When You Stand at an Ethical Crossroad
The Professional Responsibility and Ethics Committee marks Ethics Opinion No. 500
By Ellen R. Peck
Ellen R. Peck, a former judge of the State Bar Court, is the immediate past chair of the Association's Professional Responsibility and Ethics Committee.
This President's Page was originally published in the October 1999 issue of Los Angeles Lawyer.
Just as the practice of law has experienced rapid change this century, so too has the regulation of lawyers' conduct. At the dawn of the twentieth century, California lawyers traveled to court by horse; as the century ends, they can, in some cases, send their pleadings to court via the Internet. In the early twentieth century, the legal profession was regulated by a handful of statutes codified at former Sections 277-291 of the Code of Civil Procedure. Today the practice of law is regulated by the State Bar Act, the California Rules of Professional Conduct, and a complex web of other statutes, including ones that regulate attorney's fees in many fields of law, the attorney-client and work product privileges, and the sanctioning or citing of attorneys for contempt by courts of law.
Today's practitioner, in addition to being an able advocate, counselor, or transactional specialist, must be a manager of professional risk. In the event of misconduct or mistake, attorneys face the risks of legal malpractice suits, disciplinary actions, fee arbitration proceedings, court-imposed sanctions, and even criminal charges. Moreover, the standards by which conduct is measured are changing equally rapidly. Last year, California state and federal courts published more than 50 opinions defining and redefining the law of lawyers; this year there will be more. In fact, in recent years an entire industry concerning the law of lawyers has emerged. It includes "fee busters" who review lawyer billings for corporate clients and insurance companies and suggest areas that may be overcharges; lawyers whose practices are devoted exclusively to counseling and representing other lawyers in matters concerning risk management, fee disputes and arbitration, legal malpractice actions, or disciplinary proceeding; and ethics experts who testify on disqualification matters and the standard of care in malpractice cases.
In the age of fast-track, rocket-docket litigation and transactions that have to close yesterday, even the reasonably prudent lawyer needs assistance and guidance. This is why the Los Angeles County Bar Association Professional Responsibility and Ethics Committee is here to help you.
A Century of Service
When the Los Angeles County Bar Association established an ethics committee in 1917-even then on the cutting edge in the development of services its members need-it was one of the first bar associations in the country to do so. This was all the more remarkable when you consider that 1) the American Bar Association had yet to adopt the first Canons of Professional Ethics, 2) the State Bar of California would not be created by legislation for another 10 years, 3) the Rules of Professional Conduct of the State Bar of California would not be adopted by the California Supreme Court until 1928, 4) and the State Bar's own ethics committee would not be established until 1964. Yet, even then the Association perceived that lawyers would need guidance, based upon the law, from other practicing attorneys on the ethical and professional manner in which they should conduct themselves.
On May 17, 1917, the ethics committee published its first opinion-on the advertisement for and solicitation of clients-and has regularly and continuously published formal ethics opinions ever since. Now, in the last year of the century, the committee marks the publication of Opinion No. 500 and No. 501. (By comparison, the ABA's ethics committee has published 413.)
Formal Opinion No. 500 (see page 63) opines that a member of the State Bar of California may establish a business to finance the legal expenses of another person's lawsuit in exchange for an assignment of an interest in the proceeds of the claim and a recovery of expenses incurred, even though the member had no interest in the claim prior to the assignment if 1) the assignor is represented in the lawsuit by an independent attorney of the assignor's choice, 2) the assignor brings the lawsuit in his or her own name, 3) the member does not control or interfere with the assignor's attorney, and 4) if the suit is successful, the member recovers the legal expenses paid and a percentage of the total recovery. The attorney representing the assignor in the lawsuit may not accept compensation for a nonclient unless he or she complies with Rules of Professional Conduct Rule 3-310(F) and Business and Professions Code Section 6068(e), which require members of the bar to exercise independent professional judgment free of interference and to preserve their clients' confidential information. If the person financing the lawsuit compromises the attorney's independence and duty of confidentiality, the proposed relationship would not comply with these rules.
Formal Opinion No. 501 concerns conflicts of interest that may arise when an attorney leaves one firm and joins another. The question concerns a situation in which the new law firm seeks to undertake a representation that is potentially adverse to an insurance company, some of whose insureds were represented by members of the attorney's old firm acting as panel counsel, although the attorney personally neither worked for nor acquired any confidential information from or about the insurance company. The committee opined that neither the attorney nor other members of the new firm would be in violation of Rules of Professional Conduct Rule 3-310(E) by undertaking a representation that is adverse to the insurance company, provided that the attorney does not possess confidential information from or about the insurance company that is material to the new representation. The committee also observed that even if the new attorney would be precluded by Rule 3-310(E) from representing the party adverse to the insurance company, the reach of Rule 3-310(E) does not, by its express terms, extend to other members of the new firm. However, the firm should consider civil disqualification issues that arise from the application of the "imputed knowledge" rule and that disqualification could have further ethical consequences under other applicable professional standards.
What We Do
The Association's Professional Responsibility and Ethics Committee includes more than 35 members who volunteer their time to consider requests for written ethics opinions from the membership and prepare responsive ethics opinions for the assistance of Association members. As opinions are released, they are published in Los Angeles Lawyer. In addition, opinion Nos. 476 through 501 are available 24 hours a day on the Internet (www.lacba.org/opinions). Copies of all 501 opinions are available to members, free of charge, by contacting the Member Services Department at (213) 896-6560. Most past opinions are also collected and indexed in the State Bar publication, California Compendium on Professional Responsibility, which is available from the State Bar's publication department and at most law libraries.
In addition to issuing ethics opinions, the committee annually sponsors several ethics programs to help members keep abreast of changes in the law of lawyers and to provide practical guidance concerning implementation of professional standards. The committee also comments upon State Bar ethics draft opinions, proposed changes to the California Rules of Professional Conduct, and proposed legislation involving issues of professional responsibility and ethics.
As we meet the challenges of the ever changing practice of law, the Professional Responsibility and Ethics Committee serves you by considering requests for guidance on your professional responsibilities and ethics. Requests are treated as confidential. Written requests for ethics opinions may be submitted to Barbara Seidel at the Association's offices (P.O. Box 55020, Los Angeles, CA 90055) or by telephone at (213) 896-6427.