Legal Ethics Corner

Ethics Corner 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.  

Some Say That it is Better to Receive than to Give…Except, of Course, When Receiving Rule 4-400 Disciplinary Charges for Inappropriately Accepting Gifts From a Client.

In its latest advisory ethics opinion (Formal Opinion No. 2011-180), issued earlier this month, the State Bar of California's Committee on Professional Responsibility and Conduct (COPRAC) poses this question:  “When does an attorney violate rule 4-400 of the California Rules of Professional Conduct by accepting a gift from a client?”  The answer, in a nutshell, is that an attorney does so by demonstrating, by words or conduct, an intent to cause the client to give a “substantial” gift, i.e., a gift of real worth or considerable value as determined in light of various factors.

Consider this scenario:  attorney is handling client’s real estate litigation matter involving a second home in Santa Barbara which client normally rents out at $5000 a week.  Attorney, who has been working hard on the case and who could not otherwise spare $5000, expresses that she feels she has earned a break, could “recharge her batteries” via a week of relaxation at the house, and could then dive back into the case.  Although facing difficult economic times, client agrees that attorney deserves a break and reluctantly allows attorney to stay for a week free to charge.

Rule 4-400 states, “A member shall not induce a client to make a substantial gift, including a testamentary gift, to the member or to the member’s parent, child, sibling, or spouse, except where the client is related to the member.”  The rule does not define either “induce” or “substantial.”  In seeking to provide guidance on both, COPRAC opts for a definition of “induce” from the Oxford English Dictionary as, “[t]o lead (a person) by persuasion or some influence to (into, unto) some action, condition, belief, etc.; to move, influence, prevail upon (any one) to do something.”  An alternative definition of simply “to cause” or “to bring about an act or course of conduct,” is too broad.  The former is more in keeping with 4-400’s primary goal of prohibiting “lawyers from exerting undue or inappropriate influence on their clients.” 

Borrowing the definition from Black’s Law Dictionary, a “substantial” gift is one “of real worth and importance; of considerable value; valuable.”  However, one should not view such value merely from the attorney’s and client’s respective financial situations, as provided by the Restatement Third of the Law Governing Lawyers, as to do so could subject a lawyer to discipline based solely on such relative wealth.  This does not appear consistent with the rule’s intent.  Instead, one must look at the surrounding circumstances.  In addition to the relative wealth of attorney and client, the following factors should be considered: 1) the monetary value of the gift; 2) nature of the gift; 3) the fairness of the transaction; 4) the appropriateness of the lawyer’s actions or behavior; 5) the sophistication of the client; and 6) the emotional or sentimental value of the gift.

Applying the above definitions to the hypothetical, COPRAC concludes that attorney violated rule 4-400.  Attorney induced the gift by “tying her desire to stay at the Santa Barbara property to the quality of work on the case[.]”  The gift is substantial in that attorney could not pay for the same and in light of client reluctantly giving up one week’s income of $5000 from the home. 

More generally, because, as COPRAC notes, “all business dealings between attorney and client whereby the attorney benefits are closely scrutinized for any unfairness on the attorney’s part,” attorneys do well to first closely self-scrutinize a possible gift.  Generally, no gift is as valuable as that gift that keeps giving—the certificate on your wall fortified by a clean disciplinary record.  

--Luis E. Ventura

**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.**