Implied Consent and Inordinate Delay Estop a Party From Seeking Disqualification

By Robert K. Sall, who practices with Sall Spencer Callas & Krueger ALC in Laguna Beach, and serves on the Professional Responsibility and Ethics Committee of the Los Angeles County Bar Association. Mr. Sall is a Certified Specialist in Legal Malpractice by the Board of Legal Specialization of the State Bar of California. The opinions expressed are his own.

A December 2018 decision from the Fifth District Court of Appeal in the Antelope Valley Groundwater Cases (Antelope Valley – East Kern Water Agency v. L.A. Cty. Waterworks Dist. No. 40, 30 Cal.App.5th 602 (2018)), demonstrates the importance of acting promptly to seek judicial intervention where grounds exist for disqualification of a law firm. Prolonged delay may result in waiver or support the finding of an effective implied consent to the conflicting representation, and may thus estop a party from seeking judicial relief.

Antelope Valley involved Best Best & Krieger, LLP’s representation of the Los Angeles County Water District No. 40 (“District 40”) in litigation known as the Antelope Valley Groundwater Adjudication (“AVGA”) cases – a series of lawsuits dating back nearly 20 years. Best Best & Krieger began representing District 40 in 2004. The Appellant, Antelope Valley – East Kern Water Agency (“AVEK”) was not initially a named party in the AVGA Litigation, but had a long-term relationship with Best Best & Krieger as its general counsel.

In 2006, AVEK was named as a party in the AVGA cases. It retained separate attorneys to represent it while allowing Best Best & Krieger to continue as general counsel despite the firm’s representation of District 40 in the litigation. AVEK and District 40 eventually became adverse. AVEK filed a cross-complaint against District 40 and took adverse positions with respect to allocation of attorney’s fees and summary adjudication proceedings. Despite this, for nearly ten (10) years, AVEK never asserted that Best Best & Krieger could not simultaneously represent District 40 in the litigation while it was serving as AVEK’s general counsel. Thus, Best Best & Krieger had a conflict thrust upon it, resulting in it representing two clients to whom it owed a duty of loyalty and whose interests became adverse to one another in the litigation. Best Best & Krieger did not obtain an informed written consent from AVEK, which would otherwise have been required by then existing rule 3-310 of the California Rules of Professional Conduct. [The currently applicable rule would be rule 1.7(a), adopted November 1, 2018].

In 2015, the claims between District 40 and AVEK were settled. A separate judgment was entered on that settlement agreement in December of that year. The AVGA Litigation continued, however, as to the claims among smaller non-settling parties, and both District 40 and AVEK remained in the case. In 2016, AVEK terminated Best Best & Krieger as its general counsel. It then demanded, for the first time, that the firm recuse itself from representing District 40. When Best Best & Krieger declined, AVEK filed a motion to disqualify the firm from representing District 40 or any other party in the AVGA cases. AVEK argued that the failure of Best Best & Krieger to obtain AVEK’s informed written consent to the firm’s representation of District 40 was dispositive and that, as a concurrent representation conflict, under existing case law, the disqualification of Best Best & Krieger would be mandatory.

The trial court denied the motion. It concluded that all the relevant facts militated in support of a finding that AVEK was estopped from pursuing disqualification. First, it had waited ten years to raise the issue, during which time AVEK had reaped substantial benefits from Best Best & Krieger’s representation of District 40 including a court approved settlement. The trial court found that District 40 would suffer substantial financial cost to replace the firm, as well as loss of the knowledge and experience of its long-time counsel if disqualification was granted. The courts and other interested parties would be harmed as well, and thus disqualification here would not support the important public interest in the fair and efficient administration of justice. There was no evidence that disqualification would be necessary as a prophylactic measure to protect AVEK’s confidential communications. Finally, AVEK had made no effort to establish any justification for its delay. On AVEK’s appeal of the trial court’s denial of the motion, the Court of Appeal found that these facts provided “ample justification for the implied finding that delay was unreasonable and extremely prejudicial.”

AVEK argued on appeal that the trial court’s denial of its disqualification motion was an abuse of discretion. It did not contend that there was no substantial evidence to support the decision, but rather, that delay and principles of estoppel were factors that could only be considered in successive representation conflicts, and not in a concurrent representation conflict. Due to the law firm’s failure to obtain an informed written consent, AVEK argued that Best Best & Krieger had a concurrent loyalty conflict and its disqualification must be mandatory. 

The Court of Appeal disagreed, finding that AVEK presented no logical reason why the estoppel principles that courts have applied in successive representation decisions would not have equal application to a concurrent representation context. Nothing in former rule 3-310 suggested a basis for treating successive and concurrent representation differently with respect to applying the doctrine of estoppel. The Court found there was substantial evidence to support the trial court’s decision that AVEK had effectively consented to Best Best & Krieger’s representation of District No. 40 since it was aware of the conflict for years and had raised no objections. The Court concluded that AVEK was estopped by such inordinate delay in objecting or seeking disqualification despite what was an obvious conflict of interest and the firm’s failure to obtain an informed written consent.

Based upon the Court of Appeal’s review of existing authorities, it noted that courts will not subsequently grant a motion to disqualify an attorney when a client has made an informed decision to consent to that attorney’s concurrent representation of a party with adverse interests. Where the client has given informed consent, the client is estopped from revoking its consent by everyone’s reliance upon its long-standing position. Although the lack of a written consent has been cited in other cases in support of granting a client’s disqualification motion, the court found no cited authority holding that a client may not manifest an informed consent by its conduct, and therefore, the absence of an informed consent in writing under former rule 3-310 is not dispositive.[1]

The takeaway from Antelope Valley decision is that the burden in a disqualification motion is on the moving party to justify any basis for delay in bringing the motion, whether it is a concurrent representation conflict or one arising from successive representation. Even in a concurrent loyalty conflict, where disqualification might otherwise be mandatory, principles of estoppel may still be applied. Disqualification of a conflicted law firm may not be mandatory if there has been an express or implied waiver, or unreasonable delay by the party in asserting that conflict and seeking judicial relief.

[1]   Although the violation was found here, under unique circumstances, to not mandate disqualification, practitioners should not assume that such a clear conflict would be overlooked in disciplinary action.