April 2018, Vol. 18, No. 1

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Editors: David Majchrzak and Edward McIntyre


We begin 2018 with an interesting mix of issues — taken from State Bar discipline cases, from appellate decisions and an American Bar Association formal opinion. Those issues include: conflicts of interest, both related to class action representation and the efficacy of ethical screening; a dissolved law firm’s interest in matters in progress; the litigation privilege and the duty of candor to a tribunal; prosecutorial misconduct; and the interplay of technology and ethical obligations.

As always, if anyone becomes aware of a decision or opinion that she or he thinks would be of interest to the Ethics Quarterly audience, please let us know and we will consider it for the next quarter’s edition. We appreciate hearing from you.

In This Issue

Among the questions answered by rulings abstracted in this issue of Ethics Quarterly are:

Case Notes

18.1.1  In the Matter of Mackenzie (Review Dept. 2017) 5 Cal. State Bar Ct. Rptr. __, Case No. 16-R-17485 — State Bar Court of California, Review Department (November 6, 2017)

Is reimbursement of the Client Security Fund an absolute prerequisite for a petition for reinstatement for a lawyer who has been suspended, disbarred or who resigned with charges pending?

Yes. California State Bar Rules of Procedure, rule 5.4441(B)(2), and Business and Professions Code section 6140, subdivision (c), mandate that a lawyer who has been actually suspended, disbarred or who resigned with discipline charges pending must first reimburse the Client Security Fund for any money it paid out as a result of the lawyer’s misconduct before the lawyer may even file a petition for reinstatement. The Review Department rejected the argument that reimbursement may follow the filing of the petition and upheld the dismissal of Mackenzie’s petition, in spite of his apparent inability to reimburse the State Bar the $96,000 the Client Security Fund had paid out.

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18.1.2  California Self-Insurers’ Security Fund v. Superior Court (2018) 19 Cal.App.5th 1065 — Court of Appeal of California, Fourth Appellate District, Division Three — January 26, 2018

Should a law firm be automatically disqualified where a former attorney hired by the firm previously represented some of the opposing parties on the same matter?

No. The court should conduct an analysis of whether confidential information was transmitted from the attorney who changed firms to the attorneys working on the matter at his new firm.

A trial court disqualified a plaintiff’s firm that was seeking to recover reimbursement for workers’ compensation claims paid by the plaintiff fund. In the middle of the litigation, that firm hired a lawyer who had personally represented two of the defendants moving for disqualification as well as four of the defendants who had settled. Although the lawyer who changed firms was in a different office of the plaintiff firm, had been ethically screened from the matter, and had left there after five weeks without sharing confidential information, the trial court concluded that disqualification was mandatory.

The Court of Appeal reversed. It confirmed that, generally, where a lawyer is disqualified from representation, the firm is vicariously disqualified as well, especially where the basis is the former representation of an opposing party. In some cases, however, an ethical wall may preclude disqualification. The trial court must analyze whether confidential information was, indeed, transmitted from the lawyer to the attorneys working on the matter at the new firm.

There was no loyalty issue since none of the lawyers representing the plaintiff owed a duty to any of the defendants. The question was whether the new lawyer’s short tenure at the firm endangered the duty of confidentiality he owed to his former clients. If it did, then disqualification was required. Here, it did not and there were no other reasons to compel disqualification.

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18.1.3  In the Matter of Peters (Review Dept. 2018) 5 Cal. State Bar Ct. Rptr. __, Case No. 13-C-16396 — State Bar Court of California, Review Department (January 29, 2018)

Is a conviction for vehicular manslaughter for driving under the influence of prescription drugs a felony conviction involving moral turpitude such that disbarment is the appropriate sanction?

Yes. Peters was convicted of vehicular manslaughter for driving under the influence of prescription drugs when without breaking she rear-ended a car stopped at a traffic light, injuring the driver and killing the passenger.

Disbarment is the presumed sanction for a felony conviction involving moral turpitude without compelling evidence of mitigation. The Review Department found that Peters had been exceeding her prescription; had not been candid with the officer at the scene about the number of pills she had taken; had not been candid with a probation officer; and was unable to control her use of prescription drugs. The death of the passenger was a significant factor in aggravation, outweighing a 17-year record of no prior discipline, extreme emotional issues and good character and pro bono service. The Review Department recommended disbarment.

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18.1.4  Herterich v. Peltner (2018) 20 Cal.App.5th 1132 — Court of Appeal of California, First Appellate District, Division One — March 1, 2018

Does the litigation privilege trump a lawyer’s ethical duty of candor to a tribunal?

Possibly, at least for civil liability.
A putative son sued the executor of his father’s estate and the lawyer who represented the executor in probate proceedings, alleging that they made false and fraudulent statements to the court when they filed and served the petition to administer the probate of the father’s estate. He further alleged the court relied on those misrepresentations in making rulings against him.

Upholding the trial court’s summary judgment grant, the court of appeal held that the litigation privilege, Civil Code section 47, subdivision (b), applies to any communication made in a judicial or quasi-judicial proceeding by a litigant, or any other participant authorized by law, to achieve the object of the litigation, and that has some connection or logical relation to the action. The court rejected the plaintiff’s argument that the privilege did not apply because he sought “to impose liability on [the defendants] for breaching duties and violating statutes.”

In rejecting the plaintiff’s contention that the defendants breached duties of disclosure and truthfulness, the court held that “the litigation privilege extends to fraudulent statements, even when made to a court, if they were made in furtherance of litigation” — without regard to the participant’s “motives, morals, ethics or intent.” The court did observe: “While we by no means condone intentionally deceptive conduct before the courts, the litigation privilege is absolute.”

The court also rejected arguments that the defendants breached statutory duties under the Probate Code to refrain from fraud. The court did not discuss the lawyer’s obligation of candor to a tribunal under Rules of Professional Conduct, rule 5-100, or Business and Professions Code section 6068, subdivision (d), but it did cite People v. Persolve, LLC (2013) 218 Cal.App.4th 1267, which, in turn, cited Rubin v. Green (1993) 4 Cal.4th 1187. In that case, the Supreme Court held that the litigation privilege applied to a civil action for a lawyer’s alleged improper solicitation of litigants in violation of Business and Professions Code sections 6152-6253 (solicitation using “runners” or “cappers”), a misdemeanor that can also subject a lawyer to State Bar discipline, noting that an aggrieved defendant has a remedy in a malicious prosecution action in which the litigation privilege does not apply.

Although this decision applies the litigation privilege in a civil action even to a lawyer’s alleged misrepresentations to a court, nothing in the opinion suggests that the privilege would preclude the State Bar from commencing discipline proceedings against the lawyer for the same conduct. Indeed, Rubin states, in an analogous context, that it could.

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18.1.5  Heller Ehrman LLP v. Davis Wright Tremaine LLP (2018) 4 Cal.5th 467 — Supreme Court of California — March 4, 2018

Does a dissolved law firm retain a property interest in hourly fee legal matters that are in progress — but not completed — at the time of dissolution?

No. A dissolved law firm has no property interest in hourly fee matters. So, it cannot then claim a right to a portion of profits generated by its former partners continuing to work on such matters pending when the firm dissolves. The partnership has no more than an expectation that it may continue to work on such matters, and, because a client may terminate the relationship at any time and for any reason, it does so only so long as the client asks it to do so. This mere possibility of unearned, prospective fees does not constitute a property interest. So, the dissolved law firm may not make a claim for fees that its former lawyers charge when they change firms and begin representing a client on a continuing matter. That would intrude on the clients’ right to choice of counsel.

The law firm may potentially have a claim for the work necessary to preserve legal matters so they can be transferred to new counsel or the client, effectuating such a transfer, or collecting on work done before the transfer. This can include, for example, time spent filing motions for continuances and sending notices of withdrawal.

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18.1.6  Richardson v. Interstate Hotels & Resorts, Inc. (2018) 2018 WL 1258192; 2018 U.S. Dist. LEXIS 40377 — United States District Court for the Northern District of California — March 12, 2018

May lawyers representing an employer conduct mandatory interviews of employees, use lawyer-prepared declarations based on those interviews to attempt to defeat a class certification motion and subsequently represent this employees at their depositions?

No, not without first obtaining the informed written consent of each employee in compliance with Rules of Professional Conduct, rule 3-310(C).

When plaintiff, a room attendant at a San Francisco hotel, brought an employment-related class action, the employer’s lawyers interviewed 14 hotel employees/putative class members during work hours      and then presented each employee with a declaration drawn from the interview and used the declarations to oppose class certification. Subsequently, the lawyers represented the same employees at their depositions.

At the interviews, the lawyers presented each employee with a form disclosure explaining, among other things, that the interviewing lawyer represented the employer, not the employee; that information the employee provided might be used to defend the action; that the employee” may, but [has] no obligation to, speak with or otherwise cooperate with the Plaintiff’s attorneys.” The form disclosure did not contain a waiver of or consent to a conflict of interest.

After an evidentiary hearing, the court found that some of the employees required interpreters, did not understand the disclosures, did not fully understand what a putative class action was or how it might affect them, how the interviews might affect the lawsuit or that they were free to refuse. The court also found that the lawyer-prepared declarations were one-sided, favoring the employer.

The court held that, when the lawyers subsequently represented the employees at their depositions, without their informed written consents to the conflict of interest between them and their employer, the lawyers violated rule 3-310(C). The court rejected the lawyers’ argument that the declarations transformed the employees from putative class members with a conflict with the employer to individuals with no conflict because of their confirmation that they had suffered no injury in fact.

“Defense counsel’s argument rests on the erroneous premise that counsel can simply pave their own way out of what would otherwise be an obvious conflict of interest by manufacturing unreliable declarations from parties on one side of the conflict, in service of the party on the other side of the conflict, and then pointing to those same declarations as proof positive that no conflict existed.”

The court held that, although it could disqualify the lawyers entirely from the case, it would allow their continued representation of the employer but that they could not use anything they obtained from the employees, nor would they be allowed to cross-examine them if they were called to testify at trial or on summary judgment. Rather, another law firm, “without taint,” would have to do it. Further, the court held out the possibility that it would inform the jury about the facts underlying the lawyers’ representation of these hotel employees. The court also certified the action as a class action.

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18.1.7  People v. Arredondo (2018) 2018 Cal.App. LEXIS 217 — Court of Appeal of California, Fourth Appellate District, Division One — March 19, 2018

May a criminal prosecutor describe defendants as cockroaches who, together with others, posed a hidden threat to the community to obtain a conviction for gang-related activities?

No. Doing so suggests guilt by association for uncharged acts. The Court reversed part of a conviction relating to gang charges.
As the Court explained, prosecutors may express, using vivid imagery and emotional terms, disgust with conduct that admitted evidence supports. In this instance, the evidence supported a conclusion that the defendants were leaders of a larger group of people who lured the victim into a garage, beat him, stole from him, and ultimately killed him. So, the jury could properly convict for murder.

But the prosecutor improperly stated, for instance, “while . . . people are asleep in their beds these cockroaches are out there running around and committing crimes and victimizing the people of Riverside County.” Guilt by association is a “thoroughly discredited” doctrine. And this type of reference suggested that the defendants were not entitled to consideration or justice. So, the gang related findings were reversed.

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18.1.8  American Bar Association Formal Opinion 480 — Confidentiality Obligations for Lawyer Blogging and Other Public Commentary — March 6, 20181

Do the technological advances that have altered how lawyers communicate, in spite of unexpected practical questions they may raise, alter lawyers’ ethical obligations when engaging in public commentary?

No. The opinion recognizes that lawyers today comment on legal topics in various formats, including: blogs; listservs; online articles; website postings; brief online statements or microblogs; online informational videos in webinars and podcasts. While engaging in such public commentary, regardless of medium, the opinion reminds lawyers that they must still comply with the Model Rules of Professional Conduct, including Rule 1.6 (Confidentiality). It provides a lawyer shall not reveal information relating to the representation of a client unless the client gives informed consent, absent an exception to the rule.

As with California confidentiality obligations — Rules of Professional Conduct, rule 3-100 and Business and Professions Code section 6068, subdivision (e)(1) — the confidentiality rule applies not only to matters the client communicates in confidence but to all information relating to the representation, whatever its source. Thus, the scope of the protection afforded by Rule 1.6, section 6068, subdivision (e), and rule 3-100 is far broader than attorney-client privileged information.2 Absent an exception — and under the California confidentiality provision the sole exception is the commission of a criminal act likely to result in the death or serious bodily injury of another — confidentiality applies in all such public commentary, even a client’s or former client’s identity.

Thus, even if information about a client’s representation is contained in a court’s order—and thus in a public document or record — it is not exempt from the lawyer’s duty of confidentiality under Model Rule 1.6, nor the California rule or statute.3

1 While the ABA Model Rules are not binding in California, they and ABA Formal Opinions interpreting them may be used as guidance when not in conflict with California public policy. State Compensation Insurance Fund v. WPS, Inc. (1999) 70 Cal. App.4th 644, 656; City & County of San Francisco v. Cobra Solutions, Inc. (2006) 38 Cal.4th 839, 852. Given the similar scope of the confidentiality obligation under both ABA Model Rule 1.6 and California Rules of Professional Conduct, rule 3-100, and Business and Professions Code section 6068, subdivision (e)(1) — but not the exceptions to that obligation — we have included this ABA Opinion.
2 See Cal. State Bar Formal Opn. No. 2016-195, at p. 2.
3Id. at p. 3.     

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Please note that, due to the break in continuity of publications, the volume number of Ethics Quarterly now matches the calendar year of publication and does not reflect the number of years that Ethics Quarterly has been published.