MCLE Article and Self-Assessment Test
Ruling on the Rules
Careful practitioners will heed recent ethics rulings in the areas of conflict of interest, attorney's fees, litigation privilege, and attorney-client privilege.
By Ellen R. Peck and Robert L. Kehr
Ellen R. Peck, a former State Bar Court judge and former ethics counsel to the State Bar and the American Bar Association, is a sole practitioner in Malibu. Robert L. Kehr is a principal with Kehr, Crook and Fox in Los Angeles, where his practice includes business and real estate transactions and advice and expert testimony concerning legal ethics. He is the former chair of the Los Angeles County Bar Association Committee on Professional Responsibility and Ethics and is vice chair-elect of the State Bar Committee on Professional Responsibility and Conduct.
In 1997 a wealth of California appellate court decisions and federal district cases discussed the standards of professional conduct for lawyers. Happily, there were no bombshells establishing totally new areas of lawyer liability or creating more management nightmares in preventing exposure to liability. Some cases were favorable to lawyers,1 and a few cases meted out appropriate consequences for lawyer greed or inattention to duty.2 Last year's bumper crop of cases added to the body of knowledge in four critical categories of the law of lawyers: 1) conflict of interest, 2) attorney's fees, 3) the litigation privilege, and 4) the attorney-client privilege.
In addition, an important change in the duty of lawyers to communicate significant developments to their clients should be noted at the outset. On June 5, 1997, the California Supreme Court adopted amendments to Rule 3-500 of the Rules of Professional Conduct that amplify the duty of attorneys to keep clients reasonably informed by sending clients copies of important documents.3
Joint representation-the representation of two or more clients in a single matter-is one of the principal lawyer conflicts of interest. Rule 3-310(C)(1) of the Rules of Professional Conduct prohibits lawyers from accepting a joint representation in which the interests of the clients potentially conflict without the informed written consent of all clients.
This consent requirement has been particularly troublesome in the context of a shareholder's derivative action against a corporation, in which the directors must give consent to a joint representation on behalf of the corporation. Existing California authority on this issue has been inconsistent. In 1966, the California courts allowed an attorney to jointly represent the corporate defendant and individual defendants in a shareholder's derivative action.4 Then, in 1993, a federal court reached the opposite conclusion, denying approval of a class action settlement of a shareholder's derivative suit because corporate in-house counsel had defended both the corporation and individual defendants who were the attorney's superiors.5
Last year, the court of appeal in Forrest v. Baeza6 provided important new authority on the issue of joint representation. In a derivative suit involving a closely held corporation, the court held that the corporate counsel could not simultaneously represent the corporation and the two directors accused of wrongdoing. The court unequivocally stated that "an inanimate corporate entity, which is run by directors who are themselves defendants in the derivative litigation, cannot effectively waive a conflict of interest as might an individual under applicable professional rules such as [Rules of Professional Conduct] 3-600(E) and 3-310."7
Forrest did not analyze whether there should be a distinction for conflict purposes between closely held and publicly held corporations. Thus the question remains whether minority shareholders will be able to file a meritless lawsuit and force directors holding a majority of the shares to hire separate counsel.
Forrest is also important because it held that while an attorney may not represent other shareholders and the corporate defendant jointly, the attorney may continue to represent the individual shareholders after ending the representation of the corporate codefendant. The court explained that Rule 3-310(E) is based on the need to protect clients' confidential and secret information: "Where, as here, the functioning of the corporation has been so intertwined with the individual defendants that any distinction between them is entirely fictional, and the sole repositories of corporate information to which the attorney has had access are the individual clients, application of the 'former client' rule would be meaningless."8
The rule of "vicarious disqualification" or "imputed knowledge," another basic rule of conflicts, imputes the conflict of a single attorney to the entire firm. Under this rule, if a client has not consented9 to a conflict involving a single attorney in the firm, the entire firm must be disqualified.10 There are two new cases addressing this issue.
In Essex Chemical Corporation v. Hartford Accident and Indemnity Company,11 a law firm, Skadden Arps, represented Essex Chemical and later represented Hartford Accident against Essex Chemical. Skadden Arps entered into an agreement with other defense counsel to keep communications among the defense counsel confidential. A judge magistrate had disqualified Skadden Arps, which had an obvious conflict, and had disqualified all defense counsel who had entered into Skadden Arps's joint defense agreement. The district court reversed the disqualification order as to the other defense counsel, rejecting any presumption of "double imputation"-defined as the knowledge acquired by one attorney in a firm that is imputed to all attorneys in the same firm and then is reimputed to any attorney in a second firm that associates with the first firm. The court held that the other defense counsel must be allowed to establish the precise nature of the relationship among counsel and show that they had not acquired any confidential information from Skadden Arps.12 Thus, careful planning, such as establishing ethical walls, may allow counsel to utilize joint defense and co-counsel arrangements without being vicariously disqualified due to conflicts in other firms that are part of a joint defense team.
Dieter v. Regents of the University of California13 involved attorneys who had been employed by a firm representing a client but had not worked on or acquired confidential information about that client's matter. Concerned about the potentially broad effects on the market for attorney services as well as the ability of attorneys to move from firm to firm, the court held that the individual attorneys, and by imputation their new firm, would not be disqualified, because they had not worked on the particular subject matter, had no knowledge of the case, and had no presumed access to confidential information, given that they had worked at a branch of the firm that was not the site where the work had been performed.14 The holding is consistent with the American Bar Association Model Rule 1.9 and Section 204 of the Proposed Restatement of the Law Governing Lawyers.15
Conflicts issues arise in business transactions as well as in litigation, and they can cause significant problems for attorneys even if there is no injury to the client. In Passante v. McWilliam,16 a corporation had promised to reward its attorney with stock for the attorney's success in locating vital financing for the corporation. While the corporation "just outright reneged on its promise"17 of corporate stock, the promise was unenforceable because the attorney failed to comply with the predecessor of Rule 3-300 of the Rules of Professional Conduct-the rule covering business transactions between attorneys and clients. The court analyzed the attorney's claim as a business transaction with his client, not as legal services for which he would have been entitled to reasonable compensation under Business and Professions Code Section 6148 even in the absence of a written fee agreement.
Brooklyn Navy Yard Cogeneration Partners v. Superior Court (The Parsons Corporation),18 one of the most important ethics decisions of 1997, addressed the relationship between an attorney and entities related to the client. The specific question was whether the representation of a subsidiary created ethical duties to the parent corporation. For conflict purposes, the court found that a parent corporation is not a client simply because the subsidiary is, and that an attorney's duty of loyalty to the subsidiary does not preclude a representation adverse to the parent. In doing so, the court adopted the analysis of the State Bar's Standing Committee on Professional Responsibility and Conduct in its Formal Opinion 1989-113. The court noted that the economic interests of the parent can be vital to the subsidiary, and vice versa, but any negative economic consequences to a corporation as a result of litigation against its subsidiary are indirect-and the conflict-of-interest rules cover only repercussions that are directly adverse.
The court cautioned against allowing the broad language often used in describing the duty of loyalty to swamp traditional conflict-of-interest analysis by citing two compelling policy concerns. If indirect consequences were sufficient to trigger a conflict of interest, there would be no way to construct any meaningful standard for determining what is and what is not a conflict, the court reasoned. Also, indirect conflicts would be so numerous and difficult to track that it would be difficult, if not impossible, to screen for conflicts.19
State Bar Formal Opinion 1989-113 recognized a narrow exception to the general rule that related corporations should not be treated as the same entity for conflict purposes simply because of their relationship. If a corporation is the alter ego of another entity, the two entities will be treated as the same entity for conflict purposes. While in some situations a corporation will not be able to assert the alter ego doctrine to deny its own corporate separateness, the court concluded that "[i]n the context of an attorney disqualification motion where the value at stake is an attorney's duty of loyalty, we believe justice is served by allowing a corporation to assert its status as the alter ego of a lawyer's existing client."20
Whether a fee can be collected is a constant concern for all private attorneys, who may not think as often about fee agreements and billing procedures in the context of lawyer discipline. In the Matter of Jerome Berg21 is an example of how overbilling can become a disciplinary matter. In a prior civil suit, attorney Berg was sued by an insurance carrier for overbilling while serving as Cumis counsel22 in 41 dental malpractice cases. The jury awarded damages against the attorney in the sum of $282,024.86 and found that he had acted with oppression, malice, and fraud.23
From a disciplinary standpoint, the overbilling was viewed as involving three separate wrongs:
- The client was billed at higher than the agreed rate for some of the work without notice to or a new agreement with the client.
- The attorney billed his client before work was performed without disclosing this to the client or obtaining the client's agreement.
- The amount of time billed was not credible.
The State Bar Court found that Berg had violated Business and Professions Code Section 6106, which prohibits attorneys from committing any act involving moral turpitude, dishonesty, or corruption, and former Rule 2-107 of the Rules of Professional Conduct (the predecessor, with some changes, of current Rule 4-200), which prohibits charging or collecting an unconscionable fee. This case is particularly noteworthy because the jury's findings that Berg had acted with oppression, malice, and fraud were given res judicata effect in the disciplinary hearing-an act that precluded Berg from relitigating the jury's findings.24 Also of interest is the fact that former Rule 2-107 was held to be not unconstitutionally vague.25
The litigation privilege provides a complete defense for lawyers and their clients to all torts other than malicious prosecution26 stemming from any communication made in a judicial or quasi-judicial proceeding. This privilege, an important risk management tool for lawyers, is intended to encourage parties to exercise their fundamental right to resolve disputes in court without fear of being sued for something said or done in the context of litigation.27
Prior to 1997, California courts expanded the protective scope of the litigation privilege to include:
- Communications or complaints by citizens to public officials or authorities charged with investigating, prosecuting, or remedying alleged wrongdoing.28
- Communications made prior to litigation concerning the recording or filing with a court recorder or county clerk of documents connected with the filing of a related lawsuit.29
- Demand letters made before litigation as a precondition to filing a lawsuit.30
In 1997, six appellate opinions charted new boundaries for the safe harbor of the litigation privilege, including narrowing its application to pre-litigation negotiations,31 press conferences,32 and non-communicative conduct during litigation.33
Edwards v. Centex Real Estate Corporation34 placed time limitations upon the attachment of the litigation privilege before the filing of an action. In Edwards, before any lawsuit was filed, a builder-developer had repaired the concrete slab foundation of one of its homes in a cosmetic manner that the builder-developer knew, or had reason to know from prior engineering and soils reports, would not correct the problem and would result in further cracking and/or bowing of the foundation. The builder-developer concealed this information from the homeowners, who signed a release from liability. Within five years, the homeowners noticed new cracks in their foundation and learned that the foundation had fundamental design problems that had not been corrected by the earlier repair work. They sued the builder-developer and others, alleging fraud and related torts, and sought rescission of the release agreements and consequential and punitive damages.35
The defendants relied upon Civil Code Section 47(b) and invoked the litigation privilege as a defense.36 The court of appeal disallowed the use of the litigation privilege because at the time the statements were made, litigation was never suggested or contemplated by the homeowners. The court explained that attachment of the litigation privilege to pre-litigation statements requires the presence of several elements:
1) The communications were made prior to a proposed judicial or quasi-judicial proceeding.
2) The verbal adjudication proposal was offered seriously and in good faith, not as a negotiating tactic.
3) The contemplated adjudication was imminent.
4) The litigation was proposed as a means to obtain access to the courts for the purpose of resolving the dispute.37
The mere potential or "bare possibility that judicial proceedings might ensue in the future" is insufficient to invoke the litigation privilege.38
Aronson v. Kinsella39 interpreted the Edwards requirement of "imminent" litigation. The court held that when the litigation privilege attaches to pre-litigation communications, it is an absolute unqualified privilege.40 "Imminent," the court explained, does not refer to the eve of the filing of a suit or that a complaint is concurrently being drafted.41 The litigation privilege attaches to any statement made in "serious and good faith consideration [or contemplation] of litigation, even if no litigation is ultimately pursued."42
However, press conferences held even when litigation is imminent are not protected by the litigation privilege. Rothman v. Jackson43 grew out of a lawsuit involving the singer Michael Jackson and alleged torts against a child. A representative of Jackson held a press conference in which he denied all charges against Jackson and charged Rothman, who represented the child and his parents, with knowingly and intentionally making false accusations against Jackson to extort money from him.44 Rothman sued Jackson and others for conspiracy to interfere with a business relationship, defamation, and intentional infliction of emotional distress.
Jackson asserted the litigation privilege as a defense, arguing that the press conference statements related to a pre-litigation settlement of the underlying suit against Jackson.45 The appellate court disallowed the defense, holding that there was no logical, legal relationship between the press conference and the litigation. The press statements were not a necessary or useful step in the litigation process and did not serve to further the purposes of the litigation.46 The court was careful not to extend the litigation privilege to "litigating in the press."47
Generally, filing a mechanic's lien is protected by the litigation privilege because it is a statutory prerequisite to the pursuit of a judicial remedy of default and relates directly to the judicial action to foreclose the lien. However, in Limandri v. Judkins,48 the court compared mechanic's liens with other liens and held that the litigation privilege will not attach when the lien itself bears no objective relationship to the litigation.49 To determine whether the litigation privilege should apply as a defense to a claim for intentional interference with contractual relations, the court examined the entire course of conduct between the parties.50 If the nonlitigation, non-communicative conduct outweighs the litigation conduct, the litigation privilege may not apply.51
The litigation privilege has been expanded to communications in furtherance of investigations conducted by the court. Obos v. Scripps Psychological Associates, Inc.52 arose out of a child custody proceeding. A court-appointed psychologist, charged with preparing a custody evaluation report, was told that the mother's boyfriend had been dishonorably discharged from the military and fired from his job for dishonesty. The psychologist discussed these allegations with the children's attorney and their therapist but did not include them in his report. The boyfriend sued the psychologist and his employer for defamation and invasion of privacy.53 The litigation privilege was held to be a complete defense.54 The psychologist's investigation and discussions were related to his responsibilities in the child custody action.55 The privilege could be asserted against the boyfriend, even though he was not a party to the underlying litigation, because "[p]ermitting nonparties to the underlying action, such as [the boyfriend], to sue on the basis of statements otherwise protected by the judicial privilege would promote chaos, particularly in the realm of custody determinations."56
In Susan S. v. Israels,57 the court held that the litigation privilege may bar claims of abuse of process and infliction of emotional distress, but it will not bar an action for invasion of privacy. Israels represented a defendant charged with sexual battery against Susan S. By mistake, Susan's subpoenaed mental health records were sent directly to Israels, who, without leave of court, read them, transmitted them to the defense psychiatrist, and used them to cross-examine Susan at trial.58 Susan sued Israels for abuse of process, infliction of emotional distress, and invasion of privacy. In its support of the litigation privilege as a bar for abuse of process and infliction of emotional distress but not invasion of privacy,59 the court reasoned that Susan had not placed her mental health in issue by complaining about the sexual battery, and so she had a reasonable expectation of privacy about her mental health records. Further, Israels failed to use available court procedures to determine his right to obtain and disseminate the records.60
Based on case law developments to date, counsel can take certain precautions to remain within the ambit of the litigation privilege. Pre-litigation demand letters should clearly state whether litigation has been authorized, so that the letter and further negotiations and communications are within the safe harbor of the litigation privilege. Threats to file criminal, administrative, or disciplinary charges to obtain advantage in a civil dispute, however, violate Rule 5-100(A) of the Rules of Professional Conduct.
To prevent the potentially costly loss of the litigation privilege, counsel should remember that:
- Statements made at press conferences or in releases must be in compliance with the trial publicity rule.61
- Civil Code Section 47(b) is more protective of information given in response to a press inquiry that it is of volunteered information.
- While a violation of the trial publicity rule will not necessarily lead to disciplinary action against a lawyer, defamatory statements made by the lawyer or the client at a press conference may not be shielded by the litigation privilege and may subject the lawyer to civil liability.62
- Attorneys who receive information or materials that might involve the privacy rights of others should follow any available statutory or court procedures to establish their right to use or disseminate the information.63
Litigating cases in the media was also met with judicial disfavor in Electro Scientific Industries, Inc. v. General Scanning, Inc.,64 a case that delivered a double punch. Not only did the court disallow the litigation privilege for press conference statements,65 but it also held that a client's statements in press releases about his or her lawyer's opinions constituted a waiver of the attorney-client privilege. The court explained that a client waives the privilege by issuing a news release that discloses specific lawyer-client communications, such as the substantive component of the communication, the bottom line of the lawyer's opinion, or the conclusion or the ultimate outcome of the lawyer's reasoning.66
The scope of the privilege waived depends upon the use of the news release. If the party claiming the privilege does not seek to use the release, then the scope of the waiver would be narrow and limited to communications directly referred to in the release. If the party seeks to use the news release in the litigation, the waiver would be broader and reach all communications that underlie the party's statements.67
State Farm Fire and Casualty Company v. Superior Court (Taylor)68 discussed the application of the crime-fraud exception69 to the attorney-client privilege. The Taylors, husband and wife, sued State Farm and some of its insurance brokers and agents, alleging various acts of fraud with regard to an insurance policy. To assist in the litigation, State Farm employed a claims specialist who, after leaving State Farm, provided the Taylors with two helpful declarations.70
State Farm sought to seal the claims specialist's declarations based on the attorney-client privilege. Following a helpful general review of what is included within the attorney-client privilege, the court agreed with the Taylors' argument that the crime-fraud exception applied to portions of the declarations because State Farm had sought the services of counsel to enable it to commit a crime or fraud.71
The State Farm court cautioned other courts to tread carefully when a fraud accusation might invade the attorney-client relationship in litigation. Three factors must be considered when applying the crime-fraud exception to the attorney-client privilege:
1) The key is the intent of the client-not of the lawyers.
2) If the attorney-client relationship is created after an alleged crime and tort has been committed, the information between attorney and client usually would be totally privileged.
3) If a party's failure to comply with discovery constitutes a fraud upon the court, the crime-fraud exception will be applied.72
Wellpoint Health Networks, Inc. v. Superior Court (McCombs)73 held that the attorney-client privilege and work-product doctrine may apply to an attorney who is retained before litigation to investigate claims of discrimination by a client's employee. The employee sought to discover all pre-litigation communications from the attorney to the company, claiming that the attorney was acting in a nonattorney capacity. The attorney asserted both the work-product and attorney-client privileges, claiming that he was conducting the investigation incidental to giving legal counsel and advice. The court held that under circumstances in which an employer routinely assigns outside counsel to investigate and address employment discrimination complaints, the privileges will apply.74
The court further held that Labor Code Section 1198.5, which permits employees to examine their personnel files, does not express a legislative intent to overthrow the attorney-client or work-product privileges. Thus, communications that pertain to an attorney's pre-litigation investigation of discrimination claims are not discoverable as part of the personnel file.75
Moeller v. Superior Court (Sanwa Bank)76 held that a predecessor trustee may not assert the attorney-client privilege against a successor trustee to withhold documents related to the trust administration. The California Supreme Court explained that a trustee can be a "client" and thus entitled to assert the attorney-client privilege pursuant to Evidence Code Section 951 et seq. regarding its communications with an attorney consulted on behalf of the trust. The powers of a trustee, however, are not personal; they are inherent in the office of trustee. Thus, the attorney-client privilege passes to a successor trustee along with all other powers of the trustee.77
The successor's power to control the privilege is limited to confidential communications concerning the administration of the trust. The successor trustee's authority will not be extended to enable it to learn of communications in which a predecessor trustee sought personal legal advice-even advice related to the trust-if the legal services were paid by the predecessor trustee with personal funds.78
Attorneys who represent trustees in their fiduciary capacities should alert their clients that the attorney-client privilege attaches to communications between a trustee and the attorney for the trust, just as it would between any other attorney and client, but there are two key points to remember:
- There is no privilege between co-trustees. An attorney representing co-trustees generally is required to disclose to one trustee any information learned from the other trustee that is significant to the representation.
- The beneficiary of the privilege is the trust, not the trustee. As a result, a predecessor trustee cannot assert the privilege to prevent a successor trustee from learning of communications related to trust administration. If a trustee seeks legal advice on possible future claims alleging breach of fiduciary duty, the trustee will be able to assert the attorney-client privilege for the trustee's own benefit if: 1) the trustee has consulted an attorney who does not represent the trust, and 2) the attorney is paid by the trustee from resources other than trust funds.
The halfway mark for 1998 is at hand, and lawyers are still awaiting a California Supreme Court ruling on the future of mandatory continuing legal education79 and a legislative decision on whether the State Bar of California will be authorized to collect fees sufficient to maintain its regulatory operations and other programs. In these changing times, the vigilance of lawyers for new laws and cases affecting the risks of practicing law must remain constant.
Good News For Lawyers
Among the case law developments last year concerning lawyers' professional conduct and liability were several rulings in favor of a variety of actions and practices by lawyers:
Legal malpractice arbitration agreements. In Powers v. Dickson, Carlson & Campillo,1 the court ruled that lawyers need not advise their clients to seek the advice of independent counsel regarding an amendment to an existing legal malpractice arbitration clause in an agreement between a lawyer and the lawyer's client-as long as the amendment is fair and equitable to both parties and not adverse to the client. The opinion also approved enforcement of a standard arbitration clause and held that additional warnings or typeface specifications were not required.
Attorney's lien provisions in settlements between a client and a third party. In Epstein v. Abrams,2 the trial court did not have jurisdiction to determine the validity or enforceability of an attorney's lien against any judgment entered in the matter before the court, since an action to enforce an attorney's lien must be brought separately. Also, a trial court may not approve a settlement in which clients defeat their former attorney's lien.
Contingent fee agreements between private counsel and government entities. The court in City and County of San Francisco v. Philip Morris, Inc.3 ruled that cocounsel privately retained by a government agency to prosecute a fraud action may do so under a contingency fee agreement. In reaching this conclusion, the court noted that private counsel would not have an opportunity to be overzealous because government attorneys would retain full control of the litigation.
Civil legal malpractice. In B. L. M. v. Sabo & Deitsch,4 a developer's action against bond counsel was not sustained because the bond counsel's duty was to his client, a city-not the developer. The court in Kurinij v. Hanna and Morton5 held that granting summary judgment for attorneys in a malpractice action was proper when there is no triable issue of causation.
Criminal legal malpractice. A criminal defendant sued his former attorney for legal malpractice, alleging that a delay in asserting a defense caused him to suffer unnecessary incarceration prior to his release. To establish proximate cause in a legal malpractice action, a former criminal defendant must prove not only that the former counsel was negligent but also that the former client was innocent of criminal charges filed against him. In Tibor v. Superior Court (Los Angeles County),6 the former client had failed to establish his innocence.
Confession of judgment by an attorney. In Efstratis v. First Northern Bank of Dixon,7 a confession of judgment executed by a party who is also an attorney in the action is invalid since an independent counselor is required by statute for all parties-even when they are attorneys.-E.R.P. and R.L.K.
1 Powers v. Dickson, Carlson & Campillo, 54 Cal. App. 4th 1102 (1997), op. mod., May 23, 1997.
2 Epstein v. Abrams, 57 Cal. App. 4th 1159, 67 Cal. Rptr. 2d 555 (1997).
3 City and County of San Francisco v. Philip Morris, Inc., 957 F. Supp. 1130, 1135 (N.D. Cal. 1997).
4 B. L. M. v. Sabo & Deitsch, 55 Cal. App. 4th 823, 64 Cal. Rptr. 2d 335 (1997).
5 Kurinij v. Hanna and Morton, 55 Cal. App. 4th 853, 64 Cal. Rptr. 2d 324 (1997).
6 Tibor v. Superior Court (Los Angeles County), 52 Cal. App. 4th 1359, 61 Cal. Rptr. 2d 326 (1997).
7 Efstratis v. First Northern Bank of Dixon, 59 Cal. App. 4th 667, 69 Cal. Rptr. 445 (1997).
1 For a review of the 1997 rulings that supported lawyer litigants, see "Good News for Lawyers," page 38.
2 See, e.g., CAL PAK Delivery, Inc. v. United Parcel Service, 52 Cal. App. 4th 1 (1997) (an attorney representing a class of delivery competitors was disqualified for offering to dismiss the class action without recovery to the class and to share all work product in exchange for a payment to the lawyer of $8 million to $10 million). See also In re Grayson (People v. Gurule), 15 Cal. 4th 792 (1997) (contempt citation and referral to the State Bar ordered for abandonment of a death penalty appeal).
3 Cal. Rules of Professional Conduct Amended Rule 3-500 provides: "A member shall keep a client reasonably informed about significant developments relating to employment or representation, including promptly complying with reasonable requests for information and copies of significant documents when necessary to keep the client so informed."
4 Jacuzzi v. Jacuzzi Brothers Inc., 243 Cal. App. 2d 1243 (1966).
5 In re Oracle Sec. Litig., 829 F. Supp. 1176 (N.D. Cal. 1993).
6 Forrest v. Baeza, 58 Cal. App. 4th 65 (1997).
7 Id. at 77 (citing In re Oracle Sec. Litig., 829 F. Supp. at 1189).
8 Forrest, 58 Cal. App. 4th at 82.
9 Although attorneys commonly say that clients "waive" conflicts, Cal. Rules of Professional Conduct Rule 3-310 requires client consent to the joint representation after the written disclosure required by Rule 3-310(A). Reference to "waiver" might imply that the attorney has satisfied his or her duties and may proceed without further concern. Even if representation is begun properly, attorneys may not continue the representation if doing so would make it impossible for them to fully satisfy their essential duties to one client because of conflicting duties to another client. This requires attorneys to continue monitoring the satisfaction of their essential duties even after having received the written consent required by Rule 3-310(A)(2). These essential duties include: competent representation, full disclosure, secrecy, and undivided loyalty.
10 See In re S. S. Retail Stores Corp., 211 B.R. 699 (1997), for a good discussion of California's law of vicarious disqualification.
11 Essex Chemical Corp. v. Hartford Accident and Indemnity Co., ___ F. Supp. ___ (D. N.J. Jan. 28, 1998), 1998 WL 39371 (D. N.J.).
12 Id., 1998 WL 39371 at 10-11.
13 Dieter v. Regents of the Univ. of California, 963 F. Supp. 908 (E.D. Cal. 1997).
14 Id. at 909.
15 Id. at 912. ABA Model Rules of Professional Conduct Rule 1.9; Restatement of the Law Governing Lawyers (Proposed Final Draft No. 1, 1996) §204, cmt. (c)(ii).
16 Passante v. McWilliam, 53 Cal. App. 4th 1240 (1997).
17 Id. at 1242.
18 Brooklyn Navy Yard Cogeneration Partners v. Superior Court (The Parsons Corporation), 60 Cal. App. 4th 248 (1997).
19 Id. at 254-55.
20 Id. at 257-58.
21 In the Matter of Jerome Berg, 3 State Bar Ct. Rptr. 725 (Rev. Dept. 1997).
22 San Diego Federal Credit Union v. Cumis Ins. Society, Inc., 162 Cal. App. 3d 358 (1997), requires an insurer to pay for retained independent counsel for the defense of a lawsuit against the insured under circumstances in which the insurer reserves the right to deny coverage at a later date when punitive damages are at issue and the insurer denies coverage for punitive damages. Berg, 3 State Bar Ct. Rptr. 725.
23 It is not clear how the misconduct giving rise to the civil judgment came to the attention of the State Bar. Bus. & Prof. Code §6068(o)(2) requires a lawyer to report the imposition of a civil judgment for fraud, misrepresentation, breach of fiduciary duty, or gross negligence committed in a professional capacity.
24 Berg, 3 State Bar Ct. Rptr. 725, 731.
25 Id. at 731 (citing Grayned v. City of Rockford, 408 U.S. 104, 108 (1972)).
26 Rubin v. Green, 4 Cal. 4th 1187, 1193-94 (1993); Silberg v. Anderson, 50 Cal. 3d 205, 211-12, 215-16 (1990); Albertson v. Raboff, 46 Cal. 2d 375, 380-82 (1956). Note, however, that the litigation privilege is not available for noncommunicative conduct such as an attorney eavesdropping on or illegally recording confidential telephone conversations (Ribas v. Clark, 38 Cal. 3d 355 (1985) and Kimmel v. Goland, 51 Cal. 3d 202 (1990)) or for an invasion of the constitutional right to privacy (Susan S. v. Israels, 55 Cal. App. 4th 1290, 1299-1301 (1997)).
27 Edwards v. Centex Real Estate Corp., 53 Cal. App. 4th 15, 29 (1997).
28 Silberg, 50 Cal. 3d 205, 213.
29 Albertson, 46 Cal. 2d 375, 380-82.
30 Lerette v. Dean Witter Org., Inc., 60 Cal. App. 3d 573, 577-78 (1976).
31 Edwards, 53 Cal. App. 4th 15; Aronson v. Kinsella, 58 Cal. App. 4th 254 (1997).
32 Rothman v. Jackson, 49 Cal. App. 4th 1134 (1996).
33 Limandri v. Judkins, 52 Cal. App. 4th 326 (1997).
34 Edwards, 53 Cal. App. 4th 15.
35 Id. at 22-25.
36 Civ. Code §47 provides that a "privileged publication or broadcast is one made& (b) [i]n any& (2) judicial proceeding.& "
37 Edwards v. Centex Real Estate Corp., 53 Cal. App. 4th 15, 34-35 (1997).
38 Id. at 36.
39 Aronson v. Kinsella, 58 Cal. App. 4th 254 (1997).
40 Id. at 265-66.
41 Id. at 267.
42 Id. at 268.
43 Rothman v. Jackson, 49 Cal. App. 4th 1134 (1996).
44 Id. at 1138-39.
45 Id. at 1139.
46 Id. at 1145.
47 Id. at 1145-47.
48 Limandri v. Judkins, 52 Cal. App. 4th 326, 345-46 (1997).
50 Id. at 344-48.
51 Id. at 348.
52 Obos v. Scripps Psychological Assocs., Inc., 59 Cal. App. 4th 103 (1997).
53 Id. at 105-06.
54 Id. at 107-08.
55 Id. at 107.
56 Id. at 108-09.
57 Susan S. v. Israels, 55 Cal. App. 4th 1290 (1997).
58 Id. at 1294.
59 Id. at 1299-1301.
61 Cal. Rules of Professional Conduct Rule 5-120.
63 Obos v. Scripps Psychological Assocs., Inc, 59 Cal. App. 4th 103 (1997).
64 Electro Scientific Industries, Inc. v. General Scanning, Inc., 175 F.R.D. 539 (N.D. Cal. 1997).
65 Id. at 539-40, 542.
66 Id. at 543.
67 Id. at 543-44.
68 State Farm Fire and Casualty Co. v. Superior Court (Taylor), 54 Cal. App. 4th 625 (1997), opn. mod., May 1, 1997, rev. den., July 9, 1997.
69 The crime-fraud exception, codified in Evid. Code §956, provides: "There is no privilege under this article if the services of the lawyer were sought or obtained to enable or aid anyone to commit or plan to commit a crime or fraud."
70 State Farm, 54 Cal. App. 4th at 635.
71 Id. at 645.
72 Id. at 644-48.
73 Wellpoint Health Networks, Inc. v. Superior Court (McCombs), 59 Cal. App. 4th 110 (1997).
74 Id. at 124.
75 Id. at 124-25.
76 Moeller v. Superior Court (Sanwa Bank), 16 Cal. 4th 1124, 1127 (1997).
77 Id. at 1127-28.
78 Id. at 1134-35.
79 Warden v. State Bar, 53 Cal. App. 4th 510 (1997), rev. grtd. and op. superseded, June 5, 1997.
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