of manipulating the judicial process. Courts will not allow such misuse of the system.” (Id., p. __, parentheticals in the original.)

2.2.7	Rule 3-310: Avoiding the Representation of Adverse Interests.
Case:	Cal West Nurseries, Inc. v. Superior Court (2005) 129 Cal.Rptr. 3d 170
Issue:	May an attorney appear in an action against a party whom the attorney represents in an unrelated action, even if the attorney represents the second client only against parties other than the original client?
Holding:	No. The duty of loyalty to the original client prohibits the attorney from representing the second client to any extent in the action. The “substantial relationship” test of successive representation did not apply. Rather, absent informed written consent, an attorney may not concurrently represent clients who have actual or potential conflicts; nor may an attorney represent one client against another in an unrelated matter. Possession of confidential information that could be misused to the prejudice of either client is immaterial. (Id., pp. 173-174, citing Truck Ins. Exchange v. Fireman’s Fund Ins. Co. (1992) 6 Cal.App.4^th 1050; Flatt v. Superior Court (1994) 9 Cal.4^th 275 (client’s expectation of loyalty, rather than confidentiality). The law firm associated into a case on behalf of a party adverse to a client in an unrelated matter; the client objected and the attorney withdrew from representation of the party adverse to the existing client but continued to represent the party in the lawsuit in connection with claims involving other parties. The Court of Appeal ordered disqualification of the law firm. “Granted, this is an unusual set of facts. But on balance, in this context, the duty of undivided loyalty [attorney] owes [his client in the other matter] prevails.” (Id., p. 175, relying on Truck Ins. Exchange.)

2.2.8	Rule of Court 955: Duties of Disbarred, Resigned, or Suspended Attorney
Case:	In Re Salyer, 2005 WL 1389225 (Cal. Bar Ct.)
Issue:	Does non-compliance with California Rule of Court 955 preclude a petitioner who resigned from the Bar with drug and embezzlement charges pending from reinstatement when the petitioner exhibits otherwise overwhelming evidence of rehabilitation and restitution?
Holding:	No. Rule 955(c) requires a disbarred attorney to file an affidavit with the Clerk of the State Bar Court showing compliance with any Supreme Court order requiring the attorney to take steps following disbarment, such as the transfer of files to other attorneys. Although rule 955(d) states “a disbarred member’s willful failure to comply with this rule constitutes a ground for denying…reinstatement,” the Supreme Court concluded in Hippard v. State Bar (1989) 49 Cal.3d 1084, 1092 that willful noncompliance with the rule alone does not require denial of reinstatement, and to find otherwise would permanently foreclose readmission regardless of rehabilitation and other factors including lack of injury to clients, lack of impairment of disciplinary proceedings, or amount of time passed. Reinstatement may be appropriate despite failure to comply with rule 955 if a petitioner demonstrates “clear and convincing proof of rehabilitation and exemplary conduct over an extended period of time.” (Id., p. *10.)
Note:	The State Bar Court endorsed a hearing judge’s recommendation that the attorney be reinstated following over 17 years of abstinence from the methamphetamine usage that apparently contributed to his disbarment. “We conclude that petitioner’s nontraditional recovery program and the absence of independent medical or psychological evidence regarding petitioner’s recovery from methamphetamine addiction do not outweigh petitioner’s clear and convincing proof of rehabilitation and sustained exemplary conduct over an extended period of time.” (Id., p. *9.)

2.2.9	Rule 2-100 Contact with Parties Represented by Counsel
Case:	In Re Dale, 2005 WL 1389226 (Cal. Bar Ct.)
Issue:	Is an attorney representing the tenants in a negligence action against a building owner arising out of a fire subject to discipline under Rule of Professional Conduct 2-100(A), prohibiting ex parte contact with “a party the member knows to be represented by another lawyer in the matter,” for ex parte contact with the alleged arsonist who is represented in the related criminal proceeding but is not a party to the civil action?
Holding:	No. “Discipline has been imposed under rule 2-100 and its predecessors only in the instances when a member made an ex parte communication with an opposing party. Finding no rule of construction or persuasive legal precedent to support a broad interpretation, we conclude we are not at liberty to re-write rule 2-100, which by its plain language is limited to a represented ‘party.’” (Id., p. *7, citations omitted.)
Notes:	The arsonist’s criminal defense counsel refused to allow the civil attorney to interview the arsonist to obtain a statement about the condition of the premises before the fire was that the attorney needed to defeat a pending summary judgment motion. The tenants’ attorney nevertheless befriended the arsonist that ultimately could have prejudiced him had a new trial been ordered after his then-pending criminal appeal. While finding no violation of rule 2-100, the Bar Court found that the attorney was subject to discipline for engaging in acts of moral turpitude in violation of Business and Professions Code §6106. “Respondent was so focused on avoiding the technical prohibitions of rule 2-100, he was blinded to the larger issue of the overreaching inherent in the circumstances surrounding his relationship with [the criminal defendant]. Eliciting the incriminating statement from [the criminal defendant] was the height of irresponsibility and constituted at least gross neglect. Gross negligence is a well-established basis for a finding of moral turpitude.” (Id., p. *8, citations omitted.) The Bar Court also found discipline warranted by the attorney’s violation of his fiduciary duty to the non-client criminal defendant in violation of Business and Professions Code §6068(a). “Respondent assumed a fiduciary duty towards . . . a vulnerable criminal defendant [] when he used his superior knowledge and position as an attorney to create a confidential relationship of trust and dependency. In so doing, he caused [the criminal defendant] to reject his attorney’s advice and accede to respondent’s wishes.” (Id., p. *11.)

2.2.10	Evidence Code § 952: Attorney-Client Privilege
Case:	Barton v. United States District Court (9^th Cir. 2005) __ F.3d __
Issue:	Does the attorney-client privilege bar discovery of a questionnaire submitted over the internet by a potential class action plaintiff to his ultimately retained attorney, even though the submitter checked a box agreeing that he was not requesting legal advice and not thereby forming an attorney-client relationship?
Holding:	Yes. “The privilege does not apply where the lawyer has specifically stated that he would not represent the individual and in no way wanted to be involved in the dispute, but the law firm did not do that in this case – it just made it clear that it did not represent the submitter yet. Under People v. Speedee Oil Change Systems, Inc. [(1999) 20 Cal.4^th 1135] when the communication between a lawyer and possible client proceeds beyond initial or peripheral contacts to acquisition by the lawyer of information that would be confidential were there to be representation, the privilege applies.” (Id., p. __, emphasis in the original, internal quotation marks and footnotes omitted.) The Court was “influenced by how fundamental the lawyer-client privilege is to the operation of an adversarial legal system. Potential clients must be able to tell their lawyers their private business without fear of disclosure, in order for their lawyers to obtain honest accounts on which they may base sound advice and skillful advocacy. There would be no room for confusion had the communication been in the traditional context of a potential client going into a lawyer’s office and talking to the lawyer. The changes in law and technology that and technology that allow lawyers to solicit clients on the internet and receive communications from thousands of potential clients cheaply and quickly do not change the applicable principles.” (Id., p. __, footnotes omitted.)
Note:	The Ninth Circuit explained that it granted interlocutory review of the District Court’s order requiring disclosure of the questionnaires partially because the order raised a new and important problem. “What is ‘new’ about the case is attorneys trolling for clients on the internet and obtaining there the kind of detailed information from large numbers of people that used to be provided only when a potential client physically came into the lawyer’s office. Two things had to happen to bring this about: the change in the law in the 1970s that permitted attorney advertising, and the sufficiently widespread use of the internet, within the past five or ten years, that makes internet advertising worthwhile.” (Id., p. __, footnote omitted.)

2.2.11	Indemnity of Expert by Attorney
Case:	Forensis Group, Inc. v. Frantz, Townsend & Foldenaure (2005) __Cal.App.4^th___
Issue:	May expert witnesses seek equitable indemnification by filing cross-complaints against attorneys who retained them in the underlying case, when the client in that underlying action has sued the expert witnesses for professional negligence, but has not sued the attorneys?
Holding:	Yes. The Court of Appeal reversed trial court’s grant of summary judgment in favor of attorneys that had been based on public policy concerns (avoiding conflicts of interest between attorneys and former clients, attorneys’ duty of loyalty to former client and protecting confidentiality of attorney-client communications). The Court held that the rule in Musser v. Provencher (2002) 28 Cal.4^th 280 (general rule that bars equitable indemnification among predecessor/successor counsel on public policy grounds) did not preclude further proceedings to determine whether attorneys were joint tortfeasors liable to the experts under equitable indemnification theories. “We think Law Firm’s argument that there is a fatal conflict of interest here misses the main point, because to defend itself against the equitable indemnity claim, Law Firm must primarily provide information about its own legal strategy and judgment, with respect to showing how that material was presented to the trial court in the underlying case. This has very little to do with any client communications or client protection” as to the plaintiffs in the underlying unsuccessful wrongful death/products liability action. (Id., p. __.)
Note:	The court ruled that the case-by-case analysis used in attorney concurrent representation cases such as Musser was appropriate because the issues arose in the context of litigation and litigation support teams, such that during the critical time when the alleged negligence took place, the attorneys and the expert witnesses were then allied in interest to pursue their common client’s cause.

IMPORTANT UPDATE: No case reported in the last issue of Ethics Quarterly has been depublished or accepted for further review.

Disclaimer: Counsel should read the full text of the cases discussed before relying on the necessarily limited discussion of them here. Counsel also should be mindful that some of the Court of Appeal cases addressed may be subject to depublication or review by the California Supreme Court. All cases should therefore be checked to confirm they are citable.

COMMENTARY: MUST ATTORNEYS WITH CONFLICTS OF INTEREST IN VIOLATION OF RULE 3-310 ALWAYS BE PENALIZED?

Arthur M. Wilcox, Jr.[1]