ETHICS QUARTERLY

A Service of the San Diego County Bar Association's Legal Ethics Committee

March 2006 Vol. 3, No. 1

INTRODUCTION

This edition of Ethics Quarterly covers cases from December 16, 2005 through March 15, 2006. Committee members Arthur Wilcox, Ellen Peck and Daniel Eaton and Associate member Morgan Miller prepared this edition. Arthur Wilcox served as the Coordinating Contributor and prepared the Commentary.

On April 19, 2006 from 5:30 p.m. – 7:15 p.m. at the Bar Center, the Legal Ethics Committee will present a CLE seminar entitled “Fabulous Fee Agreements.” For more information and to register, please go to the SDCBA web site at www.sdcba.org.

Comments or inquiries about the Ethics Quarterly should be directed to Committee Co-Chairs Heather Rosing (hrosing@klinedinstlaw.com) or Wendy Patrick Mazzarella (wendy.patrick@sdcda.org)

CASE NOTES
3.1.1	Civ. Code §47, subd. (b): Litigation Privilege
Case:	American Products Co., Inc. v. Law Offices of Geller, Stewart & Foley, LLP (2005) 134 Cal.App.4th 1332
Issue:	Are a law firm's demand letters to a manufacturer's customers prior to the filing or initiation of a lawsuit protected by the litigation privilege in Civ. Code, §47, subd. (b), if an unfair competition claim is brought by the manufacturer against the law firm?
Holding:	No. Such letters are not privileged when the unfair competition claim is brought by a plaintiff which was not a party to the earlier litigation. The Court of Appeal relied upon Kashian v. Harriman (2002) 98 Cal.App.4th 892, 922-924, which held that although the California Supreme Court in Rubin v. Green (1993) 4 Cal.4th 1187 had extended the litigation privilege to an unfair competition claim against an attorney where the claim is founded on the attorney's misconduct in earlier litigation against the plaintiff, it did not extend the privilege to the case where the plaintiff was not a party to the earlier litigation. In American Products, the attorney defendants and their clients (the "Geller Defendants") initiated litigation against stores selling the products of a manufacturer, APC. APC, which was not a party to the litigation brought by the Geller Defendants, subsequently brought an unfair competition claim against the Geller Defendants. The trial court granted a summary judgment motion by the Geller Defendants, holding that the actions by the Geller Defendants upon which the unfair competition claim was based was subject to the litigation privilege. The Court of Appeal reversed, holding that APC was simply a member of the public and its action for unfair competition was not foreclosed by the litigation privilege.
3.1.2	Rule 3-310(E): Avoiding the Representation of Adverse Interests
Case:	Pound v. Demera Demera Cameron (2005) 135 Cal.App.4th 70
Issue:	Must the firm representing one party be disqualified when it associates an attorney in as counsel who previously obtained confidential information from the opposing party, even in the absence of any evidence that confidential information was shared between the firm and the associated counsel?
Holding:	Yes. Disqualification is required even in the absence of any evidence that confidential information was shared. The Court of Appeal followed People ex rel. Dept. of Corporations v. SpeeDee Oil Change Systems, Inc. (1999) 20 Cal.4th 1135, which held that the disqualification of an attorney who receives confidential client information extends to the attorney's entire firm, extending to attorneys who are associated into the case. “The need to maintain client confidences as well as our obligation to maintain public confidence in the legal profession and the judiciary, would be defeated if we permitted Jones’s continued representation of plaintiffs after having hired Bradley to assist in a case where Bradley previously represented defendants and, in the course of the representation, obtained confidential information. The distinction between hiring Bradley as an associate or partner, on the one hand, and associating him as counsel, on the other hand, does not change the need to protect defendants’ confidences.” This is true even if the attorney who obtained the opponent's confidences never formally associated into the case and there was no evidence that any confidential information was shared.
Note:	The Court concluded that disqualification of the Jones firm for consulting with Bradley would be required even if Bradley never associated into the case. The Court’s ruling was designed to protect even “the possibility of inadvertent disclosure.”
3.1.3	Rule 2-200: Fee Sharing Agreements Between Lawyers
Case:	Anderson, McPharlin & Connors v. Yee (2005) 135 Cal.App.4th 129
Issue:	Do the ethical restrictions on fee-splitting render unenforceable an agreement between a law firm and a partner requiring the partner to pay, as a measure of damages, 25% of the revenues for legal services for 24 months after the partner leaves the firm?
Holding:	No. Rule 2-200 does not extend to agreements between a firm and its partners. “The contract at issue in this case was made between [the departing lawyer] on the one hand and his partners on the other, and thus cannot be viewed as an agreement by [the departing lawyer or the firm] with a lawyer ‘who is not his partner.’ That section 15.8 [of the agreement requiring revenue sharing] would not be performed, if at all, until a time at which [the departing lawyer] is no longer a partner is beside the point – because the Rules of Professional Conduct that are dependent upon the continuation of a partnership spell out the fact that those provisions do not survive termination of the partnership relationship.” (Id., p. 133.)
Note:	The Court of Appeal held that even if Rule 2-200 applied, it would not render the agreement between Yee and his former firm unenforceable. That is because, among other reasons, the contractual provision was not a “fee splitting” agreement. Instead, it was “a measure of damages due to the firm from Yee as compensation for the money spent by the firm to generate the business that resulted in the fees.” (Id., pp. 133-134.)
3.1.4	Rule 4-100: Client Trust Accounts
Case:	Formal Opinion No. 2005-169
Issue:	The opinion addresses three issues relating to trust accounts: (1) the use of overdraft protection, (2) the attorney's ethical obligations when there are insufficient funds to cover the check, and (3) when an attorney must withdraw earned fees.
Holding:	(1) Merely using overdraft protection is not an ethical violation so long as the protection does not entail the commingling of the attorney's funds with the funds of the client. (2) If the trust fund has insufficient funds to cover a check, the attorney must deposit funds sufficient to cover the check and any bank charges. (3) An attorney must withdraw earned fees from a client trust account at the earliest reasonable time after they become fixed, but may not do so immediately.
Note:	Although overdraft protection is permissible, it is permissible only if the account is structured to ensure that more funds will not be deposited in the account than are necessary to pay the overdraft and any applicable bank charges. Also, the use of overdraft protection will not prevent the bank from reporting the overdraft to the State Bar.
3.1.5	Attorney Discipline, Appropriate Degree of
Case:	In the Matter of Henschel (2006) __ State Bar Ct. __
Issue:	Is an attorney entitled to relief from a stipulated 18-month actual suspension for professional incompetence and other offenses where, shortly after filing the petition for relief, the attorney engaged in an “objectively unsupportable crusade” against the State Bar Counsel and employees involved in the disciplinary proceedings?
Holding:	No. The State Bar hearing judge abused his discretion in granting the attorney’s petition for relief from actual suspension. The hearing judge rejected the attorney’s accusation of criminal misconduct against State Bar counsel and other charges, but nonetheless found that the attorney had submitted sufficient declarations and other evidence to warrant setting aside the actual suspension. The State Bar Court disagreed. “In view of petitioner’s unwillingness to accept responsibility for his prior misconduct, we conclude it was unreasonable for the hearing judge to find that petitioner is rehabilitated.” He had not demonstrated fitness to practice law because “[t]he record clearly demonstrates that petitioner is unable or unwilling to conduct himself in a manner consistent with the settled definition of good moral character.” The attorney had failed to show the requisite learning and ability in general law because “[v]iewed in its entirety, petitioner’s behavior demonstrates an inability to evaluate facts and the law competently and to draw appropriate inferences and conclusions from them.”
3.1.6	C.C. P. §170.1: Judicial Impartiality
Case:	Christie v. The City of El Centro (2006) 135 Cal.App.4th 767
Issue:	Must a judge be disqualified under Code Civ. Proc., §170.1, subd. (a)(6), to rule on the nonsuit motion as a result of a discussion of the motion with a previously disqualified judge?
Holding:	Yes. The nonsuiting judge was deemed disqualified to act in the matter as of the time of his conversation with the previously disqualified judge.
Note:	The judge had a conversation about the city's motion for nonsuit with a previously disqualified judge immediately prior to ruling on the nonsuit motion. The Court held that this conversation gave rise to a doubt as to whether the nonsuiting judge would be impartial in ruling on the motion.
3.1.7	C.C.P. §473(b): Relief for Mistake, Inadvertence, Surprise, or Excusable Neglect
Case:	Renteria v. Juvenile Justice, Department of Corrections and Rehabilitation (2006) 135 Cal.App.4th 903
Issue:	Did a trial court abuse its discretion by denying relief from filing a government tort claim nine days late where a legal secretary mistakenly failed to calendar the last day to file the claim?
Holding:	Yes. The case law establishes that relief is proper when “an attorney relies on a member of his or her staff to perform certain tasks, including calendaring deadlines, and the staff member errs. [¶]. . . [T]he trial court’s denial of relief constitutes an abuse of discretion, whether it rests on an implicit determination that the attorney’s reliance on his office calendaring system was inexcusable, or on a finding that the secretary’s erroneous removal of the claim filing date from the calendar was inexcusable.” (Id., pp. 911-912.)
Note:	In a concluding comment, the Court of Appeal rebuked the trial judge for denying relief. “We do not view this as a close case. We are frankly at a loss to understand why the trial court denied Renteria’s petition.” (Id., p. 912.)
3.1.8	Ineffective Assistance of Counsel
Case:	Young v. Runnels (9th Cir. 2006) 435 F.3d 1038
Issue:	Did a State Bar finding of unfitness against defense counsel leading to disbarment, for conduct occurring before representation of the criminal defendant-client, render counsel’s assistance to that client per se ineffective without the need to show prejudice?
Holding:	No. “[I]f the discipline rendered is indicative of counsel’s substandard abilities, then that deficiency should be manifested in counsel’s courtroom behavior and trial conduct.” (Id., p. 1043.) If the criminal defendant cannot show such prejudice in his case, his claim of ineffective assistance of counsel must be rejected notwithstanding his counsel’s discipline for misconduct in unrelated matters.
Note:	Judge Noonan concurred. He catalogued counsel’s misconduct leading to discipline, including threatening to kill her former paralegal and engaging in “erratic outbursts” before the State Bar Court that caused that Court “the gravest concern that [counsel] is not capable of conducting herself properly in any court of law.” (Id., p. 1045, emphasis in the original.) “A fully licensed lawyer with her head full of fantasies and ‘with complete lack of insight into the wrongfulness of her actions’ was counsel enough to satisfy the Sixth Amendment! As [the majority] opinion indicates, precedent apparently requires this bizarre conclusion. Only the Supreme Court of the United States can eliminate this cruel parody of the right to counsel.” (Id., pp. 1045-1046.)
3.1.9	Unauthorized Practice of Law
Case:	Benninghoff v. Superior Court (2006) 136 Cal.App.4th 61
Issue:	May a trial court assume jurisdiction over the state administrative agency practice of a former lawyer, who resigned from the Bar with disciplinary charges pending, who represented parties before such agencies?
Holding:	Yes. Business and Professions Code §6180 authorizes a court to assume jurisdiction over a “defrocked” lawyer’s illegal practice representing others before state administrative agencies. The Court of Appeal assumed without deciding that laypeople may represent parties before state administrative agencies. The Court nonetheless rejected the former lawyer’s argument that representing parties before state agencies cannot, by definition, constitute the practice of law because laypeople may do it. “[T]he law differentiates between laypeople and defrocked lawyers. Lawyers who resign with disciplinary charges pending may not practice law, without exception. ([B&P Code] §6126, subd. (b).) In contrast, laypeople may practice law when ‘authorized pursuant to statute or court rule.’ ([B&P Code] §6126, subd. (a).) If the various APA sections and regulations that Benninghoff cites do in fact allow laypeople to represent parties in administrative hearings, they constitute the statutory authorization contemplated by section 6126, subdivision (a).” (Id., p. 69.)
Note:	The Court of Appeal held that the state court could not assume jurisdiction over the former attorney’s practice before federal administrative agencies. Federal regulations allowing unlicensed advocates to appear before federal administrative agencies preempt state laws barring the unlicensed practice of law. (Id., p. 74.)
3.1.10	C.C.P. §473(b): Relief for Mistake, Inadvertence, Surprise, or Excusable Neglect
Case:	SJP Limited Partnership v. City of Los Angeles (2006) 136 Cal.App.4th 511
Issue:	Is an affidavit of fault submitted by an attorney who represents a party in a bankruptcy, but not the civil action in which the affidavit is submitted, competent under CCP §473(b) to support a motion for mandatory relief from dismissal where the bankruptcy attorney mistakenly advised the party that the trial court could not dismiss its claim in the civil action without violating the automatic stay of party’s bankruptcy proceeding?
Holding:	Yes. “By its language, [§473(b)] only requires the affidavit be executed by an attorney who represents the client and whose mistake, inadvertence, surprise or neglect in fact caused the client’s default or dismissal. The statute does not state that the affidavit must be signed by the ‘attorney of record’ in the civil action or by an attorney who has already appeared on behalf of the client. Indeed, such an interpretation would eviscerate the very purpose of the statute for those clients whose defaults were entered because their attorneys inexcusably failed to timely file an answer or other responsive pleading on their behalf. In such cases, the default would have been taken against the client before the attorney ever appeared before the court or became ‘attorney of record’ in the matter.” (Id., p. 517, citations omitted.)
Note:	The Court of Appeal found Rodrigues v. Superior Court (2005) 127 Cal.App.4th 1027 “instructive.” Rodrigues, abstracted at Ethics Quarterly 2.2.1, held that an affidavit of fault under CCP §473(b) could be submitted by an attorney licensed to practice in a foreign country. “Just as the Rodrigues court concluded that interpreting the term ‘attorney’ to include non-California attorneys would better serve the statute’s remedial purposes, we also conclude that interpreting the term ‘attorney’ to include attorneys who are not of record in the civil action would better serve the statute’s remedial purposes.” (Id., p. 518.)
3.1.11	Unauthorized Practice of Law
Case:	Finkbeiner v. Gavid (2006) __ Cal.App.4th ___
Issue:	Is a trustee that petitions in pro per to modify and terminate a trust engaged in the unauthorized practice of law?
Holding:	No. A trustee filing a petition as part of her fiduciary responsibility to the court is simply representing herself in fulfilling her duties as trustee pursuant to Prob.Code §§17200, et seq. and is not engaged in the unauthorized practice of law. The court distinguished situations in which a non-attorney trustee, by appearing in pro per, such as initiating litigation against a third party, represents the interests of the trust and affects the interests of a beneficiary, and is therefore engaged in the unauthorized practice of law. In such cases, the trustee cannot appear on behalf of the trust and must be represented by counsel. (Ziegler v. Nickel (1998) 64 Cal.App.4th 545, 549.)
3.1.12	Anti- SLAPP, Code of Civil Procedure Section 425.16 – Attorney Activity Covered By
Case:	Healy v. Tuscany Hills Landscape & Recreation Corporation (2006) ___Cal. App. 4th __
Issue:	Did the trial court err in denying a special motion to strike complaint under anti-SLAPP statute where allegedly defamatory statements were contained in an attorney’s letter on behalf of a homeowner’s association which expressly referred to the litigation arising from homeowner's prohibition on ingress and egress for weed abatement purposes and referred to an enclosed litigation disclosure letter?
Holding:	Yes. A defamation action is within a special motion to strike under anti-SLAPP statute if the statement is protected by the litigation privilege. The lawyer’s letter was within the scope of the litigation privilege because it expressly referred to the litigation arising from a particular homeowner's prohibition on ingress and egress for weed abatement purposes and because one of its purposes was to advise association members of pendency of litigation involving the association. Since the letter statements are absolutely privileged, the homeowner would never prevail on the defamation action.
3.1.13	Ineffective Assistance of Counsel
Case:	People v. Gayton (2006) __ Cal.App.4th __
Issue:	In a probation revocation hearing involving sending the probationer to prison for seven years, was defense counsel’s failure to review the probation officer’s file prejudicial ineffective assistance of counsel, where the probation officer testified that he had never seen the probationer and that the probationer had failed to appear at scheduled meetings was contradicted by the probationer’s testimony and the probation officer’s own file notes?
Holding:	Yes. Since the probation file completely contradicted the probation officer’s testimony, which was the primary evidence on which the trial court relied to order probation revoked, and which supported the probationer’s own testimony, d efense attorney’s failure to review the probation file and use it to impeach the probation officer's testimony was prejudicial ineffective assistance of counsel.
Note:	The Court observed, “This case fell through a chasm. And no one, not the trial attorney, not the prosecutor, not the court--and certainly not the probation officer--can escape some degree of responsibility for the existence of that chasm. When the issue is whether a defendant goes to prison for seven years or to a drug rehabilitation program, someone should be paying attention. In this case, it appears no one but the defendant really was.” The court not only reversed the trial court but also cautioned that the prosecution and bench have additional responsibilities: “. . . [P]rosecutors always bear some responsibility for the evidence they offer. And when it became clear during the hearing that the facts were so hotly contested, and that the probation officer had neither brought the file nor reviewed it in the last three months, it was perhaps incumbent upon the court to consider issuing an order to produce the file on its own motion. In short, it must be remembered that everyone in this case had a stake in getting at the truth: All failed.”
3.1.14	Ineffective Assistance of Counsel
Case:	In re Thomas (2006) __ Cal.4th __
Issue:	Did prejudicial ineffective assistance of counsel in criminal proceedings result from defense counsel’s failure to investigate and develop further evidence adding to the plausibility of the defense’s alternate-killer theory of two Grateful Dead fans in 1985?
Holding:	No. The Court held that defense counsel's performance was deficient for not making any attempt to confirm the existence of "Bo," the alleged alternate killer, by conducting an investigation in the Grateful Dead community. It concluded, however, that the deficient performance of counsel was not prejudicial since there was no reasonable probability of a more favorable outcome. The identity of an alternate killer did not overcome the overwhelming circumstantial evidence supporting the jury verdict, including that the defendant was seen with the victims shortly before they were killed and that the murder weapon and spent ammunition belonged to the defendant.
3.1.15