April 2015 Vol. 15, No. 11
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Ethics Quarterly, another publication of the Legal Ethics Committee, returns. In this and subsequent issues, Ethics Quarterly will continue its tradition of collecting and summarizing recent decisions and other authority that address issues of professional responsibility and legal ethics. Our focus will be current questions that arise in the practice of law.
In this issue, for example, one theme in some of this quarter's authority is the conflicts that can develop between a lawyer's duty to her or his client, or the court, and the lawyer's own professional self-interest. The tensions can be real. In Christenson, the lawyers' duty to their client to admit their own "serious misconduct" necessarily conflicted with their self-interest in their own reputations. And Acadia Patent Acquisitions, LLC underscores that our duty of confidentiality to a client (Bus. & Prof. Code section 6068(e)) bars representation of another in a subsequent action. That duty of confidentiality is put to the ultimate test in State Bar Form. Opn. 2015-192, where a court orders a lawyer to disclose client confidential information in order for her to fulfill her ethical duty that mandates withdrawal from that client's representation. What does "at every peril to himself or herself" mean when confronting a court's order, possible contempt, a hostile client and conflicting ethical duties? And when it comes to disclosure to clients and courts, what are the consequences of a lawyer's failure to disclose to both his client and the court that he was ineligible to practice law because of State Bar discipline while representing an accused at a preliminary hearing? Other decisions focus on equally important issues: malpractice arising out of mediation; crafting a contingent fee agreement when the defendant may not be able to pay.
We welcome your comments, and suggestions about recent decisions, authority or issues we might address in future editions. For immediate questions, the Legal Ethics Committee maintains a hotline that SDCBA members can call at any hour (619) 231-0781 x4145. Just follow the instructions and a Committee member will get back to you with ethics authority and guidance you might consider.
In This Issue
Among the questions answered by rulings abstracted in this issue of Ethics Quarterly are:
15.1.1 Christeson v. Roper – (January 20, 2015)
When court-appointed lawyers miss a critical deadline for federal post-judgment relief in a state death penalty case, does that create a conflict of interest such that the client is entitled to new appointed counsel.
Yes. In a per curiam decision, the Court reversed and remanded an Eighth Circuit judgment upholding a district court’s order denying the appointment of new counsel.
A state jury convicted Christenson of three counts of murder andhe was sentenced to death, a conviction and sentence the Missouri Supreme Court affirmed. His federal court-appointed lawyers missed the strict one-year deadline for filing a federal habeas petition by 117 days.
His lawyers subsequently acknowledged that they failed to meet with him until more than six weeks after his petition was due, and there was no evidence that they communicated with their client at all during this time.
They have since claimed that their failure to meet with their client and timely file his habeas petition resulted from a simple miscalculation of the limitations period (and, according to the Court, in defending themselves, they may have disclosed privileged client communications). But a legal ethics expert, reviewing their handling of Christeson's habeas petition, stated in a report submitted to the District Court: "[I]f this was not abandonment, I am not sure what would be."
The district court dismissed the petition as untimely, and the Eighth Circuit denied Christeson's application for a certificate of appealability. Christeson, who appears to have severe cognitive disabilities that lead him to rely entirely on his attorneys, may not have been aware of this dismissal.
Seven years passed. Then Christenson’s lawyers met with two new lawyers to discuss the case. The new lawyers immediately noticed a glaring problem. Christeson's only hope for securing review of the merits of his habeas claims was to file a motion under Federal Rule of Civil Procedure 60(b) seeking to reopen final judgment on the ground that statute of limitations should have been equitably tolled. But the first lawyers could not be expected to file such a motion on his behalf, because any argument for equitable tolling would be premised on their own malfeasance in failing to file timely the habeas petition. While initially receptive to the second lawyers’ assistance, the first lawyers then refused to allow outside counsel access to their files.
The second lawyers filed a motion for substitution of counsel, which the district court denied explaining only that it was "not in [Christeson's] best interest to be represented by attorneys located in New York and Pennsylvania," as the second lawyers were. The district court did not address their offer to forgo all fees and expenses associated with travel to Missouri, nor did it address the possibility of appointing other attorneys for Christeson.
Christeson appealed. The Eighth Circuit dismissed for lack of jurisdiction, apparently reasoning that the second lawyers were not authorized to file an appeal on Christeson's behalf. While that appeal was still pending before the Eighth Circuit, the Missouri Supreme Court issued a warrant of execution setting Christeson's execution date. The second lawyers filed another motion for substitution of counsel; the district court denied it; the court of appeals affirmed.
The Supreme Court granted certiorari, issued a stay of execution, reversed and remanded. The Court held:
The court's principal error was its failure to acknowledge [the first lawyers’] conflict of interest. Tolling based on counsel's failure to satisfy [the] statute of limitations is available only for "serious instances of attorney misconduct."[citation] Advancing such a claim would have required [the lawyers] to denigrate their own performance. Counsel cannot reasonably be expected to make such an argument, which threatens their professional reputation and livelihood.[citation] Thus, as we observed in a similar context in [citation], a "significant conflict of interest" arises when an attorney's "interest in avoiding damage to [his] own reputation" is at odds with his client's "strongest argument—i.e., that his attorneys had abandoned him." … Given the obvious conflict of interest here, the considerations relied upon by the District Court cannot justify its decision to deny petitioner new counsel.
15.1.2 Anten v. Superior Court (Weintraub) – 2nd District/1st division – (January 30, 2015 [modified February 10, 2015].)
California law has established that in a lawsuit between a former client and its former lawyer based on an alleged breach of a duty arising from the attorney-client relationship, the attorney-client privilege does not protect their communications relevant to the breach. (Dietz v. Meisenheimer & Herron (2009) 177 Cal.App.4th 771, 786; Evid. Code § 958.) Similarly, if multiple clients consult a lawyer on a matter of common interest, and the joint clients later sue each other, communications between either client and the lawyer in the course of that relationship are not privileged in the lawsuit between the clients. (Zador Corp. v. Kwan (1995) 31 Cal.app.4th 1285, 1294; § 962.) And, generally one joint client cannot waive the attorney-client privilege for another joint client. (American Mut. Liab. Ins. Co. v. Superior Court (1974) 38 Cal.App.3d 579, 595.)
What happens, however, when only one joint client sues their former lawyer; can the other client prevent the parties from discovering or introducing otherwise privileged attorney-client communications made during the course of the joint representation?
No. Evidence Code section 958 bars a non-suing client from preventing the discovery of communications among the lawyer and joint clients during the joint representation.
Two parties (an individual and a husband and wife) sought tax advice from a second lawyer, who told them that their first tax lawyer’s incurable error barred favorable tax treatment from the sale of a business. As a result, they settled with the IRS for more than $1 million. That second lawyer then “fired” the individual as a client and represented the husband wife in a malpractice action against the former tax lawyer whose advice led to the need to settle with the IRS. The individual former client then sued both sets of tax lawyers.
The individual former client sought document discovery related to the second tax lawyer’s representation of him and the husband and wife; the second lawyer objected, invoking the attorney-client privilege on behalf of the husband and wife clients. The trial court agreed. The court of appeal, on an issue of first impression—i.e., where only one joint client charges the lawyer with a breach of duty; the other does not—granted a writ petition and reversed.
The court’s primary focus was section 958, which eliminates the attorney-client privilege for a communication relevant to an issue of breach, by either lawyer or client, of a duty arising out of the lawyer-client relationship.
Because both the individual former client and the husband and wife were the second lawyer’s joint clients, sections 952 and 954 provide that the husband and wife’s communications with the lawyer were not confidential, as to the individual former client. Because the communications were not confidential as to the individual former client, they also are not privileged as to him.
The court acknowledged, however, that the communications would still be inadmissible at trial if there were privileged as to third parties, other than the individual former client, the husband and wife and the second lawyer.
In addition to the literal application of section 958, the court also found that the public policy rational of fundamental fairness underlying section 958 further supports its conclusion. To allow a non-breaching joint client to invoke the privilege to prevent, for example, a lawyer from introducing a fee agreement against a breaching client would not only be unfair, but would invite collusion. Likewise, it would be unjust to allow a non-suing former client to invoke the privilege to thwart the other client’s suit against a former lawyer by invoking the privilege to prevent introduction of relevant attorney-client communications. Moreover, the risk of collusion would be especially significant if the alleged breach were that the lawyer had favored the non-suing client over the one who sued.
15.1.3 Acacia Patent Acquisition LLC v. Superior Court (Reddy) - 4th District February 27, 2015
Law firm that represented attorneys in fee dispute may be disqualified from representing another client involving matters related to prior representation.
Should a law firm that previously represented another law firm in a client fee dispute be disqualified from representing an expert seeking consulting fees from the same client arising out of the same underlying litigation?
Yes. The law firm’s wide-ranging access to privileged information in the first representation and the substantial relationship between the two matters requires disqualification. One of the fundamental duties of an attorney is to “maintain inviolate the confidence, and at every peril to himself or herself to preserve the secrets, of his or her client.” (Bus. & Prof. Code, § 6068, subd. (e).) To facilitate this end, the Rules of Professional Conduct preclude an attorney from accepting employment adverse to a client or former client absent written consent where the attorney has obtained confidential information through that representation that is material to the employment. (See Rules of Prof. Conduct, rule 3-310.) For these reasons, an attorney will be disqualified from representing a client against a former client when there is a substantial relationship between the representations. When a substantial relationship exists, courts presume the attorney possesses confidential information of the former client that is material to the present representation.
In assessing whether a substantial relationship exists, courts focus on the similarities between the two factual situations, the legal questions posed, and the nature and extent of the attorney’s involvement in the two matters. A substantial relationship exists where (1) the current matter involves the work the attorney performed for the former client or (2) there is a substantial risk the representation of the present client will involve the use of information acquired in the course of representing the former client, unless that information has become generally known.
These same principles may, under certain circumstances, apply to successive representations where the attorney owes a duty of confidentiality to a non-client. This may occur where there are both (1) implicit obligations that an attorney takes on to maintain the confidences of a nonclient received in the course of representing a client and (2) the unfair advantage that might accrue were such an attorney to pursue substantially related litigation against the nonclient. If an attorney is deemed to have a duty of confidentiality to a nonclient, then the substantial relationship test is applied to determine whether disqualification is appropriate.
Not every fee dispute will automatically result in the attorney representing the underlying law firm being disqualified from being adverse to the underlying client in other related matters. But here, the attorney was because he had been exposed to numerous privileged documents.
15.1.4 People v. Anderson – 2nd District/1st Division March 10, 2015
When a criminal defendant’s lawyer at his preliminary hearing was ineligible to practice law for failure to pay State Bar dues, with a pending State Bar stipulation that subjected him to discipline, sufficient to require reversal?
Yes. But the former client still had to show a timely writ challenge, or else demonstrate prejudice.
Anderson was convicted of murder. Months before, the State Bar had placed the lawyer who had represented him at his preliminary hearing on “inactive status” and thus “ineligible to practice law” for failure to pay State Bar dues. The lawyer, however, had also entered into a stipulated disposition with the State Bar in a matter that involved his failure competently to represent a criminal defendant.
The court of appeal found that the lawyer had been suspended from the practice of law for reasons that did not necessarily reflect on his professional competence—failure to pay State Bar dues. He was, however, at the same time subject to discipline—on probation and subject to suspension—arising from stipulated determinations that he had failed to perform legal services competently, and had willfully violated the law and professional rules. The court found, in addition, that the lawyer failed to perform his professional duties in the case on appeal when he did not inform the trial court and his client of his suspension and seek the court’s permission to withdraw from representing Anderson. (Rules of Prof. Conduct, rule 3-700(A)(2).) Thus, the court found that the lawyer was guilty of willful conduct demonstrating professional incompetence and resulting harm to his client and to the court, that he was then subject to discipline for that conduct, and that he had violated conditions of his discipline and the Rules of Professional Conduct. The unrebutted inference was conclusive: the lawyer was not competent to represent Anderson at the preliminary hearing.
But then came the procedural twist. Although representation by competent counsel is a fundamental right, California law limits relief, without a showing of resulting prejudice, to pretrial challenges; otherwise, the defendant faces the assumption that a fair trial generally renders preliminary-hearing errors harmless. Hence, although Anderson raised the issue of his counsel’s incompetence soon after its discovery, he failed to apply for an extraordinary writ then—before trial and conviction—when he could have sought relief without any showing of resulting prejudice. But Anderson had been tried and convicted while represented by counsel whom he did not contend was incompetent. Thus, absent a showing of prejudice, he was entitled to no relief. Failing to make that showing, his conviction stood.
Notes: From an ethics perspective, this opinion is less important for its holding than it is as reminder that attorneys’ duty of confidentiality often extends into areas beyond where the attorney-client privilege applies. Of course, this includes not just communications and documents related to mediation, but also client secrets learned during the course of representation, regardless of how and from what source the attorney learns them.
15.1.5 In re Chang – Supreme Court March 16, 2015
May an attorney who was admitted to the New York Bar, but denied admission to the California Bar because he was not eligible for citizenship under the Chinese Exclusion Act be posthumously admitted to the California Bar?
Yes. Hong Yen Chang, a native of China, came to this country in 1872, earned his undergraduate degree at Yale, and graduated from Columbia Law School in 1886. He applied for admission to the New York Bar, but despite a “high marking” and unanimous recommendation from the bar examiners, he was turned down by the state supreme court in 1887 because he was not a citizen. That same year, a New York judge issued Chang a certificate of naturalization. After the New York Legislature passed a law allowing him to reapply for bar admission, Chang was admitted in 1888, becoming “the only regularly admitted Chinese lawyer in this country.”
Chang then relocated to California. But, when he moved for admission to the California bar and the Supreme Court observed that his motion was “made in due form” and “his moral character duly vouched for,” he was denied admission because courts were expressly forbidden to issue certificates of naturalization to any native of China under the federal Chinese Exclusion Act and the Bar required all applicants to either be a citizen of the United States or to have the intention to become one (something that was then unavailable to Chang).
The historical context in which the Supreme Court denied Chang admission to the bar was California’s then interest in precluding mass immigration of Chinese day laborers that accompanied the gold rush. Such concerns were, in fact, a major motivation for the passage of the Chinese Exclusion Act. The legal and policy underpinnings of the 1890 decision have been discredited and the Chinese Exclusion Act has been repealed. Last year, the Court granted admission to an undocumented immigrant who had been brought to the United States as a child, put himself through college and law school, passed the California bar exam, and met the requirement of good moral character. (In re Garcia (2014) 58 Cal.4th 440, 466.) Accordingly, the discriminatory exclusion of Chang from the State Bar of California was a grievous wrong that denied Chang equal protection of the laws; apart from his citizenship, he was by all accounts qualified for admission to the bar.
15.1.6 Amis v Greenberg Traurig LLP – 2nd District/3rd Division March 18, 2015
May an attorney’s alleged misconduct in failing to advise at mediation of risks of settlement be used as the basis of a legal malpractice lawsuit?
No. Amis admitted that his alleged damages stemmed directly from entering into the settlement agreement and that any communications he had with Greenberg Traurig regarding the settlement occurred during the mediation. Because mediation confidentiality under Evidence Code section 1115 precluded Amis from presenting evidence of any alleged acts or omissions for the purpose of, in the course of, or pursuant to a mediation, the malpractice claim failed and the trial court properly entered judgment. The judiciary cannot craft its own exceptions to mediation confidentiality statues, even where equities appear to favor doing so; only the legislature may amend the scope of mediation confidentiality.
From an ethics perspective, this opinion is less important for its holding than the fact that it serves as a reminder that attorneys’ duty of confidentiality extends beyond attorney-client communications. This includes not just mediation confidentiality, of course, but also client secrets learned during the course of the representation, regardless of how they learned or from what source.
15.1.7 Business & Professions Code, section 6068, subdivision (e): Duty of Confidentiality
Ethics Opinion: The State Bar of California Standing Committee on Professional Responsibility and Conduct Formal Opinion No. 2015-192
What information may an attorney ethically disclose to the court to explain her need to withdraw from a representation – particularly in the face of an order to submit to the court, in camera or otherwise, the substance of the attorney-client communications leading to the need to withdraw?
An attorney may disclose to the court only as much as is reasonably necessary to demonstrate her need to withdraw, and ordinarily it will be sufficient to say only words to the effect that ethical considerations require withdrawal or that there has been an irreconcilable breakdown in the attorney-client relationship. In attempting to demonstrate to the court her need to withdraw, an attorney may not disclose confidential communications with the client, either in open court or in camera. To the extent the court orders an attorney to disclose confidential information, the attorney faces a dilemma in that she may not be able to comply with both the duty to maintain client confidences and the duty to obey court orders. Once an attorney has exhausted reasonable avenues of appeal or other further review of such an order, the attorney must evaluate for herself the relevant legal authorities and the particular circumstances, including the potential prejudice to the client, and reach her own conclusion on how to proceed. Whatever choice the attorney makes, she must take reasonable steps to minimize the impact of that choice on the client.
One of the most important duties of an attorney is to preserve the confidences of her client. “No rule in the ethics of the legal profession is better established nor more rigorously enforced than this one.” Business and Professions Code section 6068(e)(1) requires an attorney “[t]o maintain inviolate the confidence, and at every peril to himself or herself to preserve the secrets, of his or her client.” Rule 3-100(A) provides, “A member shall not reveal information protected from disclosure by Business and Professions Code section 6068, subdivision (e)(1) without the informed consent of the client . . .” except under certain limited exceptions not applicable here. An attorney moving to withdraw from representation faces a difficult dilemma – how to present sufficient facts to enable the court to consider the motion, while still maintaining the client’s confidences.
As referenced above, the attorney should seek appropriate relief from the court’s order, including filing a writ petition. She also should renew efforts to reach a compromise with the client and the court, which may include further attempts to obtain the client’s consent to the withdrawal (albeit with full disclosure to the client of any adverse consequences of such disclosure). To the extent the duty to withdraw is a permissive one (unlike the mandatory one in our hypothetical facts), then the attorney should consider withdrawing the motion to withdraw.
15.1.8 Rules of Professional Responsibility, rule 4-200: Fees for Legal Services
Los Angeles County Bar Association Professional Responsibility and Ethics Committee Opinion No. 526
May an attorney enter into a binding and enforceable contingency fee agreement that provides to the attorney some or all of the first proceeds of suit so as to impose on the client greater risk that the defendant’s financial condition will limit the amount recovered from a settlement agreement or judgment?
Yes. But any such risk-shifting agreement requires the client’s informed consent based on the attorney’s full and fair disclosure of pertinent information known to the attorney. As a general rule, an attorney is entitled to collect a contingent fee only as and when the client receives payment on a resulting settlement or judgment.
An attorney’s fee negotiation with a client generally is an arm’s length transaction in which the attorney is entitled to act to advance and protect his or her own interests. But, there are limitations. To be enforceable, a contingency fee agreement must fully comply with the requirements of Business & Professions Code section 6147 and is reasonably understandable to the client.
Also, under Rules of Professional Conduct, rule 4-200: “(A) A member shall not enter into an agreement for, charge, or collect an illegal or unconscionable fee.” There is no known authority that would make unconscionable under the “shock the conscience” standard a fee agreement that shifts to the client the risk of limited collectability and thereby results in the attorney receiving compensation that is disproportionate as measured by usual contingency fee rates or when compared to any net amount received by the client. Regardless of whether the attorney receives most or even all of the recovery, the inquiry must be whether the facts known when the fee agreement was made require the conclusion that the risk-shifting device was unconscionable.
Where an attorney and client recognize the additional risk that there might be a successful outcome, but only a limited recovery because of the potential defendant’s financial condition, they can shift that risk in whole or part to the client with informed consent that is based on a full sharing by the attorney of pertinent information known to the attorney. Where an attorney’s fee agreement would not have been unconscionable had the matter resolved in a financially-favorable manner for the client, it does not become unconscionable by reason that the defendant later defaults in satisfying a judgment or contractual settlement obligation, or negotiates a settlement limited by its financial weakness, so that the amount actually obtained by the attorney’s client is reduced or nonexistent while the attorney’s compensation for services is unaffected.
1Please 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.