by the OCBA Professionalism and Ethics Committee Members
The past year provided no shortage of important developments in the area of legal ethics, professional responsibility, and the law of lawyering. The Professionalism and Ethics Committee has summarized some of the most significant court decisions and ethics opinions.
Electronic Discovery In an ethics opinion (Formal Opinion No. 2015-193) warning that even the most seasoned attorneys may not be competent to handle certain representations without help, the California State Bar’s Committee on Professional Responsibility and Conduct (COPRAC) addressed ethical duties for handling discovery of electronically stored information (ESI). Beginning with the premise that the ethical duty of competence under Rule of Professional Conduct 3-100(A) “remains constant” in the face of new technology, COPRAC opines that an attorney involved in responding to a litigation request for e-discovery must have adequate technical skills and resources at his disposal. Id. at 2.
The attorney must determine “at the outset” of the engagement whether e-discovery issues will play a role in the matter. This threshold evaluation requires the attorney to “assess his or her own e-discovery skills and resources,” and an attorney lacking them “must try to acquire sufficient learning and skill, or associate or consult with someone with expertise to assist.” Absent acquisition of this skill set, the attorney must decline the engagement. Id. at 3. Even a highly experienced attorney may be required to seek curative assistance from others. Id. at 7.
The opinion discusses a hypothetical e-discovery scenario, where the attorney committed several professional errors, including failing to make a proper assessment of the e-discovery needs and issues, neglecting to understand or supervise the client’s search for responsive ESI, not screening the ESI for potentially privileged material, and, lacking adequate personal expertise, failing to retain or consult with an expert until after the client’s interests were potentially prejudiced. These failures led to the hypothetical attorney violating a number of ethical duties, including the duty of competence and the duty to preserve his client’s confidences.
Mediation Confidentiality In Amis v. Greenberg Traurig, LLP, 235 Cal. App. 4th 331 (2015), the court again addressed the hot topic of mediation confidentiality. Amis sued Greenberg Traurig, LLP (GT) for malpractice, alleging that in representing him and his former company in mediation to settle a civil action, GT had counseled him to sign a settlement agreement in which he assumed personal liability for the company’s liabilities. When the company defaulted in payments under a settlement agreement, the plaintiff in the underlying case sought payment from Amis.
In the malpractice suit, Amis alleged that GT had failed to advise him of the risks of his assuming personal liability. The trial court granted GT summary judgment based on the mediation confidentiality established by Evidence Code section 1119.
The Second District Court of Appeal affirmed. Quoting from Cassel v. Superior Court, 51 Cal. 4th 113 (2011), the court held that “neither evidence of anything said, nor any writing, is discoverable or admissible ... if the statement was made, or the writing was prepared, for the purpose of, in the course of, or pursuant to, a mediation.” 235 Cal. App. 4th. at 117 (quoting Evidence Code § 1119). Amis had admitted that his alleged damages stemmed entirely from entering into the settlement agreement, and that any communications he had with GT regarding the settlement agreement occurred during the mediation. Thus, Section 1119 precluded Amis from using these communications to prove that GT’s acts or omissions caused his damages.
The court rejected Amis’ argument that the trial court should have drawn an inference—from the evidence that he had signed the settlement agreement after being advised by GT—that GT had advised him regarding the terms of the agreement, and had consented to his assumption of personal liability. The Court of Appeal concluded that drawing such an inference would allow Amis to do indirectly what the statute prohibits being done directly. Moreover, the statute would not allow GT to rebut the inference by presenting evidence of the advice it gave to Amis.
In-Firm Communications The court in Palmer v. Superior Court, 231 Cal. App. 4th 1214 (2014), addressed whether in-firm communications about a dispute with a current client will be protected from discovery in a subsequent malpractice action brought by that client.
Plaintiff Mireskandari retained the law firm of Edwards Wildman Palmer LLP to represent him in a lawsuit. The relationship soured, and Mireskandari expressed dissatisfaction with the firm’s work and its fees. While still representing the client, the lead partner consulted with other partners designated as general counsel and claims counsel. When the former client sued for legal malpractice, he moved to compel production of internal firm communications, which the firm asserted were protected by attorney-client privilege. The firm also asserted that communications with a third partner who had billed time to the case also were subject to protection because he advised the lead partner.
The trial court granted the motion to compel, and the firm brought a petition for writ of mandate. In opposing the writ, the client asserted that the firm had failed to establish an attorney-client relationship existed among partners, and that the firm’s representation of its own interests while still representing the client created an impermissible conflict of interest.
The Court of Appeal granted the writ in part, and denied it in part. Expressing no opinion on whether there was an ethical breach, the court first concluded that an attorney-client relationship was established between the partner assigned to the case and the firm’s in-house counsel (the general counsel and claims counsel) because they had provided legal advice to the firm. Significantly, neither had performed work on the client’s case. The privilege having been established, the court found that the existence of a conflict of interest did not abrogate the attorney-client privilege, as no such conflict of interest exception was established under California statute.
In contrast to the in-house counsel, the court found that no attorney-client relationship existed as to the third partner who had performed work on the case. Thus whether in-house privilege may be invoked is going to depend on what role is occupied by the attorneys serving as ethics advisors, and whether they have done billable work for the client. It remains to be seen how these limitations will be developed in future cases.
Attorney Disclosure Upon Withdrawal In State Bar Formal Opinion No. 2015-192, COPRAC opined on the ethical dilemma that attorneys face when making a motion to withdraw as counsel. COPRAC posed a hypothetical in which an attorney learns of information on the eve of trial that leads her to conclude that her client’s case lacks merit. The client insists that the attorney continue to prosecute the case notwithstanding the attorney’s belief that she cannot continue to do so ethically. As a result, the attorney concludes she has a mandatory duty to withdraw. The hypothetical presents an ethical predicament because the attorney must provide a declaration sufficient to satisfy the court that grounds exist to withdraw, but cannot compromise her client’s position in the pending litigation or otherwise reveal client confidences. Cal. R. Prof. Conduct 3-100, 3-700(A)(2); Cal. Bus & Prof Code §6068 (e)(1).
COPRAC ultimately concluded that “an attorney may not disclose confidential communications with the client, either in open court or in camera.” Cal. State Bar Formal Op. No. 2015-192, pp. 1, 10; see also Cal. R. Ct. 3.1362(c). Ordinarily, informing the court simply that “ethical considerations require withdrawal or that there has been an irreconcilable breakdown in the attorney-client relationship” should be sufficient. Id. at 10. In the event the court requires more information from the attorney, the attorney should be careful to provide only facts that would not result in the disclosure of client confidential information, including attorney-client privileged communications. The opinion makes clear that providing such confidences to the court in camera is not a solution, and could result in a waiver under Evidence Code Section 915(a) and Costco Wholesale Corp. v. Superior Court, 47 Cal. 4th 725 (2009). Finally, in the event a court orders the disclosure of confidential information, an attorney must take all reasonable steps, including, at a minimum, filing a writ petition, to avoid the nearly impossible choice between breaching a client’s confidence and disobeying a court order.
Conflicts of Interest In Acacia Patent Acquisition, LLC v. Superior Court, 234 Cal. App. 4th 1091 (2015), the court disqualified a law firm based on a unique conflict of interest resulting from the firm’s prior representation of another law firm in a fee dispute. In the fee dispute, the disqualified firm had necessarily obtained confidential information from its law firm client Floyd & Buss (F&B) regarding F&B’s representation of Acacia in a patent case. After the fee dispute concluded, the disqualified law firm began representing an expert suing Acacia for fees in connection with the same underlying patent litigation. Acacia moved to disqualify the firm from representing the expert in his case against Acacia. The trial court denied the motion. The appellate court reversed.
Noting this was not a traditional successive representation case, the court examined out-of-state authority indicating that a disqualifying conflict can arise from the representation of a law firm with regard to a non-client. In order to protect Acacia’s confidential information, the court disqualified the firm from representation of the expert. The court found that the law firm had wide-ranging access to privileged information in the first matter, which was substantially related to the second matter, requiring the disqualification of the law firm. The court recognized that a law firm representing another law firm in a fee dispute will not automatically be disqualified from opposing the adverse client in future litigation. Courts will have to examine the scope of the disclosure of privileged information and whether the two matters are substantially related.
Western Sugar Coop. v. Archer-Daniels-Midland Co., No. CV 11-3473, 2015 U.S. Dist. LEXIS 21448 (C.D. Cal. Feb. 13, 2015), involves the disqualification of a law firm due to conflicts that arose from the merger of the law firms Squire Sanders and Patton Boggs. At the time, Squire Sanders represented plaintiffs in a suit involving high-fructose corn syrup (HFCS) against several defendants, including Tate & Lyle and Ingredion, while Patton Boggs actively represented Tate & Lyle, and previously represented Ingredion, on various regulatory matters. Due to an oversight, the pre-merger conflict check did not identify the conflicts. After the firm declined to withdraw from the HFCS case, Tate & Lyle and Ingredion each filed a motion to disqualify the firm.
The court first analyzed the conflict arising from the firm’s concurrent representation of the HFCS plaintiffs and Tate & Lyle, which requires disqualification absent an informed waiver. The firm cited an advance conflict waiver Tate & Lyle signed years before the HFCS litigation, which the court rejected because it did not provide “a full and reasonable disclosure of the potential conflict” and was thus insufficient. Id. at *22. As the court explained, the waiver was “open-ended” and “lacks specificity” because it “purports to waive conflicts in any matter not substantially related indefinitely” and “does not identify a potentially adverse client, the types of potential conflicts, or the nature of the representative matters.” Id. at *20. Citing the “hot potato” rule, the court also held that the firm’s withdrawal did not cure the conflict, even though the engagement letter authorized withdrawal. That rule, the court explained, applies “regardless of the attorney’s reasons for terminating the relationship.” Id. at **23-25.
The court then analyzed the successive conflict of interest arising from the firm’s prior representation of Ingredion. The court found that the firm’s prior work for Ingredion was substantially related to the firm’s current work for plaintiffs because both matters involve the question whether HFCS is “natural.” This created a presumption that the firm obtained confidential information from Ingredion that is material to the new matter. Id. at **31-33. Finally, the court concluded that the firm’s ethical wall did not rebut this presumption because the lawyer who previously represented Ingredion had consulted with the lawyer representing the HFCS plaintiffs after the merger was effected, and before the ethical wall was erected. Id. at **34-36.
Attorney-Client Privilege—Joint Clients In Anten v. Superior Court, 233 Cal. App. 4th 1254 (2015), the court addressed whether a non-suing joint client can prevent discovery of attorney-client communications made in the course of a joint representation. Anten joined with the Rubins to retain joint counsel in a matter of common interest. Anten later sued the jointly engaged counsel for legal malpractice. In discovery, Anten requested production of communications between counsel and the Rubins, to which the attorney objected based on the Rubins’ attorney-client privilege. On appeal, the court held that relevant communications during the joint attorney-client relationship between the attorney and any of the joint clients are not privileged as between those joint clients. California Evidence Code section 958 provides that there is no attorney-client privilege as to communications relevant to an issue of breach, by the lawyer or by the client, of a duty arising out of the attorney-client relationship. Here, Section 958 applied to the communications between both of the joint clients—even the client not suing the attorney, the Rubins—and the attorney.
Anti-SLAPP Motions Finton Constr., Inc. v. Bidna & Keys, APLC, 238 Cal. App. 4th 200 (2015), addresses the anti-SLAPP statute, Civil Procedure Code section 425.16. In this appeal from the grant of an anti-SLAPP special motion to strike, the Court of Appeal issued an opinion despite the parties’ settlement, “as an example to the legal community of the kind of behavior the bench and the bar together must continually strive to eradicate.”
The law firm of Bidna & Keys (B&K) represented the plaintiff in an underlying lawsuit filed against FCI. During the lawsuit, B&K’s clients provided it with a hard drive that allegedly contained information stolen from FCI. FCI demanded its unconditional return. B&K refused, but made the drive available for forensic copying by FCI’s expert. FCI filed a lawsuit against B&K alleging conversion and receipt of stolen property. B&K successfully moved to strike FCI’s complaint under the anti-SLAPP statute. The court of appeal affirmed, finding that “[i]t is unquestionable and undisputed that the acts alleged in the complaint all arise out of defendants’ representation of their clients in the underlying case. ... In reality, it seems they are being sued for representing their clients.”
The court then addressed FCI’s argument that, where the activity at issue is illegal, the anti-SLAPP statute is inapplicable. The court clarified that this applies only to criminal conduct, and not to alleged statutory violations. As applied to the facts of this case, moreover, the exception for criminal conduct was inapplicable for two reasons. First, the conduct at issue (possessing allegedly misappropriated information for the sole purpose of representing a client accused of the misappropriation) is protected by the litigation privilege, Civil Code section 47(b). As the court noted, “without the litigation privilege, attorneys would simply be unable to do their jobs properly,” as “[n]o attorney can litigate a trade secret case without examining the disputed materials to determine if they constitute trade secrets or even contain any relevant data at all.” Second, the alleged misconduct did not satisfy the elements of the criminal statute in any event. Accordingly, the order granting the anti-SLAPP special motion to strike was affirmed.
Medical Marijuana In separate opinions by the Los Angeles County Bar Association (Ethics Opinion 527) and the San Francisco Bar Association (Opinion 2015-1), the ethics community weighed in on issues relating to the legalization of marijuana for medicinal purposes. The ethical issue addressed by these opinions is whether a California lawyer can advise a client in connection with a medical marijuana business in light of federal law—specifically, the Controlled Substance Act—making it a crime to grow, sell, or possess marijuana, as well as to aid and abet a violation of federal marijuana laws. As the opinions acknowledge, Rule of Professional Conduct 3-210 prohibits a California lawyer from “advis[ing] the violation of any law, rule, or ruling of a tribunal ...,” and Business and Professions Code section 6068(a) mandates that “[i]t is the duty of an attorney to ... support the Constitution and laws of the United States. ...”
Notwithstanding the apparent violation of Rule 3-210 and Section 6068(a), both ethics opinions conclude that a lawyer may advise a client in connection with a medical marijuana business as long as she does not specifically advise how to violate federal law. The opinions also note that the lawyer must advise her client of the risks that she will be found to be in violation of federal law, and the Los Angeles County Bar Association notes the further need to warn the client that otherwise attorney-client privileged communications could be subject to attack under the crime-fraud exception.
Posthumous Bar Admission Whereas Supreme Court decisions and, in particular, decisions regarding Bar admissions are not usually the place to turn for a feel-good story, 2015 did provide just that in the case of In re Hong Yen Chang, 60 Cal. 4th 1169 (2015). In this case, the Supreme Court righted a century-old wrong when it posthumously admitted to the California Bar Hong Yen Chang.
Mr. Chang graduated from Philips Academy, Andover, and Yale University before earning a J.D. from Columbia Law School. He was admitted to the New York Bar in 1888, and then moved to California, where he applied for admission to the California Bar. Despite his otherwise impeccable record, Mr. Chang had one very big strike against him—he was of Chinese descent. According to the California Supreme Court, under the Chinese Exclusion Act of 1882, Mr. Chang’s naturalization certificate, which he had obtained in New York, was issued without authority of law, and therefore justified the denial of his California Bar application. About 125 years later, the court addressed and attempted to correct what it referred to as a “sordid chapter of our state and national history,” and a “grievous wrong.” Id. at 1171, 1175. Noting its 2014 decision to admit Sergio Garcia, an undocumented immigrant from Mexico, the court stated, “Even if we cannot undo history, we can acknowledge it and, in so doing, accord a full measure of recognition to Chang’s path-breaking efforts to become the first lawyer of Chinese descent in the United States.” Id. at 1175.