Ethics Opinon 1992-2
What obligations, if any, are imposed by the Rules of Professional Conduct of the State Bar of California upon an attorney who obtains knowledge that another attorney has committed a violation of such Rules, which violation raises a substantial question as to the violating attorney's honesty, trustworthiness, or fitness as an attorney?
STATEMENT OF FACTS
The Committee has been asked to render opinions with respect to the following two fact situations:
Situation #1: Attorney P has filed a verified complaint on behalf of Plaintiff against Defendant and Third Party. The complaint expressly alleges that Third Party engaged in certain actionable acts and misrepresentations.
Defendant is represented by Attorney D, who answer on her behalf. Third Party answers the complaint in pro per. In the course of settlement negotiations, Attorney P admits in written correspondence directed to Attorney D that there is no valid claim against Third Party, nor has there ever been a belief in the validity of such claim. In her words as quoted, the false allegations of acts purportedly undertaken by Third Party were included as "a tactical decision," in contemplation of Third Party's lack of cooperation, which lack of cooperation "did not materialize."
Must Attorney D report Attorney P's misconduct to the disciplinary authorities of the State Bar, pursuant to the Rules of Professional Conduct of the State Bar of California?
Situation #2: Client is a sole proprietor. Client retains Attorney X to institute an action for unfair competition against a number of large corporations for various damages to her business. Attorney X agrees to perform the legal service related to bringing such an action, but requests payment of a $50,000.00 retainer in connection with the representation. Client agrees, and transfers $50,000.00 in stock (by endorsing the stock certificates) to Attorney X for that purpose. At the direction of Client, Attorney X liquidates the stock and deposits the proceeds in her trust account.
In that the litigation is anticipated to address trademark issues, Attorney X approaches Attorney Y (whose practice is limited to intellectual property issues) concerning Attorney Y's availability to assist in the litigation as co-counsel, subject to Client's consent. Attorney X disclosed receipt of the retainer, but the merits of the case were not discussed. Prior to obtaining the consent of Client and prior to Attorney Y's discussing the case with Client, Client sustains severe brain damage during a household accident, which damage is irreversible and will inevitably result in the cessation of Client's business. Without Client's testimony the likelihood of prevailing at any trial on the unfair competition claim is remote.
Attorney X informs Attorney Y that the retainer payment is not traceable, and suggest that the two abandon the proposed litigation and split the retainer, each to be converted to their respective personal uses. Attorney Y declines.
Thereafter, Attorney X does not proceed with the case prior to the expiration of the statute of limitation. In later conversations with Attorney Y, Attorney X admits that he did not refund Client's retainer, and jokes that, all things considered, Client's case was his "best ever."
Must Attorney Y report Attorney X's misconduct to the disciplinary authorities of the State Bar, pursuant to the Rules of Professional Conduct of the State Bar of California?
Situation #1: Attorney D has no duty to report her opponent's misconduct to disciplinary authorities, although her report to such authorities would be privileged should she elect to do so. In no event, however, may Attorney D knowingly take advantage of the misrepresentations of opposing counsel to exculpate Defendant, or to recover affirmatively against Third Party on Defendant's behalf.
Solution #2: Attorney Y has no duty to report the misconduct of Attorney X to disciplinary authorities, although her report to such authorities would be privileged should she elect to do so. Any action which must be taken by Attorney Y with respect to Client (or the representative of Client's estate) are beyond the scope of this opinion.
The narrow issue as to whether California law or the Rules of Professional Conduct of the State Bar of California ("the California Rules of Conduct") impose an affirmative duty to report the misconduct of other attorneys to disciplinary authorities is one which is raised frequently in San Diego County, and apparently throughout the state. See Bar Association of San Francisco Opinion No. 1977-1; Los Angeles County Bar Association Formal Opinion Nos. 355 and 440. (1) This perception that such a duty exists is no doubt attributable, at least in part, to the fact that a duty to report certain misconduct is imposed under both the ABA Model Code of Professional Responsibility [at DR-103(A)] and the ABA Model Rules of Professional Conduct [at Rule 8.3(a)], upon which authority many textbooks, treatises and existing case law authority on the topic are based.
In contrast, the California Rules of Conduct are silent on this point: there is no express duty imposed upon attorney to report the ethical misconduct of other attorneys in this state. Nor does this Committee believe that such a duty is implied.
In connection with the adoption of the California Rules in their present form, the Commission for the Revision of the Rules of Professional Conduct specifically considered the enactment of a rule based upon Rule 8.3 of the ABA Model Rules of Professional Conduct, which provides as follows:
(a) A lawyer having knowledge that another lawyer has committed a violation of the rules of professional conduct, that raises a substantial question as to that lawyer's honesty, trustworthiness or fitness as a lawyer in other respects, shall inform the appropriate professional authority.
(b) . . .
(c) This rule does not require disclosure of information otherwise protected by Rule 1.6 [of the ABA Model Rules of Professional Conduct, regarding confidentiality of information relating to representation of a client].
The legislative history of the California Rules indicates that adoption of Model Rule 8.3 was considered at length. While the support for and opposition to the rule was reported to be approximately equal, the Model Rule failed to obtain majority approval, and therefore was expressly omitted from the California Rules. 1 State Bar of California, Proposed Amendments to the Rules of Professional Conduct, "Proposed Rules and Legislative History," p. 10-11, (July, 1987).
The rationale for opposing adoption of the reporting requirement were summarized as follows:
(1) Such a rule could not or would not be enforced;
(2) The discipline for failing to report might exceed the discipline for the underlying offense; and
(3) Reporting of an adversary's misconduct, in some instances, may not be in the best interest of a client, and may provoke more animosity between the opposing parties than is necessary.
1 State Bar of California, Proposed Amendment to the Rules of Professional Conduct, "Proposed Rules and Legislative History," p. 11 (July, 1987).
Therefore, we are in accord with the conclusion of our colleagues to the north, in that an attorney is not subject to discipline for not reporting the ethical misconduct of another attorney to the appropriate disciplinary authority. Bar Association of San Francisco Opinion No. 1977-1; Los Angeles County Bar Association Formal Opinion No. 440. This Committee's opinion, however, is based upon and aided by the legislative history of the 1989 amendment to the California Rules. (2)
The Committee's analysis can be illustrated in the context of the Situations presented above.
Recall that Situation #1, Attorney D has learned that Attorney P, by Attorney P's own admission, has asserted facts in a verified complaint which were known to be false. To the extent Plaintiff knew that the allegations were false, she would be guilty of the crime of perjury. Cal. Pen. Code §118. To the extent that Attorney P knew that the allegations were false, at a minimum, she would be guilty of subordination of perjury. Cal. Pen. Code §127. The Committee believes that the subornation of perjury is conduct which raises a substantial question as to the Attorney P's honesty, trustworthiness, or fitness as an attorney. Nonetheless, Attorney D is not required to report the misconduct of Attorney P to disciplinary authorities by the California Rules of Professional Conduct.
This conclusion is subject, however, to several important caveats. Under the hypothetical, the misrepresentation relates to acts falsely attributed to Third Party, not Defendant. Should Attorney D take advantage of such facts, either in seeking to exculpate Defendant or to impose liability against Third Party in favor of Defendant, while knowing such facts to be false, the Committee is of the opinion that this assertion may well amount to "assisting" in the violation of the California Rules of Conduct, and would subject Attorney D to discipline. Rule 1-120, California Rules of Professional Conduct. (3) Further, Attorney D's use of the misrepresentation in litigation would be inconsistent with truth, and would likely be viewed as misleading the judge "by an artifice or false statement of fact or law," in violation of the State Bar Act. Cal. Bus. & Prof. Code §6068(d). (4)
In no instance may Attorney D threaten to report to report the misconduct of Attorney P to disciplinary authorities, in order to obtain an advantage in the pending litigation. Rule 5-100(A), California Rules of Professional Conduct. (5) / Nonetheless, the Committee is of the opinion that if Attorney D does report the ethical violations of Attorney P to the State Bar of California, her conduct in so reporting will be absolutely privileged under Cal. Civ. Code §47. Lebbos v. State Bar, 165 Cal. App. 3d 656, 669, 211 Cal. Rptr. 847 (1st Dist. 1985); Chen v. Flemming, 147 Cal. App. 3d 36, 41, 194 Cal. Rptr. 913 (2nd Dist. 1983). (6) / "Informal complaints received by a bar association which is empowered by law to initiate a disciplinary procedures are as privileged as statements made during the course of formal disciplinary proceedings." Chen v. Flemming, supra, 147 Cal. App. 3d 36, at page 41 [citations omitted].
The privilege of Cal. Civ. Code §47 does not, however, sanction reporting in all instances. Cal. Bus. & Prof. Code §6068(e) requires that an attorney "maintain inviolate the confidence, and at every peril to himself or herself to preserve the secrets, of his or her client." To the extent any report to disciplinary authorities involves or may require the disclosure of confidential information, it should not be made absent the client's informed written consent.
The misconduct discovered by Attorney Y is even more egregious. Clearly, the knowing and intentional conversion of client funds is an act which runs well afoul of ethical rules and criminal statutes, and therefore, amounts to conduct which raises a substantial question as to the Attorney X's honesty, trustworthiness, or fitness as an attorney. Nonetheless, or fitness as an attorney. Nonetheless, the Committee's conclusion remains the same: the California Rules of Professional Conduct do not impose a duty upon Attorney Y to report the misconduct of Attorney X, although Attorney Y may do so.
The Committee declines to conclude whether an attorney-client relationship has been created as between Attorney Y and Client. Therefore, an analysis of the numerous, remedial obligations to Client, for which the Committee believes Attorney Y would be responsible if such a relationship exists, lies beyond the scope of this opinion. Likewise, the Committee does not address the existence or application of an affirmative duty, if any, to report criminal misconduct placed upon Attorney Y by substantive law outside the California Rules of Professional Conduct and the State Bar Act.
This Committee concludes that there is no ethical duty imposed by the California Rules of Professional Conduct upon California attorneys to report the misconduct of other attorneys. This is true regardless of the nature or magnitude of such misconduct. Notwithstanding, the act of reporting such misconduct is absolutely privileged in this state.
This opinion is advisory only, and is not binding on the San Diego County Bar Association, its officers or agents, the State Bar of California or any court.
- Opinion No. 1977-1 of the Bar Association of San Francisco concedes that there is not an express duty to report the misconduct of other attorneys, but without legal authority, asserts that "the moral and ethical considerations aside from the statutory law would seem to dictate that such an obligation may be proper."
Formal opinion No. 440 of the Los Angeles County Bar Association found that there is no duty to report what a lawyer believes to be unprivileged, unethical conduct on the part of another lawyer, in that "it would be inappropriate to find such a duty in the absence of any express requirement in the Rules of Professional Conduct." (This opinion overrules Opinion No. 355, which found such a duty by relying upon the ABA Model Code of Professional Responsibility.)
- Unlike Opinion No. 1977-1 of the Bar Association of San Francisco, this Committee does not feel it has the jurisdiction address any moral or "non-statutory" ethical obligations to report ethical misconduct. See No. 1, supra.
- Rule 120 states: "A member shall not knowingly assist in, solicit, or induce any violation of these rules [i.e., the Rules of Professional Conduct] or the State Bar Act."
- Cal. Bus. & Prof. Code §6068(d) imposes a duty upon California attorneys "to employ, for the purpose of maintaining the causes confided to him or her such means only as are consistent with truth, and never to seek to mislead the judge or any judicial officer by an artifice or false statement of fact or law."
- Rule 5-100(A) states: "A member shall not threaten to present criminal, administrative, or disciplinary charges to obtain an advantage in a civil dispute."
- For absolute immunity to attach under Cal. Civ. Code §47, one must show that the publication (1) was made in a judicial proceeding; (2) had some connection or logical relation to the action; (3) was made to achieve the objects of the litigation; and (4) involved litigants or other participants authorized by law. Chen v. Flemming, supra, 147 Cal. App. 3d 36, at page 41. As in Chen, the Committee believes that these elements are present in the Situation at issue.
Disclaimer: This opinion was issued by the Legal Ethics Committee of the San Diego County Bar Association. It is advisory only and is not binding upon any member of the SDCBA, any other member of the State Bar of California, the State Bar of California or its Board of Governors, or any persons or tribunals charged with regulatory responsibilities. The SDCBA, its officers, directors, agents, and the Legal Ethics Committee members assume no responsibility or liability in rendering this opinion.