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 for SDCBA members.

Local Counsel Liability

We frequently serve as local counsel for lawyers located elsewhere in California or out-of-state.  Indeed, Southern District Local Rule 83.3.c.6 allows the court to require a lawyer with an office outside the district to designate local counsel.  The role, however, is not without peril.  Two recent cases make the point.

In Gabriel Technologies Corporation, Judge Battaglia awarded the defendants $12,401,014.51 in attorneys’ fees as sanctions against the plaintiffs for asserting frivolous claims under a provision of the Patent Act.  Then, the Court examined the conduct of local counsel under Federal Rule 11 and imposed $64,316.50 in sanctions.

Local counsel argued that its role was limited:  It merely ensured that the plaintiffs’ papers complied with the local rules and did ECF filings.  Local counsel stressed that while it did initial research to ensure that each claim was properly pled, it relied on lead counsel that there was a good faith basis for the allegations; that it never had access to plaintiffs’ percipient witnesses or documents; that it never participated in discovery or motion practice.  Judge Battaglia was unimpressed.

He imposed sanctions to “deter local counsel from filing documents without performing a reasonably inquiry.”  Specifically, Judge Battaglia found that, when Judge Anello—the case transferred when Judge Battaglia became a district judge—made plaintiffs post an $800,000 bond because he questioned their case, local counsel had heightened Rule 11 obligations.

Judge Battaglia resisted the defendants’ request to impose sanctions jointly and severally on counsel and the plaintiffs ($12,401,014.51).  Instead, the $64,316.50 sanction was the amount of fees local counsel received, thus barring it from realizing any profit from its role.

In an analogous, malicious prosecution case, Cole v. Patricia A. Meyers & Associates, the Court of Appeal held that co-counsel in the underlying action—disposed of on summary judgment—may be held liable even though they signed no pleadings and their role was limited to serving solely as trial counsel, if the case ever went to trial.  The court concluded that, if lawyers names appear on pleadings as co-counsel, they could be liable if the underlying claims lacked merit.  As counsel of record, putative trial counsel “had a duty of care to their clients that encompassed both a knowledge of the law and an obligation of diligent research and informed judgment.”

Rule of Professional Conduct 3-110—an attorney without sufficient knowledge or skill may associate with or consult another lawyer—provides no defense.  Competent representation still requires knowing enough to judge the quality of the other attorney’s work.

The Court of Appeal’s admonition applies equally to both situations:  “Attorneys may … avoid liability if they refrain from lending their names to pleadings or motions about which they know next to nothing.”  (Id. at 1119-1120).  A word to the wise is, hopefully, sufficient.

-- Edward McIntyre