by Joel M. Pores
A member shall keep a client reasonably informed about significant developments relating to the employment or representation and promptly comply with reasonable requests for information and copies of significant documents. CRPC 3–500. A parallel duty is imposed to respond promptly to reasonable status inquiries of clients and to keep clients reasonably informed of significant developments under B&P §6068(m). The key to effective communication is that the client must have an honest assessment of the risks and benefits in order to provide informed consent. Lysick v Walcolm, 258 Cal.App.2d 136, 147 (1968). There must also be a discussion of peripheral matters outside the scope of representation that are reasonably apparent and that may require legal assistance elsewhere. Nichols v. Keller, 15 Cal.App.4th 1672 (1993).
A repeated or habitual failure to possess and use diligence, learning, and skill may lead to discipline. One such act or omission may lead to malpractice liability. Competence requires the mental, emotional, and physical ability and the time and resources reasonably necessary to perform. CRPC Rule 3–110. It is therefore important to know your potential clients and their resources, the needs of the matter to be undertaken, and your own abilities and limitations. Consultation or association with another lawyer reasonably believed to be competent is one way to act competently. CRPC 3–110(C).
An attorney must disclose in writing any legal, business, financial, professional, or personal relationship with a party, witness, or someone who would be affected substantially by resolution of the matter, or has such an interest of their own. CRPC Rule 3–310(B). The purpose of disclosure is to give the client an opportunity to intelligently weigh the importance of the past or present connection, and have the option to decline representation under such circumstances. The timing of the disclosure must be such that the client has a reasonable opportunity to object and find other counsel and must inform the client of all relevant circumstances and of the actual and reasonably foreseeable adverse consequences of representation. CRPC Rule 3–310(A)(2).
Informed written consent is required in order to accept representation of more than one client in a matter in which the interests of the clients actually or potentially conflict or to represent a client and at the same time accept representation of another client, in a separate matter, whose interest is adverse to that of the first client. CRPC Rule 3–310(C). Where the attorney has obtained confidential information as a result of representation, which is material to the employment of another client whose interests are adverse to the first client, such informed written consent is also required. CRPC Rule 3–310(E)
An attorney must maintain inviolate the confidence, and at every peril to himself or herself to preserve the secrets, of his or her client. B&P §6068(e); CRPC Rule 3–100. This duty continues beyond termination of the relationship, and extends to both former and present clients. Flatt v. Superior Court, 9 Cal.4th 275 (1994).
An attorney may not reveal knowledge of a client’s commission of a crime or fraud or an intention to commit it. There is no exception in California permitting disclosure, unlike many jurisdictions. If a client consults the attorney for the purpose of assisting the client to commit a crime or fraud, there is no attorney-client privilege under EC §956, and the attorney may be compelled to testify against the client. Note that this exception to the privilege does not abrogate the attorney’s duty to keep the secrets inviolate at every peril to himself or herself. The attorney may not disclose the information unless and until a court makes the determination above. B.P. Alaska Exploration, Inc. v Superior Court, 199 Cal.3d 1240 (1988). Although there is a duty not to disclose certain information, such duty does not also extend to affirmative acts, which further a client’s unlawful conduct. In re Young, 49 Cal.3d 257, 265 (1989). (Attorney disciplined for providing financial assistance to fugitive client.) The client’s confidences may be divulged if relevant and necessary to defend against a claim of legal malpractice. Schlumberger Ltd. v. Superior Court, (1981) 115 Cal.App.3d 386, 392–93 (1981).
Funds held for the benefit of a client including advances for costs and expenses must be deposited into an account labeled “Trust Account” or “Attorney Trust Account” or words of similar import and maintained in this State or with the client’s consent in another state having a substantial relationship with the client or the client’s business. No funds belonging to the attorney shall be deposited or otherwise commingled, except funds reasonably sufficient to pay bank charges. In the case of funds belonging in part to the client and in part to the attorney, the portion belonging to the attorney must be withdrawn at the earliest reasonable time after the attorney’s interest becomes fixed. However, where the right to receive a portion of the funds is disputed by the client, the disputed portion shall not be withdrawn until the dispute is finally settled. CRPC Rule 4–100. The attorney must promptly pay or deliver, as requested by the client, any funds, securities, or other properties which the client is entitled to receive. CRPC Rule 4–100(A)(1), (2) CRPC Rule 4–100(B)(4). If funds are to be held for more than a “short period of time,” or are more than a “nominal” amount, it is necessary and proper to open an interest bearing account in the name of the client and attorney. Such an alternate account is allowed under B&P §6211(b) and CRPC Rule 4–100(A). Funds are considered nominal or short term if it is “not practicable to segregate them to earn income.” Under CRPC 4–100, a member may not deviate from the unqualified duty to place funds in a client trust account even with a client’s authorization. In the Matter of Lilly (Rev. Dept. 1992) 2 State Bar Ct.Rptr. 185.
Conscionability of Fees
An attorney shall not enter into an agreement for, charge or collect an illegal or unconscionable fee. CRPC Rule 4–200(A). Unconscionability is determined on the basis of all of the facts and circumstances existing at the time of contracting, except where the parties contemplate that the fees will be affected by later events. There are eleven factors enumerated among those to be considered in determining the conscionability of a fee. CRPC Rule 4–200(B). “Non-refundable” fees, those “earned upon receipt,” and “minimum fees” all have been the subject of unconscionability claims, regardless of the language of the agreement. Unconscionable fees may constitute a breach of fiduciary duty.
Termination of employment may not take if a court’s permission is required. The attorney must take reasonable steps to avoid reasonably foreseeable prejudice to the client. CRPC Rule 3–700(A).
Under CRPC Rule 3–700(B) termination through withdrawal is mandated if a client insists on bringing an action, conducting a defense, asserting a position in litigation, or taking an appeal without probable cause and for the purpose of harassing or maliciously injuring any person. CRPC Rule 3–700(C) provides that permissive withdrawal is proper for actions of the client: 1) where continued employment is likely to result in violation of the rules; 2) where there is an inability to work with co-counsel; 3) where the mental or physical health makes it difficult to perform effectively; 4) if the client knowingly and freely assents to termination; and 5) where other good cause exists.
Upon termination, the attorney must promptly release to the client all “papers and property,” which includes correspondence, pleadings, deposition transcripts, exhibits, physical evidence, expert’s reports, and other items reasonably necessary to the client’s representation, whether the client has paid for them or not. CRPC Rule 3–700(D)(1). An attorney must promptly refund any part of a fee paid in advance that has not been earned. This provision is not applicable to a “true retainer” which is paid solely to ensure the availability of the attorney.
A “non-engagement” letter is often necessary and good practice in order to protect the potential client, and oneself, from misunderstandings regarding responsibility for taking any action or measures on behalf of a potential client whose matter has been rejected. State that the decision is not to be construed as a comment on the merits of their case and that certain pressing time limits may apply. Tell them of the need to act promptly to secure other counsel. It is very important to clearly tell the potential client that you are not in charge of their affairs so as to avoid any misunderstandings.
This is an age of legal specialization. It is difficult enough to keep abreast of developments in one or two practice areas. The general practitioner may find it difficult or even impossible to stay current in every area of the law. Beware of your own limitations. Even if you think you can do it, the chances are that there may be trouble just lurking around the corner.
Good luck, and happy lawyering!
Joel M. Pores is a sole practitioner in Laguna Hills. His practice focuses on Legal Malpractice, Fee Disputes, and Ethics. Pores is former co-chair, vice-chair of the OCBA Client Relations Committee, a member of the OCBA Professionalism & Ethics Committee, a member of the OCBA Mentoring Committee, a member of the Community Outreach Committee, and acts as an arbitrator of attorney fee disputes for the OCBA and the State Bar MFA programs. He is a former member of the State Bar Committee for Mandatory Fee Arbitration. Joel’s website is PoresLaw.com and he may be contacted at JPores@Poreslaw.com.