The California Rules of Professional Conduct: The Good, the Bad, and the Utterly Confusing
LACBA Update, May 2005
By David B. Parker and Nicholle Noyes of Parker Mills & Patel LLP. Parker is the immediate past chair of LACBA's Professional Responsibility and Ethics Committee. The opinions expressed are those of the authors only.
All California lawyers are obligated to abide by the California Rules of Professional Conduct. Violations of these rules can lead to a wide range of State Bar discipline or disbarment, not to mention other serious repercussions such as civil liability,1 non-insurability, and damage to reputation. With so much at stake, one might reasonably expect the rules to provide clear guidance. Instead, all too often, they are a vexing source of controversy even for savvy ethicists, not to mention traps for neophytes and the unwary.
California's rules are unique. California is one of the few jurisdictions that eschews the ABA Model Rules, opting for its own unique set of rules, most notably in the area of confidentiality (Business and Professions Code Sec. 6068(e)). The rules are based on a "one size fits all" philosophy. They rarely speak to the conduct of lawyers practicing in a particular field, or for certain kinds of representation or certain classes of clients. They apply to all lawyers, no matter the nature of one's practice. Like American Express, they don't leave them behind when they are performing services in another state. (Rule 1-100(D)). And the rules are ever-changing, whether buffeted by the political winds calling for lawyer whistle blowing (e.g., last year's expedited amendment to Sec. 6068(e) to permit lawyers to blow the whistle on clients who threaten to cause death or serious physical injury to another, leading to the adoption of new Rule 3-100) or simply by the vagaries of the Supreme Court's interpretation of them. One need only compare last year's Huskinson & Brown v. Wolf, 32 Cal.4th 453 with Chambers v. Kay (2002) 29 Cal. 4th 142 (violations of Rule 2-200 governing fee splitting without client written consent), or last year's Fletcher v. Davis, 33 Cal. 4th 61 with Hawk v. State Bar (1988) 45 Cal.3d 589 (dealing with what is an "adverse" interest under Rule 3-300) to understand how even the high court struggles with the meaning and non-disciplinary impact of the rules.
Imagine the Ten Commandments with footnotes. California's rules are accompanied by an "Official Discussion," supposedly offered not as an independent basis for discipline but rather to provide guidance2 but which are at times unhelpful3 and other times contradictory.4
These ethical tenets are not exclusive. The California Rules of Professional Conduct must be understood against the backdrop of
(1) the State Bar Act (Business and Professions Code Sec. 6000 et seq.), which provides its own set of 15 commandments in Sec. 6068 and addresses, among other things, written fee agreements (Sec. 6147-48) and arbitration standards for lawyer-client fee disputes (Sec. 6200-6206); and
(2) a host of other statutes, e.g.,
-- the Code of Civil Procedure (which makes clear lawyers cannot shield work product in a State Bar proceeding or legal malpractice action, Sec. 2018(e), (f), and governs the authority of litigation attorneys, substitutions, and motions to withdraw, Sec. 283 et seq.);
-- the Evidence Code (which codifies attorney-client privilege, Sec. 950 et seq.);
-- and even the Probate Code
(Sec. 16000 et seq. deals with the fiduciary duties of trustees and has been held to apply to attorney-client relationships, including the presumption of undue influence in Sec. 16004).5
There are even judicially crafted rules, such as the duty to return inadvertently turned-over privileged documents or the concept of imputed conflicts for disqualification purposes.6
Still, it's not enough to know the ethical scriptures. California lawyers also have to keep up with the commentary of latter-day scribes, some with black robes,7 some with white hats,8 and, last but not least, colleagues whose influence comes purely from their expertise and commitment to professionalism.9
These commentaries are critical because the rules are not exactly models of clarity. For example, Rule 3-310, governing conflicts and waivers, uses the phrase "written informed consent," defined as "client's written agreement . . . following written disclosure." "Disclosure" is defined to require informing client of the "relevant circumstances and of the actual and reasonably foreseeable adverse consequences . . . ." It appears the "disclosure" of risk factors must be in writing, but, must the client sign the "written agreement" or otherwise deliver the consent, or is it enough if the lawyer sends a confirming letter memorializing a verbal expression of consent? Clearly, the former is the better, safer practice.
But note the contrast in Rule 3-300 ("Avoiding Interests Adverse to Client"), which speaks of "fully disclosing" the terms of the transaction and requires the client "consent in writing" but does not use the phrase "written informed consent" and does not provide definitions as does Rule 3-310. Also, neither rule deals with modern communication via e-mail. Does the "written consent" requirement differ between the two conflicts-related rules?
Rule 2-100 ("Communication with a Represented Party") prohibits direct or indirect communications with a represented party but fails to define what "indirectly" means. How does one square the right of clients to communicate with their counterparts and the right of attorneys to advise clients as to that right (both recognized in the rule's Official Discussion) with the notion that the attorney cannot use the client to "indirectly" communicate with an adverse party?
Sadly, however, even strict adherence to California's ethics rules may imperil lawyers who practice in federally regulated areas, such as securities practitioners who face the prospect that Sarbanes-Oxley whistle blowing regulations may preempt the rules.10
Here's hoping the State Bar's Revision Commission, comprised of some of the bar's best and brightest ethicists who are actively involved in a complete overhaul of the rules, will solve some of the problems,11 and that in the meantime lawyers steer a defensive course around the pitfalls. In a word, be careful out there!
1 While a violation of the rules is not per se actionable, the rules can form the basis for tort liability, for malpractice, or breach of fiduciary duty. (See Stanley v. Richmond (1995) 35 Cal. App. 4th 1070, 1086; Mirabito v. Liccardo (1992) 4 Cal. App. 4th 41.)
2 See Rule 1-100.
3 Rule 3-600's Official Discussion sagely observes: "When a change in [a client organization's] control occurs or is threatened, members are faced with complex decisions involving personal and institutional relationships and loyalties and have frequently had difficulty in perceiving their correct duty." No kidding.
4 Rule 3-310(B) requires written disclosure when a "Member" has various kinds of relationships with other parties and witnesses. Yet the Official Discussion assures us that the drafters of the rule shouldn't be taken literally. "[The rule] is intended to apply only to a member's own relationships or interests, unless the member knows that a partner or associate in the same firm has or had a relationship with another party or witness or has or had an interest in the subject matter of the representation."
5 Walton v. Broglio (1975) 52 Cal. App. 3d 400 (applying predecessor statute, Civil Code Sec. 2235). There are also special provisions relating to independent counsel advising "dependent adults" who request that counsel draft testamentary instruments in favor of a "care custodian," Probate Code Sec. 21350 et seq. Osornio v. Weingarten (2004) 124 Cal. App. 4th 304.
6 State Compensation Insurance Fund v. WPS (1999) 70 Cal. App.4th 644, 656; People v. SpeeDee Oil Change (1999) 20 Cal. 4th 1135, respectively.
7 The Supreme Court promulgates the rules, interprets them, and metes out discipline. There is also a growing body of ethics law in the published opinions of the State Bar Court.
8 State Bar prosecutors, like their criminal counterparts, are the gatekeepers, deciding whether to bring charges.
9 Some of the finest ethics scholarship is found in the ethics opinions issued by the State Bar's Standing Committee on Professional Responsibility and Conduct and LACBA's own Professional Responsibility and Ethics Committee, both of which are often relied upon by the courts.
10 The precise issue is an open question, but the 9th Circuit's ruling in Credit Suisse First Boston Corp. v Grunwald, __ F.3d __ (2005), holding that federal law regulating NASD arbitration pre-empts California's ethics standards for arbitrators, suggests that Sarbanes-Oxley may well trump California's ethical standards governing confidentiality.
11 To follow the commission's work, see www.calbar.ca.gov/state/calbar/calbar_generic.jsp?cid=10129.