April 2022 Ethically Speaking - The Fiduciary Duty to Communicate With Your Client About Acts of Malpractice

by Robert K. Sall

Lawyers are human. Mistakes will happen from time to time. Some errors or omissions are more material than others and may lead to severe consequences for a client. Errors that are not uncommon include failing to properly calendar an important date, missing the deadline to file papers to make or oppose a motion, missing a court appearance, failing to timely designate expert witnesses or meet trial deadlines, or failing to timely file a complaint until after an applicable statute of limitations has arguably expired.

The lawyer’s fiduciary duty to communicate with his or her client is a broad one and failure to properly keep a client informed may result in discipline or civil liability. A provision of the State Bar Act, Business & Professions Code section 6068(m), describes a series of statutory general duties of an attorney, which includes the duty: “To respond promptly to reasonable status inquiries of clients and to keep clients reasonably informed of significant developments in matters with regard to which the attorney has agreed to provide legal services.”

Proper communication under the Rules of Professional Conduct includes the obligation to promptly inform the client of any circumstance that is required to be disclosed by the rules or the State Bar Act. Cal. Rules of Prof’l Conduct (“CRPC”) R. 1.4 (Communication with Clients) (2018). The lawyer must communicate with the client about any significant development relating to the representation. CRPC R. 1.4(a)(3). Such communication must address any matter for which the client’s informed consent would be required. CRPC R. 1.4(a)(1). This includes providing an explanation to the client to the extent reasonably necessary to permit the client to make informed decisions regarding the representation. CRPC R.1.4(b). If a conflict of interest has developed that would require disclosure and informed written consent under Rule of Professional Conduct 1.7 (Conflict of Interest: Current Clients), Rule 1.4(a)(l) also mandates that such conflict be disclosed in the manner required by the rules. Rule of Professional Conduct 1.0.1 (Terminology) defines informed consent. To obtain informed consent, the client must be apprised in writing of the relevant facts, the reasonably foreseeable adverse consequences, and the material risks of a proposed course of action in order to make an informed decision. See CRPC R. 1.0.1(e).

While Rule 1.4 does not explicitly state that a lawyer must disclose his or her mistakes, the obligation to make such disclosure is well established. “[A]ttorneys have a fiduciary duty to disclose material facts to their clients, an obligation that includes disclosure of acts of malpractice.” Beal Bank SSB v. Arter & Hadden LLP, 42 Cal. 4th 503, 514 (2007) (citing Neel v. Magana, Olney, Levy, Cathcart & Gelfand, 6 Cal. 3d 176, 188-89 (1971)). This disclosure obligation was recognized by the California Supreme Court in Neel over fifty years ago. Fiduciary duty includes the obligation to render a full and fair disclosure to the client of all facts that materially affect the client’s rights and interests. See id. The Restatement (Third) of the Law Governing Lawyers, section 20, subsection c, provides: “If the lawyer’s conduct of the matter gives the client a substantial malpractice claim against the lawyer, the lawyer must disclose that to the client.” The Restatement also provides that the lawyer “must explain a matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation.” Id. The State Bar of California’s Standing Committee on Professional Responsibility and Conduct (“COPRAC”) in Formal Opinion 2019-197 addresses the subject of the lawyer’s duty of communication and the obligation to disclose malpractice. The opinion concludes that an error potentially giving rise to a legal malpractice claim is a significant development relating to the representation. There is no debate that the occurrence of an act or omission which may have a material adverse impact on the client must be disclosed.

When the lawyer recognizes that a material error or omission has occurred, what is it that must be disclosed? Must the potential consequences for the client be fully explained? Must the client be told of potential remedial steps? One commentator has noted that there is a dearth of direct authority as to the extent of the lawyer’s obligation to self-report an act of malpractice. Benjamin P. Cooper, The Lawyer’s Duty to Inform His Client of His Own Malpractice, 61:1 Baylor L. Rev. 174, 176-77 (2009). There are no easy answers to the above questions other than that the client is entitled to a candid, full, and fair disclosure. A lawyer may, for reasons of professional embarrassment, impact on insurance coverage, self-protection, or otherwise, understandably be reluctant to admit a mistake or describe his or her conduct as malpractice. If there is a reasonable prospect that the lawyer’s error or omission might lead to a claim against the lawyer or the lawyer’s firm, the situation implicates the lawyer’s personal or professional interests in avoiding or defending against a future claim. That the lawyer may be tempted to limit such a disclosure reveals the tension that exists in this situation between the interests of the client and the interests of the lawyer and law firm. The lawyer should be mindful of the duty of fidelity—uberrima fides—which has been defined as “[t]he most abundant good faith; absolute and perfect candor or openness and honesty; the absence of any concealment or deception, however slight.” David Welch Co. v. Erskine & Tulley, 203 Cal. App. 3d 884, 890 n.2 (1988) (citing Black’s Law Dict. (Rev. 4th ed. 1968) at 1690).

In some instances, there may be an opportunity to rectify an error, or seek judicial relief from its consequences, and sometimes this effort requires a declaration of fault. In Smith v. Lewis, 13 Cal. 3d 349 (1975), an attorney had submitted a declaration of fault in support of the client’s application under Code of Civil Procedure section 473 for relief from judgment. That declaration was later used in evidence by the client in a malpractice action against the lawyer. In reviewing the trial court’s admission of that evidence, the Supreme Court held that the declaration should have been excluded under Evidence Code section 352 because it had “insubstantial probative value” and was of marginal relevance to the issues in that lawsuit:

On its face, the declaration, under oath, is manifestly a confession of error on the part of defendant. The jury possibly could have misunderstood its context or its purpose, or confused the quantum of asserted negligence necessary to permit the amendment of the judgment with that required to support a finding of malpractice.

Id. at 364.

Were we to sanction the admissibility of such evidence, tension might develop between an attorney’s duty to zealously represent his client (citation omitted) and his instinct of self-protection. As a result, the attorney could become reluctant to seek an amended judgment under Code of Civil Procedure section 473, and the quality of legal representation in the state might suffer accordingly. In short, an attorney should be able to admit a mistake without subjecting himself to a malpractice suit. Therefore, we conclude, the trial court erred in admitting the declaration into evidence.

Id. at 365. Despite the result under the particular facts in Smith, the exclusion of such evidence in a future malpractice claim is not certain, as decisions on admissibility will vary with the circumstances.

When considering what must be disclosed, a lawyer may naturally be concerned about the future use to which the written disclosure or declaration will be put. If the lawyer’s interest in self-protection tempts him or her to consider means of limiting the disclosure, the lawyer’s independent judgment has likely been affected. This demonstrates that a conflict of interest will often exist in communicating with the client about an error, its potential consequences, and the means that may exist to mitigate any resulting harm. Rule of Professional Conduct 1.7, in relevant part, provides that a lawyer shall not, without informed written consent from each affected client and compliance with other provisions of the rule, represent a client if there is “a significant risk that the lawyer’s representation of the client will be materially limited . . . by the lawyer’s own interests.” CRPC R. 1.7(b) (emphasis added).

The fact that there is a potential conflict of interest will necessitate additional disclosures. Rule 1.4 (a) requires the lawyer to promptly inform the client of any decision or circumstance requiring informed consent. COPRAC, in Formal Opinion 2019-197, opines that this includes an informed consent to the lawyer’s continued representation. Cal. Bar Formal Opn. 2019-192, at 5. The lawyer who continues to represent a client in the effort to mitigate harm resulting from the lawyer’s error must also reasonably believe that he or she will be able to provide competent and diligent representation to the client. CRPC R. 1.7(d). Where the lawyer’s own personal interests are affected, careful consideration must be given to the impact that is likely to have on the lawyer’s independent judgment. Loyalty and independent judgment are essential elements of the lawyer-client relationship. See CRPC R. 1.7, Cmt. 1.

Whether or not a serious conflict exists is likely to depend upon the severity of the error, the potential harm to the client, and whether the error may still be corrected. With many errors or omissions, it may be possible to mitigate adverse consequences by the lawyer’s continued representation and proper efforts to minimize or avoid harm to the client. If the relationship has not terminated, fiduciary duty will still require the lawyer to reasonably consult with the client about the means by which to accomplish the client’s objectives. CRPC R. 1.4(a)(2). This blends the fiduciary obligation to disclose and obtain informed consent with the duty to advise the client, to ascertain the goals and objectives, and to take steps reasonably necessary to advance the client’s interests. Lawyers have the duty to volunteer opinions, even those that may be outside the scope of representation, where such advice is necessary to further the client’s objectives, or to avoid the possibility of adverse consequences if not considered. Nichols v. Keller, 15 Cal. App. 4th 1672, 1683-84 (1993). Not only should candid and full disclosure be made, but the potential impairment on the lawyer’s independent judgment in all likelihood warrants the recommendation that the client consult with independent counsel for further guidance.

In advising the client with respect to reasonable means to mitigate the harm resulting from his or her error, the lawyer should refrain from advising the client regarding the merits of a potential malpractice claim. Cal. Bar Formal Opn. 2019-197 cautions that “to do so would be to provide advice to the client on an issue on which the attorney’s interests squarely conflict with the client’s.” Instead, as Formal Opinion 2019-197 notes, “the attorney has a duty to disclose the conflict and the resulting limitations on [his or] her ability to advise the client.”

While the situation may be both awkward and difficult, where the lawyer has made an error that materially impacts the client, the lawyer’s duty to the client is to make a full and fair disclosure. To comply with ethical obligations, the lawyer must provide sufficient information so the client will be fully informed in making a decision as to how such a development will affect the representation, and the steps that may be taken if it is possible to mitigate any resulting harm.

Robert K. Sall is a shareholder with Sall Spencer Callas & Krueger in Laguna Beach. A Certified Specialist in Legal Malpractice Law by the State Bar of California’s Board of Legal Specialization, he lectures frequently for the OCBA on lawyer conduct, fee disputes, and legal ethics. He can be reached at rsall@sallspencer.com.