January 2021 Ethically Speaking - 2020 in Review

by Members of the OCBA professionalism & Ethics Committee

In a relatively quiet year for published decisions and opinions impacting the law of lawyering and attorney ethics, a few notable cases emerge. The selected cases summarized below address a range of issues, from common interest privilege and anti-SLAPP to disqualification and the standard of proof required in certain legal malpractice cases. The summaries below include the widely publicized decision that Legalmatch.com was improperly operating as a referral service without obtaining certification by the State Bar of California. Legalmatch.com’s later application for certification was declined by the State Bar.



In Doe v. Yim, 55 Cal. App. 5th 573 (2020), an attorney, Lee, represented her adult daughter, Doe, in a suit against Lee’s ex-husband, Yim. Doe was Lee’s daughter by a previous marriage. The suit alleged that Yim sexually abused Doe over several years during the marriage. Yim promptly moved to disqualify Lee based on both the Lawyer as Witness rule (rule 3.7) and the rules relating to confidentiality. The trial court granted the disqualification motion. The court of appeal affirmed. The court found that Lee would be a key witness in the trial. Lee argued that she had consent from Doe under rule 3.7(a)(3), which is an exception to the rule. The court ruled that the trial judge exercised proper discretion to grant the motion despite the consent. Comment 3 to rule 3.7 states that the trial judge has discretion to ignore the consent in order to protect the trier of fact from being misled or the opposing party from being prejudiced. In disqualifying Lee from the trial, the court held that appearing at evidentiary hearings and taking or defending depositions were included in the rule’s prohibition of the lawyer serving as a witness.

Lee argued that she should still be allowed to represent Doe in pretrial proceedings, but the court found that confidential information obtained during the marriage could be misused to the advantage of Doe and the disadvantage of Yim. Lee could not scrub the confidential information from her mind, and it inevitably would be used in the case. The court affirmed the trial court’s discretionary finding that allowing Lee to represent Doe would prejudice Yim and the integrity of the judicial process due to Lee’s dual role as a lawyer/witness and her potential misuse of confidential information.

Bahdjedjian v. Western Diocese of the Armenian Church of N. Am., No. CV 19-4717 DSF (GJSx), 2020 WL 5353982 (C.D. Cal. Apr. 29, 2020) is a Central District ruling denying without prejudice a motion to disqualify plaintiff’s counsel. In an employment claim, defendants produced documents in response to plaintiff’s discovery requests. Large portions were redacted, but no privilege log was produced at that time. Plaintiff’s counsel removed the redactions, inadvertently they claimed, reviewed the material and concluded on their own accord that they were not privileged. Plaintiff’s counsel demanded that all redactions be removed from the production. Defendants refused, and asked plaintiff’s counsel to destroy the documents. Defendants’ counsel later produced a privilege log, formally asserting the privilege claim. Defendants filed a motion to disqualify plaintiff’s counsel for refusing to return or destroy the inadvertently disclosed privileged materials.

Plaintiff’s counsel erroneously argued that the redactions were not proper because the communications were not privileged. An attorney who receives potentially privileged communications is not entitled to act as judge and unilaterally make such a determination. Any competent litigator would know that blacked-out redactions in a document production reflect a claim that the material should not be disclosed, whether or not there is a privilege log. When in doubt, counsel should ask the court. Here, the court found that plaintiff’s counsel was aware the redacted materials were subject to a privilege claim. The defendants, however, failed to establish that disqualification was the proper remedy. They did not show that plaintiff’s counsel wrongfully acquired an unfair advantage that undermines the integrity of the judicial process and will have a continuing effect on the proceedings. Thus, defendants failed to establish that the “drastic measure” of disqualification was called for at this time, and failed to even establish that the redacted information was privileged. Although the motion was denied, the court said the plaintiff’s counsel should have stopped review, researched the law, and complied with their ethical duties. It ordered destruction of all copies of the unredacted documents, and further stated that sanctions and fees may still be warranted if it were determined that the redacted portions are privileged.



In Jackson v. LegalMatch.com, 42 Cal. App. 5th 760 (2019), the court held that an online attorney marketing company, LegalMatch, was a “referral” service that should have been registered with the State Bar and operated in accordance with certain defined standards under California Business & Professions Code section 6155.

LegalMatch operates www.legalmatch.com. Legalmatch asks prospective clients to fill out an intake form online regarding their legal needs. LegalMatch then takes the user’s information and transmits it to lawyers who have subscribed to LegalMatch. Lawyers pay yearly or multi-yearly subscriptions to receive intake information. The lawyers can then reach out to the potential client using LegalMatch’s platform.

Under Business & Professions Code section 6155, a business cannot operate “for the direct or indirect purpose” of “referring potential clients to attorneys” unless the service is registered with the State Bar and operated in conformity with minimum standards for a lawyer referral service established by the State Bar, or is operated in conformity with standards set by the supreme court.

The court held that the term “referral” in the statute meant the act of directing a client to an attorney, and does not require that a referring party make any judgment about the client’s circumstances. A referral occurs when an entity directs or sends a potential client to an attorney. In the case of LegalMatch, the act of sending the user’s information to the selected lawyers “constitutes and completes the referral.”

The court further noted that the statutory framework surrounding section 6155 supported its conclusion. The legislature enacted section 6155 within a broader framework regulating unlawful solicitation in which the legislature wished to reduce “ambulance chasing” activities and “runners” and “cappers” who acted for attorneys. Section 6155 was an exception to this framework. While the potential for abuse did exist, it also was the case that individuals could have difficulty finding attorneys. The legislature thus provided for lawyer referral services to operate, so long as they met minimum requirements, i.e., they are registered with the State Bar and operate with standards set by the State Bar or the supreme court.


Departing Attorneys

In California State Bar Formal Opinion No. 2020-201, the California Standing Committee on Professional Responsibility and Conduct (COPRAC) considered the ethical duties that arise when an attorney leaves a law firm to practice on his or her own or to join another law firm. In many cases, the law firm and the departing attorney will each want to continue representing the clients with which the departing attorney has maintained a relationship. Though the law firm and the departing lawyer have obvious competing financial interests, the Opinion makes clear that the clients’ interests must come first, including specifically the clients’ right to their choice of counsel.

To ensure that the clients’ choice of counsel is not impaired, the Opinion emphasizes that both the law firm and the departing attorney have a duty to notify clients of the departing attorney’s plan to leave the firm. This duty is rooted in Rule 1.4(a)(3) of the California Rules of Professional Conduct, which requires attorneys and law firms to “keep the client reasonably informed about significant developments relating to the representation.” The Opinion makes clear that the departure of an attorney who “plays a principal role in Law Firm’s delivery of legal services” to a client is a significant development for that client.

The Opinion recommends that the notice to the client take the form of a joint notice from the law firm and departing attorney. When this is not practical, unilateral notice should be given. In either case, the notice should provide the client with enough information to make an informed decision about future representation. This should include: (1) the timing of the departure and the departing attorney’s contact information, (2) billing rate and staffing information, and (3) a statement that the client is free to remain with the law firm or the departing attorney, or choose another attorney or law firm altogether.

Finally, the Opinion makes clear that the client’s file belongs to the client, not the law firm. Accordingly, even if legal fees remain outstanding, the law firm is obligated to transfer the client file to an attorney of the client’s choice, and may not hold the client’s file hostage.


Attorney-Client Privilege

In Golden Door Props., LLC v. Superior Court, 52 Cal. App. 5th 837 (2020), Petitioner Golden Door Properties, LLC (Golden Door) owned a spa and resort on approximately 600 acres in San Diego County. In January 2015, Real Party in Interest Newland Sierra LLC (Newland) proposed 2,135 new residential units and 81,000 square feet of commercial development (the Project) in close proximity to Golden Door’s property. Real Party in Interest County of San Diego (the County) was lead agency for the Project. Golden Door filed a challenge to the County’s approval of the development project under the California Environmental Quality Act (CEQA), and nondisclosure of records requested by project opponents.

Among other categories of documents, Golden Door sought documents shared between Newland and the County. The County and Newland asserted privilege claims in response to Golden Door’s motions to compel on the basis of the common interest doctrine arising from the County and Newland’s joint defense agreements in separate actions involving Golden Door.

The court agreed that the common interest doctrine applied, distinguishing prior holdings that “the common interest doctrine does not protect preapproval shared communications,” since at the preapproval stage, the agency and applicant presumably have divergent interests. Id. at 69. Here, the court explained, “the referee correctly determine[d] that the common interest doctrine applied to avoid waiver of the attorney-client and attorney work product privileges with respect to communications between the County and Newland involving their joint-defense of the two preapproval lawsuits.” Id. at 72.

 In so holding, the court explained that, unlike other preapproval lawsuits involving the invocation of the common interest doctrine, here, “Golden Door had already sued the lead agency and applicant, twice no less, seeking orders effectively killing the project.” Id. The court ultimately decided that “[a] project opponent cannot by its own litigation strategy create a preapproval common defense interest, and then claim the agency and applicant have acted improperly in furthering that interest by sharing relevant attorney-client communications.” Id.

In Wood v. Superior Court, 46 Cal. App. 5th 562 (2020), a transgender woman (Wood) who was a member of a fitness club contacted the Department of Fair Employment and Housing (DFEH) to report alleged gender discrimination by the club. The DFEH filed a discrimination lawsuit against the club. During discovery, the club requested that Wood, who had intervened as a plaintiff, produce all of her communications with the DFEH. Wood refused to produce one such communication, a prelitigation email she sent to DFEH lawyers regarding her DFEH complaint, on the grounds of attorney-client privilege.

After the trial court granted a motion to compel production of the subject email, Wood filed a petition for writ of mandate arguing the trial court erred by overruling her privilege objection.

The court of appeal affirmed the trial court’s order, holding that the email was not privileged because Wood had not shown she had an attorney-client relationship with the DFEH lawyers. In doing so, the court found that, based on the DFEH’s own published policies and procedures, the DFEH lawyers represent the DFEH and not individual complainants. Rejecting Wood’s contention that an attorney-client relationship was formed because the DFEH was investigating her complaint and seeking relief on her behalf, the court of appeal found that the mere alignment of interests between Wood and the DFEH lawyers did not give rise to an attorney-client relationship. The court also rejected Wood’s reliance on federal cases finding a “de facto” attorney-client relationship between the EEOC and antidiscrimination complainants, noting that California law requires an actual attorney-client relationship for the privilege to apply.


In Wittenberg v. Bornstein, 50 Cal. App. 5th 303 (2020), the court of appeal held that an attorney’s acts of representing clients with interests adverse to a former client and using the former client’s confidential information in that representation are not protected under the anti-SLAPP statute.

Wittenberg and Bornstein co-owned and managed a real estate investment company (Hertzel). Attorney Peretz represented Hertzel several years earlier concerning the return of a deposit and had filed a dismissal with prejudice of a cross-complaint in that action. Afterward, Wittenberg sued Bornstein, who in turn hired Peretz to represent him. Wittenberg then amended her complaint to add Peretz as a defendant, alleging that Peretz breached his duties of loyalty and confidentiality by: (1) representing Bornstein in the present action without obtaining a conflict waiver; (2) using Hertzel’s confidential information to prosecute Bornstein’s dissolution and accounting claims against Hertzel; and (3) filing the request for dismissal of the cross-complaint in the prior action.

The trial court denied Peretz’s anti-SLAPP motion as to Wittenberg’s cause of action for breach of fiduciary duty because the anti-SLAPP law does not apply to claims by a client against an attorney for acts on that client’s behalf, which the appellate court affirmed. “Such causes of action arise from Peretz’s alleged breaches of his fiduciary and professional obligations, not from the litigation conduct. . . . There is no chilling effect on advocacy in such claims; rather, the threat of liability encourages the attorney to act competently and loyally.” Id. at 314.

However, the court of appeal held that Peretz’s conduct in dismissing the cross-complaint in the prior action fell within the anti-SLAPP statute and that Wittenberg failed to show a probability of prevailing. The court found that Hertzel suffered no harm from the dismissal of the cross-complaint and that Wittenberg failed to establish she had an attorney-client relationship with Peretz.

Data Breaches

In Formal Opinion No. 2020-003, COPRAC opined that, embedded within Rule 1.1 (Competence), lawyers have a duty of technological competence. Such duty requires that lawyers either have a basic understanding of the risks associated with a given technology and take reasonable steps to prevent data breaches which potentially harm clients, or obtain help from appropriate technology experts to assess those risks and take those preventative steps. This applies with respect to each type of electronic device or system incorporated into the lawyer’s practice, including computer systems vulnerable to phishing, portable electronic devices, and laptop computers using public or inadequately secured networks, etc.

The Committee concludes that, in the event of a data breach, lawyers have an obligation to: (1) conduct a reasonable inquiry to determine the extent and consequences of the breach and (2) notify current clients whose interests have a reasonable possibility of being negatively impacted by the breach. The Committee did not opine on whether lawyers have a duty to disclose a data breach to former clients. However, it noted that the American Bar Association Standing Committee on Ethics and Professional Responsibility, in ABA Formal Opinion No. 18-483, declined to impose a duty to notify a former client of a data breach; while the Maine Professional Ethics Commission, in its Opinion No. 220, opined that a former client is entitled to no less protection and candor than a current client, and, thus, lawyers have a duty to disclose a data breach to both current and former clients.

In addition, lawyers with management or supervisory responsibility in law firms have obligations under Rules 5.1 and 5.3 to make reasonable efforts to ensure the firm has in effect policies and procedures to protect client confidential information from the risk of inadvertent disclosure and data breaches as a result of technology use and to supervise subordinate lawyer and non-lawyer personnel to comply with the procedures.


Malicious Prosecution

Roche v. Hyde, 51 Cal. App. 5th 757 (2020), clarified principles of agency and proof in a malicious prosecution action. The original lawsuit involved the sale of a winery. Buyer sued Seller for fraud for failing to disclose a seismic report that revealed an active fault line under the property. Seller countered that Buyer’s deal counsel learned of the fault line when he represented a predecessor of Buyer in an earlier attempt to purchase the winery, and that counsel’s knowledge should be imputed to Buyer. 

A protracted discovery dispute followed. Despite orders to compel and monetary sanctions, Buyer resisted Seller’s efforts to discover the attorney’s prior knowledge of the fault line. Due to lack of evidence of the attorney’s knowledge, the trial court denied Seller’s summary adjudication motion on the fraud claim. Eventually, Buyer produced documents showing its deal counsel not only knew of the fault but possessed the seismic report. Seller moved for monetary and terminating sanctions, and Buyer promptly dismissed the underlying action and paid some of Seller’s attorneys’ fees.

Thereafter, Seller sued Buyer and its trial counsel for malicious prosecution. On appeal from the denial of defendants’ anti-SLAPP motion, the court of appeal focused on whether Seller met his burden of proving (1) the underlying action was terminated in his favor and (2) Buyer lacked probable cause to pursue the underlying action. It answered both questions in the affirmative.

First, the court held that Buyer’s dismissal in the face of terminating sanctions constituted a termination in Seller’s favor, and that Buyer’s payment of Seller’s fees, without a settlement agreement or releases, did not constitute a negotiated “settlement” to rebut this conclusion.

Second, relying upon Wittenbrock v. Parker, 102 Cal. 93 (1894), the court held that Buyer lacked probable cause because its lawyer possessed material facts specific to that transaction, and Buyer “must be constructively charged with information in the hands of its transaction counsel.” Although Buyer had defeated summary adjudication on the fraud claim, the court held, as a matter of first impression, that Buyer’s egregious discovery misconduct, which likely impacted that ruling, fell within the fraud or perjury exception to the interim adverse judgment rule recognized in Carpenter v. Sibley, 153 Cal. 215 (1908).



In Masselis v. Law Office of Leslie F. Jensen, 50 Cal. App. 5th 1077 (2020), shortly before a divorce trial was set to begin, an attorney urged her client to accept an $800,000 settlement offer, even though valuations placed the client’s share at $1.5 million or more. (Note: the facts are taken from the unpublished version of this opinion, as the court of appeal did not include the fact section in its published opinion.) The client believed her soon-to-be-ex-husband was hiding assets. When the attorney confirmed she would not demand more than $800,000, the client accused the attorney of not having her best interests in mind. The evidence showed that the attorney said, “That’s it. I’m done,” and walked away from the discussion. Given it was shortly before trial, the client believed she had little choice but to accept a less favorable settlement.

The attorney instituted a collection action for unpaid fees; the client asserted a cross-complaint for negligence and breach of fiduciary duty on a “settle and sue” theory: that had the matter been tried, the client would have received an award in the range of $1.5 million.

The jury was given standard instructions relating to professional negligence claims, as proposed by the attorney. (CACI 600-603.) The court also instructed the jury with CACI 430, Causation: Substantial Factor. The jury deliberated, and returned a verdict finding the attorney had been negligent and had breached her fiduciary duties. The jury awarded damages of $300,000.

On appeal, the attorney argued it was error to instruct the jury on substantial factor causation. The attorney asserted that Filbin v. Fitzgerald, 211 Cal. App. 4th 154 (2012), and related cases held that the client could only obtain damages if they were proven to a “legal certainty,” entailing a higher burden of proof. The court held that the standard of proof for the elements of causation and damages in a “settle and sue” legal malpractice action is the preponderance of the evidence standard set forth in Evidence Code section 115. The court of appeal reasoned that the “legal certainty” language used in Filbin and elsewhere simply means the level of certainty required by law, which, in the legal malpractice context, is by a preponderance.