Dating Your Co-Workers? Considering the Effect of Rule of Professional Conduct 1.8.10 for In-House Counsel
By Kirsten H. Spira and Alexander M. Smith
Kirsten Spira is a partner at Jenner & Block and a member of Los Angeles County Bar Association's Professional Responsibility and Ethics Committee. Alex Smith is an associate at Jenner & Block. The opinions expressed here are their own.
In 2018, California overhauled its Rules of Professional Conduct for the first time in decades. The new rules, which took effect on November 1, 2018, more closely align California's rules with the American Bar Association's Model Rules of Professional Conduct—and, in turn, with the many states that have modeled their rules on the ABA's. Among those new rules is Rule 1.8.10, which prohibits a lawyer from "engag[ing] in sexual relations with a current client who is not the lawyer's spouse or registered domestic partner, unless a consensual sexual relationship existed between them when the lawyer-client relationship commenced."[i] Rule 1.8.10 replaces the fact-specific inquiry formerly required under California Rule of Professional Conduct 3-120 with a broad, per se prohibition against initiating a sexual relationship with a client.[ii] But while Rule 1.8.10 is straightforward in some respects, it raises a host of unresolved questions—especially when applied in the context of an intra-organizational relationship between in-house counsel and a non-lawyer corporate employee.
The Shift from Rule 3-120 to Rule 1.8.10
Before 2018, California Rule of Professional Conduct 3-120 effectively permitted an attorney to engage in sexual relations with a client, so long as the attorney did not: 1) "[r]equire or demand sexual relations with a client incident to or as a condition of any professional representation"; 2) "[e]mploy coercion, intimidation, or undue influence in entering into sexual relations with a client"; or 3) "[c]ontinue representation of a client with whom the [attorney] has sexual relations if such sexual relations cause the [attorney] to perform legal services incompetently . . . ."[iii]
During this period, California's prohibition on sexual relations with a client was significantly narrower than Model Rule of Professional Responsibility 1.8(j), which states that a "lawyer shall not have sexual relations with a client unless a consensual sexual relationship existed between them when the client-lawyer relationship commenced."[iv] Indeed, as the Commission for the Revision of the Rules of Professional Conduct (Commission) pointed out, California's prohibition on sexual relations with clients was so narrow that there had not been a single published disciplinary case applying Rule 3-120.[v]
When the Commission took up Rule 3-120, it opined that "California's current rule renders it difficult to prove a violation in the typical circumstance of consensual sexual relations because the rule is not a bright-line standard."[vi] Accordingly, the Commission proposed—and the California Supreme Court ultimately adopted—a new rule, which prohibits any sexual activity between a lawyer and a client unless they are married or the sexual relationship pre-dated the attorney-client relationship. In proposing this rule, the Commission emphasized that its "bright-line prohibition" against sexual relations with a current client would have a "salutary deterrent effect" against improper attorney-client sexual relationships.[vii] And while Rule 1.8.10 is more forgiving than Model Rule 1.8(j) in some respects—for instance, by exempting spouses from the rule and requiring client consultation before bringing disciplinary charges[viii]—it is significantly more stringent than Rule 3-120.
Applying Rule 1.8.10 in the Corporate Context
Rule 1.8.10 is straightforward when applied to a relationship between an attorney at a law firm and an individual client, unless the attorney and the client are married (or registered domestic partners), or the sexual relationship predated the commencement of the attorney-client relationship, that attorney cannot represent that client.[ix] Rule 1.8.10 is significantly thornier when the client is an organization, and particularly where the lawyer works in-house.
As an initial matter, the Rules of Professional Conduct apply to all California lawyers, including lawyers working in-house for private, public and governmental organizations.[x] That these in-house lawyers regularly work with non-lawyers in their organization cannot be doubted. So who is the in-house attorney's "client" for purposes of the prohibition against sexual relations?
Rule 1.8.10 does not specify how the rule is applied in the in-house context, but Comment 2 states that Rule 1.8.10 "applies to a lawyer for the organization (whether inside counsel or outside counsel) who has sexual relations with a constituent of the organization who supervises, directs or regularly consults with that lawyer concerning the organization's legal matters."[xi] A "constituent" is "any agent or fiduciary authorized to act on behalf of an organization."[xii] By defining the client as a constituent who "supervises, directs or regularly consults with that lawyer concerning the organization's legal matters," the class of persons included within the reach of Rule 1.8.10 is significantly broader than former Rule 3-120, which applied only to "individual[s] overseeing the representation."[xiii]
A constituent who supervises or directs the lawyer's work should be fairly easy to identify, but what does it mean to "regularly consult" with an attorney? Suppose that a non-lawyer constituent has sought advice from the in-house lawyer on only two or three brief occasions. Is this "regularly" for purposes of Rule 1.8.10? What if the constituent never personally consults with the in-house lawyer, but is involved in formulating questions that the constituent's department-head regularly poses to the in-house counsel? Neither the text of Rule 1.8.10 itself nor the Commission's comments clarify whether this rule prohibits a relationship in these situations.
The drafting history of a separate ABA rule, Model Rule 4.2, may provide some additional insight as to the scope of the rule. Prior to 2002, Model Rule 4.2, which governs communications with unrepresented parties, applied only to communications with "persons having a managerial responsibility on behalf of the organization." When the ABA amended Model Rule 4.2 in 2002, it abandoned this phrasing in favor of the current "constituent of the organization" language. One member of the ABA committee responsible for this change explained that it was intended to "focus more specifically on the constituent's authority in the matter at issue and his or her relationship with the organization's lawyer," rather than on whether there was a formal supervisory relationship.[xiv] Other commentators have opined that, by adopting this language, the ABA intended to give Model Rule 1.8(j) a "broader" sweep than it had previously.[xv] This history suggests that the drafters did not want to limit the class of constituents to which the prohibition applies to individuals with managerial authority, but instead wanted to reach any constituent who regularly consulted with the lawyer.
Dealing with a Rule 1.8.10 Violation
What happens when an organization discovers a violation of Rule 1.8.10?
Unlike California's other conflict-of-interest rules, Rule 1.8.10 does not allow the organizational client simply to consent to the representation despite the ongoing sexual relationship. Moreover, short of adopting a blanket "no-fraternizing" rule, it may be difficult for any organization to determine ex ante whether the State Bar will deem a particular relationship to violate Rule 1.8.10, given the fact-specific nature of the inquiry. A known breach also cannot be simply overlooked by a lawyer in the organization who manages or supervises the offending lawyer because, under the current rules, supervising lawyers have a responsibility to ensure that subordinate lawyers comply with the rules and, in some circumstances, may be personally responsible for another lawyer's known violations.[xvi] In short, there is no mechanism to cure a past Rule 1.8.10 violation; however, a continuing (or future) violation may be avoided. On the face of the rule, future compliance can be achieved if the couple ends the sexual relationship, marries or registers as domestic partners.
Is there any less drastic solution? The text of Rule 1.8.10 suggests that a violation occurs only when there is a relationship between an attorney and someone who "regularly consults with that lawyer concerning the organization's legal matters."[xvii] Accordingly, the violation should be remedied by reorganizing the reporting structure so that the individual lawyer no longer provides legal advice to the individual client constituent. In other words, altering the chain of command would eliminate the risk of "that lawyer" consulting the constituent with whom the lawyer has a relationship.
Of course, this will not be a feasible solution for every organization, and it is possible that the State Bar will not view this as a sufficient remedy. An organization that discovers a continuing violation of Rule 1.8.10 will need to decide between eliminating the consulting relationship between the couple and broader remedies, such as preventing the lawyer from providing advice to the constituent's entire department, moving the constituent to another department, or terminating one or both of them. But given the use of the phrase "that lawyer," a simple reorganization of the consulting relationship should satisfy both the letter and the spirit of the rule.
Finally, an attorney in violation of Rule 1.8.10 might attempt to sidestep this remedial question by asserting that its prohibition on attorney-client sexual relations is unconstitutional. It is far from clear that such a challenge would be effective. The Commission actually anticipated that Rule 1.8.10 might be challenged as unconstitutional, but observed that Rule 1.8.10 was "not believed to be unconstitutional" and there had been no constitutional challenges to any similar rules in any other jurisdiction.[xviii] Time will tell as to whether anyone will mount such a challenge to Rule 1.8.10.
[i] Cal. Rules of Prof. Conduct, R.1.8.10(a) (2018).
[ii] While the standard set forth in former Rule 3-120 was eliminated from the revised Rules of Professional Conduct, that standard nevertheless continues in effect in California (alongside new Rule 1.8.10) through Business and Professions Code section 6106.9.
[iii] Cal. Rules of Prof. Conduct, R. 3-120(B) (1992).
[iv] Model Rules of Prof. Conduct, R.1.8(j).
[v] Commission for the Revision of the Rules of Professional Conduct, New Rule of Professional Conduct 1.8.10: Executive Summary (hereinafter Executive Summary), at 1 n. 3.
[vi] Id. at 1
[vii] Id. at 2.
[viii] Cal. Rules of Prof. Conduct, R.1.8.10(a), (c).
[ix] See Cal. Rules of Prof. Conduct, R. 1.8.10.
[x] Cal. Rules of Prof. Conduct, R.1.0 (stating that the Rules are "binding upon all lawyers"); see also Cal. Rules of Prof. Conduct, R. 1.0.1 (defining "law firm" to include lawyers "in the legal department, division or office of a corporation"); Cal. Rules of Prof. Conduct, R.1.13.
[xi] Cal. Rules of Prof. Conduct, R.1.8.10, comment 2.
[xii] Cal. Rules of Prof. Conduct, R.1.13, comment 1.
[xiii] Cal. Rules of Prof. Conduct, R.3.120, comments.
[xiv] Carl A. Pierce, The Provisions, Bus. Law. Today 48, 53 (Nov./Dec.2002).
[xv] Christopher P. Clasby, The Ethics of Representing Corporations, 104 Ill. B.J. 40, 42 (2016).
[xvi] Cal. Rules of Prof. Conduct, R.5.1.
[xvii] Cal. Rules of Prof. Conduct, R.1.8.10, comment 2.
[xviii] Executive Summary, at 1 & 1 n.2.