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New Ethics Rules Address Law Firm Managers and Supervisors

By Carole J. Buckner
Carole J. Buckner is a partner and general counsel at Procopio, Cory, Hargreaves & Savitch LLP in San Diego.

Effective November 1, 2018, California's new Rules of Professional Conduct (RPC), will become applicable to all California attorneys. The new RPCs include both significantly modified rules and entirely new rules. One new series of rules applicable in California for the first time includes Rules 5.1, 5.2 and 5.3, governing law firms and associations and addressing responsibilities of managerial, supervisorial, and subordinate attorneys.[1] Rules 5.1 and 5.3 bring a new focus to established ethics concepts. Law firms large, medium, and small,[2] should reassess their operations to assure compliance.

Although new to California, the American Bar Association Model Rules of Professional Conduct include a similar but not identical series of rules. Given the similarity, out-of-state case law and ethics opinions can provide some insight into likely interpretation and application of the rules in California.

Rule 5.1 addresses the responsibilities of managerial and supervisory attorneys to assure compliance with ethics rules and law. The rules recognize that ethics compliance starts at the top. Attorneys in managerial roles are required to make "reasonable efforts to ensure that the firm has in effect measures giving reasonable assurance that all lawyers in the firm comply with" the Rules of Professional Conduct and the State Bar Act. [3] Comment [1] explains that efforts must be made to "establish internal policies and procedures" for the law firm.[4] Comment [8] points out that these are rules for which State Bar discipline can be imposed.[5]

Some examples of reasonable measures are referenced in the comments to the rule, including thorough policies and procedures pertaining to conflicts of interest, procedures for calendaring and tracking deadlines, supervision over handling client funds and property, and supervising inexperienced lawyers. A law firm's structure, types of practice, size and location or jurisdiction will determine what is "reasonable" and the policies required, and more extensive procedures may be appropriate for larger firms.[6] Other areas that should be given thorough consideration include internal mechanisms to address lawyer impairment, procedures for lawyers leaving the firm, and policies and procedures for handling data and the use of technology to protect confidential client information. Another important area is dealing with excessive workloads of attorneys, particularly in public agencies and legal departments. [7]

Under new Rule 5.3, a lawyer's supervisory responsibilities continue to extend to non-lawyer assistants.[8] The obligations are similar as far as making reasonable efforts to put effective measures in place to ensure that non-lawyers comply with applicable ethics rules.[9] One important area is supervision of a law firm's client trust account. A lawyer was privately reprimanded for lack of supervision after his wife, acting as the firm's bookkeeper, wrote herself more than $22,000 in checks from the client trust account.[10]

One way for a lawyer with intermediate managerial responsibility to satisfy the requirements applicable under Rule 5.1 is to designate a managing partner or management committee that holds the requisite authority and is charged with that responsibility.[11] However, individual lawyers must take corrective action if the lawyer knows that the delegated managers are not implementing the measures required by Rule 5.1.[12]

Individual attorneys with direct supervisory authority over another lawyer must make "reasonable efforts to ensure that the other lawyer complies with those rules and the State Bar Act."[13] A similar obligation applies to manage or supervise non-lawyer personnel to comply with the professional obligations of an attorney.[14] Whether one lawyer has such direct supervisory authority over another can depend upon the particular factual scenario involved. In one reported decision, an attorney was suspended for 60 days for failing to supervise a recent law school graduate after the inexperienced lawyer gave incorrect legal advice, resulting in harm in the amount of nearly $10,000 to the client.[15] An organized system for periodic review of the work of a new admittee is appropriate.[16]

Although Rule 5.1(c) does not create vicarious liability,[17] an individual attorney can be liable for another attorney's ethics violations under two scenarios. First, if a lawyer orders or ratifies conduct that violates the rules, the lawyer is subject to discipline.[18] Second, a lawyer with managerial or supervisory authority is responsible if he or she knows of conduct that violates the rules and fails to take action to avoid or mitigate the consequences, "whether or not the lawyer is a member or employee of the same law firm."[19] This implicates both local counsel and co-counsel.[20] Again, similar obligations are applicable with regard to non-lawyer personnel under Rule 5.3.

Several additional new rules provide areas where law firm managers should focus. Rule 1.10 is another entirely new rule that will, for the first time, address imputation of conflicts of interest between lawyers associated in a firm.[21] Rule 1.10 also addresses screening, which is defined as the isolation of a lawyer from participation in a matter through imposition of appropriate procedures.[22] Comment [5] to the rule specifically provides that the responsibilities of managerial and supervisory lawyers that are set forth in the new 5 series apply to screening arrangements implemented under this rule.[23] Rule 8.4.1 is another rule with a significant change that merits attention because it addresses prohibited discrimination, harassment, and retaliation.[24] While the prior version required a prior adjudication of a matter in order to present the matter to State Bar;[25] new Rule 8.4.1 drops this requirement.[26]

Given the extensive revisions to the Rules of Professional Conduct, now is the time for lawyers and law firms to prepare for compliance. Careful review of the changes to the rules is merited, with appropriate modifications to existing policies and procedures to assure alignment with the new requirements.


[1] New California Rules of Professional Conduct, available at http://www.calbar.ca.gov/Attorneys/Conduct-Discipline/Rules/Rules-of-Professional-Conduct/New-Rules-of-Professional-Conduct.

[2]"Firm" or "law firm" means a law partnership; a professional law corporation; a lawyer acting as a sole proprietorship; an association authorized to practice law; or lawyers employed in a legal services organization or in the legal department, division or office of a corporation, of a government organization, or of another organization. Cal. Rules of Prof. Conduct, R. 1.0.1(c) (effective 11/1/18) available at http://www.calbar.ca.gov/Portals/0/documents/rules/Rule_1.0.1-Exec_Summary-Redline.pdf.

[3] Cal. Rules of Prof. Cond., R. 5.1 (effective 11/1/18) available at http://www.calbar.ca.gov/Portals/0/documents/rules/Rule_5.1-Exec_Summary-Redline.pdf (hereinafter referred to as Rule 5.1).

[4] Id.

[5] Id.

[6] In re Phillips, 244 P.3d 549, 553 (Ariz. 2010).

[7] See, e.g., ABA Formal Ethics Op. 06-441; In re Edward S., 173 Cal. App. 4th 387 (2009).

[8] Cal. Rules of Prof. Conduct, R. 5.3 (effective 11/1/18) available at http://www.calbar.ca.gov/Portals/0/documents/rules/Rule_5.3-Exec_Summary-Redline.pdf.

[9] Id.

[10] In re Anonymous, Ind., No. 02S00-0707-DI-260, 11/13/07; see, e.g., In re Malek-Yonan, 2003 WL 23095707 (2003) (non-attorney office staff embezzled $1.7 million).

[11] Rule 5.1, Comment [2].

[12] Rule 5.1, Comment [3].

[13] Rule 5.1(b).

[14] Rule 5.3(b).

[15] In re Wilkinson, La., No. 01-B-2310, 1/15/02.

[16] In re Ritger, 556 A.2d 1201 (N.J. 1989).

[17] Rule 5.1, Comment [8].

[18] Rule 5.1 (c)(1).

[19] Rule 5.1(c)(2).

[20] Rule 5.1(c).

[21] Cal. Rules of Prof. Conduct, R. 1.10 (effective 11/1/2018) available at http://www.calbar.ca.gov/Portals/0/documents/rules/Rule_1.10-Exec_Summary-Redline.pdf (hereinafter Rule 1.10).

[22] Rule 1.0.1(k).

[23] Rule 1.10, Comment [5].

[24] Cal. Rules of Prof. Conduct, R. 8.4.1 (effective 11/1/2018) available at http://www.calbar.ca.gov/Portals/0/documents/rules/Rule_8.4.1-Exec_Summary-Redline.pdf (hereinafter Rule 8.4.1).

[25] Cal. Rules of Prof. Conduct, R.2-400(C).

[26] Rule 8.4.1.