Red Flags: Inquiring Further into the Veracity of a Client’s Story
LACBA Update, January 2015
By Andrew M. Vogel, Deputy Attorney General, Office of the Attorney General of the State of California, and member of LACBA’s Professional Responsibility and Ethics Committee. The views this article expresses are solely the author’s.
The California Supreme Court stated three decades ago that “[w]hile an attorney may often rely upon statements made by the client without further investigation, circumstances known to the attorney may require an investigation.”1 But what circumstances warrant going beyond taking a client’s story at face value? How far does the lawyer’s obligation to investigate go? What duties must the lawyer observe in conducting such an investigation?
These questions present an interplay of obligations. A lawyer’s duty of competence prohibits “intentionally, recklessly, or repeatedly fail[ing] to perform legal services with competence.”2 The ABA’s Model Rules of Professional Conduct, in addressing competence, require the lawyer to use “the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation.”3 A leading treatise suggests this language “indicate[s] a duty to investigate.”4 The ABA’s Model Code of Professional Responsibility states: “[A] lawyer must be…free to obtain information beyond that volunteered by his client.”5 Furthermore, lawyers must “employ only such means as are consistent with truth” and must not to seek to mislead the trier of fact “by an artifice or false statement of fact or law.”6
In litigated matters, lawyers must also adhere to procedural obligations under Code of Civil Procedure Section 128.7 and Federal Rule of Civil Procedure 11. Each provides in pertinent part that by presenting a pleading to the court, a lawyer certifies that to the best of his or her “knowledge, information, and belief, formed after an inquiry reasonable under the circumstances,” a pleading’s “factual contentions have evidentiary support or, if specifically so identified, are likely to have evidentiary support after a reasonable opportunity for further investigation or discovery.”7 Additionally, an “attorney’s investigation and research also may be relevant to whether the attorney acted with malice” for malicious prosecution purposes.8
The need to inquire critically into facts related by a client continues throughout the representation. A recent case, Peake v. Underwood,9 illustrates this point. There, a home purchaser sued the sellers’ agent, alleging the agent failed to disclose a defect at the home. In e-mails to the purchaser’s lawyer and in a subsequent Section 128.7 motion, the agent’s lawyer cited evidence demonstrating that the claims had no factual or legal basis. The trial court granted the agent’s Section 128.7 motion and, as a sanction, dismissed the purchaser’s action and imposed an attorney’s fee award against the purchaser and her lawyer.
The California Court of Appeal affirmed this sanction. In doing so, the court addressed lawyers’ ongoing duty to evaluate the evidentiary bases for their clients’ claims, particularly where an adversary develops contrary evidence:
[E]ven though an action may not be frivolous when it is filed, it may become so if later-acquired evidence refutes the findings of a prefiling investigation and the attorney continues to file papers supporting the client’s claims….Thus, a plaintiff’s attorney cannot “just cling tenaciously to the investigation he had done at the outset of the litigation and bury his head in the sand.” …Instead, “to satisfy [the] obligation under [Section 128.7] to conduct a reasonable inquiry to determine if his [or her] client’s claim was well-grounded in fact,” the attorney must “take into account [the adverse party’s] evidence.”10
Nor may a lawyer merely assume that others with whom he or she has acted as co-counsel conducted a reasonable investigation. In Cole v. Patricia A. Meyer & Associates, APC, the court found sufficient prima facie evidence to support a malicious prosecution claim against not just the lawyers who brought an action without sufficient evidentiary support or investigation, but also against the lawyers’ co-counsel, despite co-counsel’s argument that they did no pre-trial work on the case and served solely as trial counsel.11 Similarly, in Jay v. Mahaffey,12 the court held that where prima facie evidence existed to support a malicious prosecution claim against a supervising lawyer, the lawyer’s associate could not avoid the same liability merely by claiming she “was following [the] superior’s instructions.”13
How may a lawyer demonstrate a reasonable inquiry, both at the outset of a case and as the case progresses? For starters, several courts have unsurprisingly treated a lawyer’s interviews of knowledgeable persons, review of pertinent records, and appropriate legal research as pre-litigation investigative work sufficient to shield a lawyer from sanctions.14
The court in Peake suggested that conducting discovery against a litigation adversary also plays an important role in a lawyer’s “reasonable inquiry.” The court faulted the home purchaser’s lawyer for “fail[ing] to engage in any affirmative discovery against [the seller’s agent],”15 viewing this as evidence that neither the lawyer nor his client viewed the client’s claims as meritorious.16 Similarly, in Childs, a case Peake cited with approval, the court upheld Rule 11 sanctions against a lawyer for failing to conduct a reasonable inquiry into his client’s claims where, in the face of evidence the adversary adduced that demonstrated the client had fabricated his story, the lawyer conducted no discovery to “test the verity of [this] evidence.”17
Assume that a lawyer has both diligently investigated a client’s claims before litigation and has continued to do so as the case progresses. But assume also that because of or despite these efforts, red flags continue to exist concerning the factual basis for the position the client wants the lawyer to advocate. The lawyer intends to investigate further. What other duties come into play?
The lawyer must “keep [the] client reasonably informed about significant developments relating to the employment or representation…”18 A key factual defect in the client’s claims, a potential further investigation, and the risk of sanctions if that investigation is not pursued should present “significant developments” of which the lawyer should inform the client. Both the Rules of Professional Conduct and the State Bar Act also impose a duty not to disclose a client’s confidential information19—a duty “broader than the attorney-client privilege”20 that encompasses “information relating to the representation, whatever its source.”21 If a lawyer’s investigation into the factual bases for the client’s claims involves inquiries directed to others, the lawyer cannot disclose the client’s confidential information without client consent. And in the hopefully unlikely event that an investigation reveals a factual problem that puts the lawyer at risk of prosecuting an action without probable cause or of violating the Rules of Professional Conduct, the rules don’t merely permit but require the attorney to withdraw from the representation.22
Failing to maintain a critical eye toward the veracity of facts related by a client may prove costly. Remaining cognizant of this risk and conducting critical factual inquiries in a manner consistent with a lawyer’s professional obligations are practices well worth adhering to.
1 Butler v. State Bar, 42 Cal. 3d 323, 329 (1986).
2 Cal. R. of Prof’l Conduct R. 3-110(A). The State Bar Act, while not codifying a duty of competence, includes other duties that are arguably “inherent in that concept.” (Vapnek, et al., Cal. Professional Responsibility (Rutter Group) §6:9, citing Bus. & Prof. Code §6068(c), (d), (e)(1), (f), (m).)
3 ABA Model Rules of Prof’l Conduct R. 1.1 (emphasis added.) Because California has not adopted the ABA Model Rules, they do not establish ethical standards in California. But courts may consider them in the absence of direct or conflicting California authority. State Compensation Ins. Fund v. WPS, Inc., 70 Cal. App. 4th 644, 655-56 (1999).
4 Mallen & Smith, 4 Legal Malpractice, §29:22 (2014 ed.).
5 ABA Model Code of Prof’l Responsibility, Canon 4, Ethical Consideration 4-1. The Model Code’s Ethical Considerations, while not “mandatory in character,” provide “a body of principles upon which the lawyer can rely for guidance in many specific situations.” See Preliminary Statement to Model Code.
6 Cal. R. of Prof’l Conduct R. 5-200(A), (B).
7 “[F]ederal case law construing Rule 11 is persuasive authority on the meaning of [S]ection 128.7.” Peake v. Underwood, 227 Cal. App. 4th 428, 440 (2014), citations omitted.
8 Cole v. Patricia A. Meyer & Associates, APC, 206 Cal. App. 4th 1095, 1114 (2012).
9 Peake, 227 Cal. App. 4th 428.
10 Id. at 441, citing Childs v. State Farm Mut. Auto. Ins. Co., 29 F. 3d 1018, 1025 (9th Cir. 1994) (brackets in original).
11 Cole, 206 Cal. App. 4th at 1114-17.
12 Jay v. Mahaffey, 218 Cal. App. 4th 1522 (2013).
13 Id. at 1545-46.
14 See Greenberg v. Sala, 822 F. 2d 882, 887 (9th Cir. 1987) (plaintiffs’ counsel made “sufficient inquiry” for Rule 11 by interviewing clients for 100 hours, reviewing records, conducting legal research, and having other counsel review proposed complaint); accord Jensen Elec. Co. v. Moore, Caldwell, Rowland & Dodd, Inc., 73 F. 2d 1327, 1330 (9th Cir. 1989).
15 Peake v. Underwood, 227 Cal. App. 4th 428, 449 (2014).
17 Childs v. State Farm Mut. Auto. Ins. Co., 29 F. 3d 1018, 1025 (9th Cir. 1994)
18 Cal. R. of Prof’l Conduct R. 3-500.
19 Cal. R. of Prof’l Conduct R. 3-100(A); Bus. & Prof. Code §6068(e)(1).
20 Dietz v. Meisenheimer & Herron, 177 Cal. App. 4th 771, 786 (2009).
21 Cal. R. of Prof’l Conduct R. 3-100(A), cmt. 2.
22 Cal. R. of Prof'l Conduct R. 3-700(A), (B). A more detailed discussion of mandatory withdrawal is beyond this article’s scope.
LACBA's Professional Responsibility and Ethics Committee welcomes new inquiries from LACBA members regarding ethical issues or concerns about professional responsibilities. The identity of the inquirer is kept confidential within the committee. The committee, however, does not publish formal opinions that are the subject of any pending litigation involving the inquirer. If you have an ethical question that you would like the committee to consider, you can mail your written inquiry to Los Angeles County Bar Association, Professional Responsibility and Ethics Committee, P.O. Box 55020, Los Angeles, CA 90055-2020, or e-mail your inquiry marked “Confidential” to Member Services at email@example.com.