Rule Aficionados and ADR
LACBA Update, December 2002

By Diane L. Karpman, former chair, LACBA Professional Responsibility & Ethics Committee. Karpman of Karpman & Associates in Los Angeles represents attorneys in disciplinary matters and is an expert consultant and witness on legal ethics issues. The opinions expressed are her own.

Some members of the legal community believe that there ought to be a rule regarding everything. Each precise aspect of practice should be detailed and delineated by exact and detailed rules.

These aficionados fail to understand that oppressive regulation of the practice would fail to include the nuances of specific clients who require the lawyer to exercise discretion. Clients come in all shapes and sizes, and their needs are unique and sui generis. Therefore, lockstep rules would fail to take into consideration the idiosyncratic requirements of a client who could be categorized as eccentric, diminished, or unconventional. We all know that on any given day (but especially late Friday afternoon if it is rainy) all of our clients could fall within the rubric of “unconventional”.

Recognition of the “unique” character of client matters is reflected in the imposition of State Bar discipline. For example, discipline is meted out on a case-by-case basis and is not formulaic, talismanic, or imposed in a cookie cutter fashion. Each case is unique.

Currently, ADR proponents are urging that the recently revived California Rules Revision Commission adopt a requirement or rule that requires all lawyers to inform their clients of the options involving alternative dispute resolution. The Revision Commission is specifically charged with attempting to reconcile the California Rules with the recently enacted Ethics 2000 revisions of the American Bar Association’s Model Rules. An “ADR Rule” was proposed and rejected by the ABA’s Ethics 2000 Commission. Ideas are sometimes rejected because they are or could be considered to currently exist within the penumbra of a given existing rule.

Both California and the Model Rules have affirmative rules requiring that a lawyer keep a client reasonably informed regarding the case. California has Rule 3-500 and a supporting section of the Business and Professions Code, Sec. 6068 (M), which require that the lawyer communicate with the client. ABA Model Rule 1.4 requires communication.

Communication is almost a fiduciary duty because if a client has a right to expect loyalty and confidentiality, but those ideas are never discussed, then what good are they to the client? “The duty to communicate derives in part from a lawyer’s fiduciary duty of upmost good faith to the client.ABA Annotated Model Rules of Professional Conduct, Fourth Edition, page 32.

Clients hire lawyers to provide counsel and advice so that they can make informed decisions. “One of an attorney’s basic functions is to advise. Liability can exist because the attorney failed to provide advice. Not only should an attorney furnish advice when requested, but he or she should also volunteer opinions when necessary to further the client’s objectives.” Nichols v. Keller (1993) 15 Cal. App. 4th 1672.

Lawyers are also duty bound to perform services for their clients in a competent manner, pursuant to Rule of Professional Conduct 3-110 (Competency Rule). Competency would seem to suggest that a lawyer be conscious of cost-saving methods to assist clients in obtaining their overall objectives. Many, but not all, cases employing alternative dispute resolution are economic and can result in sizable savings for the client.

Advising a client regarding ADR options may not be in the client’s best interest, such as where a client has diminished capacity; a myriad of other circumstances could be present to indicate that early ADR is inadvisable. The issue then becomes one involving the allocation of authority in an attorney-client relationship. Attorneys have authority to determine procedural matters, but the client retains authority on issues involving “substantial rights or the cause of action itself” because the client is the “captain of the ship.” Blanton v. Woman Case (1983) 145 Cal. App. 3d 100.

Is the choice of an adjudicative forum tactical or substantive? Depends, but it would seem that inherent in the obligation to exercise independent judgment is a large measure of discretion.

Our rules express a “one size fits all” philosophy. Therefore, if a rule is enacted vis-a-vis information regarding ADR, that will eliminate the attorney’s ability to evaluate a client’s status in offering advice regarding ADR. Sophisticated clients, corporations, entities with in-house counsel know and understand the benefits or detriments of ADR. But what about unsophisticated clients with little or no experience other than that fed by the media in terms of the legal system. How informed will their decisions be?

The idea of universal applicability of our rules is no longer applicable in our society. Witness the Sarbanes-Oxley, or accounting reform bill, which will seek to impose new gatekeeper or watchdog obligations on lawyers involved in SEC activity. For approximately a decade, the IRS, as a result of abusive tax shelter letters, has had the ability to discipline lawyers engaged in that forum.

Therefore, a mandatory rule requiring information regarding ADR would seem unnecessary since a lawyer already has obligations of communication and a duty of competency. It is already tucked within the folds of the “penumbra” of good lawyering.