Ethics in Brief

Ethics in Brief is designed to present ethical issues that practitioners might well face on a daily basis. It is a service of the Legal Ethics Committee of the San Diego County Bar Association.

No Matter the Role, We’re Always Still Lawyers 

Sometime during their careers, lawyers volunteer — or are dragooned — to serve, not as lawyers, but in some other capacity: trustee of a family trust; guardian of a sibling’s child; member of a business joint venture; director of a charitable corporation. We try to make clear: “I’m not your lawyer. Not giving you legal advice. We’re agreed about that, correct?”

Has the lawyer sailed into an ethical safe harbor? Not quite. The Rules of Professional Conduct and the State Bar Act (Bus. & Prof. Code section 6000, et seq.) follow us no matter what role we undertake; disregarding those obligations can lead to civil liability or State Bar discipline.

A relatively recent State Bar case — In the Matter of Jane L. Schooler (Review Dept. 2017) __Cal. State Bar Ct. Rptr. __, 2017 WL 71766909 (December 6, 2016, modified, January 31, 2017) underscores the point. Ms. Schooler, a lawyer, served as trustee and executor of her parents’ multi-million dollar estate. When the last of her parents died, the estate assets were supposed to be divided equally and distributed to Schooler and her four siblings. But that didn’t happen.

Instead she used one asset, a beach house, for her own benefit — even changing the locks to keep her brothers out; she made distributions (some $100,000) to herself, and for seven years (2004-2011) made no distributions to her siblings in spite of their demands. Meanwhile, the value of the estate decreased. Finally, her brothers sued. Ultimately, the court removed her as trustee and found, inter alia, that she had violated her fiduciary duties under the Probate Code section 16000, et. seq.

Then the State Bar filed disciplinary charges against her.

Self-represented, she claimed in her defense that her alleged misconduct should be excused because she was acting as a trustee for the family estate, not as a lawyer, and because, in fact, she had relied on the advice of a lawyer for her actions.

The State Bar Court rejected her arguments. “The law is clear that even if Schooler was not practicing law, she was required to conform to the ethical standards required of attorneys,” citing Crawford v. State Bar (1960) 54 Cal.2d 659, 668 [“Attorneys must conform to professional standards in whatever capacity they are acting in a particular matter.”]

The State Bar Court Review Department upheld the trial court’s finding of culpability, but disagreed with the lesser sanction the trial judge had recommended (suspension). Instead, the reviewing court recommended disbarment. “Schooler had a fiduciary duty under the terms of the trusts to equitably distribute the [estate] to the named beneficiaries. Unfortunately for them, she failed in performing those duties for seven years after her mother’s death.”

And then there’s In the Matter of McCarthy (Review Dept. 2002) 4 Cal. State Bar Ct. Rptr. 364, 373. “An attorney who accepts the responsibility of a fiduciary nature is held to the high standards of the legal profession whether or not he acts in his capacity of an attorney. He must maintain proper books of account and records of transactions, and he may not comingle client’s funds or use them for personal use.” The McCarthy court found that the lawyer had misappropriated funds, not of a client, but belonging to another member of a joint venture because the lawyer had a fiduciary relationship with a co-joint venturer and breached that duty when he failed to distribute the coventurer’s share.

Galardi v. State Bar (1987) 43 Cal.3d 683, 691, 693 is yet another case where the court found a lawyer had a fiduciary duty as joint venture, who failed to obtain consent of his coventurers to encumber joint venture property. The court recommended suspension.

Civil liability can also haunt conduct even though the lawyer is not acting as a lawyer. In American Airlines v. Sheppard, Mullin, Richter & Hampton (2002) 96 Cal.App.4th 1017, 1032, a lawyer served as a Federal Rule 30(b)(6) witness (person most knowledgeable) for one party in circumstances where the court found he had a conflict of interest because of a prior representation of American Airlines. The court rejected the argument that he was not acting as a lawyer, but only as a witness, and that he had not revealed any confidential information; rather, it held that the Rules of Professional Conduct define the duty component of fiduciary duty for a lawyer, citing Mirabito v. Liccardo (1992) 4 Cal.App. 4th 41, 45. The court found a duty arising out of a conflict of interest (Rule of Professional Conduct 3-310), even though at the time the lawyer was not acting as a lawyer, and upheld a finding of breach of fiduciary duty and malpractice.

So what’s a lawyer to do? In short, know the Rules of Professional Conduct and abide by them, no matter what hat we think we’re wearing at the time.

-- Edward McIntyre

**No portion of this summary is intended to constitute legal advice. Be sure to perform independent research and analysis. Any views expressed are those of the author only and not of the SDCBA or its Legal Ethics Committee.**