January 2023 Ethically Speaking - 2022: The Ethics Year in Review

By Members of the OCBA Professionalism & Ethics Committee

As has become tradition, the OCBA Professionalism and Ethics Committee summarizes below some of the more noteworthy legal ethics cases and opinions issued in 2022. They include cases addressing the witness-advocate rule, causation and the statute of limitations in a legal malpractice case, and the anti-SLAPP statute. They also include one of the more prominent California ethics opinions of the year, issued by our own OCBA.

Local Rules
In Shiheiber v. JPMorgan Chase Bank, 81 Cal. App. 5th 688 (2022), Attorney Henderson represented the plaintiff in a suit against JPMorgan Chase Bank (Chase). Henderson violated several local court rules relating to preparation for trial, such as submission of motions in limine, jury instructions, and trial brief. The trial judge issued sanctions against her for $950, just below the amount requiring reporting to the State Bar. She did not dispute the violations, but rather challenged the sanctions, claiming that the statutes do not permit sanctions for local rules violations relating to trial, rather than pre-trial, matters, and that sanctions for violation of local rules requires a finding of bad faith.

The court of appeal found that California Code of Civil Procedure (CCP) section 575.2, under which the trial court awarded the sanctions, is not limited to only pre-trial matters, but covers the entire matter from filing to termination.

Henderson’s argument on bad faith was premised on California Civil Procedure Code section 128.5, which requires a finding of bad faith to award sanctions. The trial court specifically found there was no bad faith. However, the court held that section 575.2 is unrelated to section 128.5 and does not require a finding of bad faith.

The court was particularly concerned with Henderson’s violation of California Rules of Professional Conduct (CRPC) Rule 3.3(a)(2) for failure to address a case “in the jurisdiction known to the attorney to be adverse” to her client’s position. A key case was ignored by Henderson in her opening brief and, when raised in Chase’s opposition brief, was minimized in the reply brief. The court rejected Henderson’s arguments, but nonetheless addressed them at length and ordered the opinion published in order to politely but clearly excoriate Henderson for bringing an appeal with no merit and clogging the appellate court to the detriment of other, more important cases.

Fee Agreements
In Brawerman v. Loeb & Loeb LLP, 81 Cal. App. 5th 1106 (2022), Mark Brawerman and his company retained the law firm of Loeb & Loeb to represent them in negotiations with a venture capital firm. All parties to the negotiation were located in California. Loeb & Loeb spent a total of 928 hours on the matter, 382 of which were spent by an associate in Loeb & Loeb’s New York office who was licensed only in New York and New Jersey.

Brawerman and his company were dissatisfied with Loeb & Loeb’s work and filed suit in Superior Court for professional negligence and breach of fiduciary duty. The court referred the matter to arbitration pursuant to the parties’ retainer agreement. Brawerman moved to remand the matter to court, arguing that the entire retainer agreement (including the arbitration provision) was void because the Loeb & Loeb associate working on the matter was not licensed in California. The arbitrator denied the motion. The arbitrator ultimately ruled on the merits in favor of Brawerman, but awarded far less relief than he had sought. The superior court confirmed the award, and Brawerman appealed.

The court of appeal affirmed, rejecting Brawerman’s argument that the entire retainer agreement was void due to the associate’s lack of a California license. Citing Birbrower v. Superior Court, 17 Cal. 4th 119 (1998), the court held that the unlicensed practice of law by one of several attorneys working on a matter does not void the entire retainer agreement. Rather, it impacts only the amount of fees due to the law firm.

The court of appeal distinguished Sheppard, Mullin v. J-M Mfg. Co., 6 Cal. 5th 59 (2018), where the court held that a law firm’s conflict of interest voided an entire retainer agreement. The court of appeal explained that Sheppard’s conflict voided the entire retainer agreement only because “the object of the agreement was itself the ethical breach.” Specifically, “the object of the agreement was the representation of J-M,” and that representation violated conflict of interest rules. “It was the wrongfulness of its very formation that rendered the contract unenforceable.” In contrast, the Loeb & Loeb retainer agreement was not unlawful at its inception. It was merely performed unlawfully in part when Loeb & Loeb assigned a New York associate to a California matter. Accordingly, the court of appeal affirmed.

Statute of Limitations
In Wang v. Nesse, 81 Cal. App. 5th 428 (2022), a former client brought a legal malpractice action against her former attorney arising out of representation in a marital dissolution action. After the attorney’s death, his estate moved for summary judgment on the statute of limitations. This case addresses the recurring problem in legal malpractice cases of determining when the representation has ended for purposes of applying the continuous representation tolling provision of Code of Civil Procedure section 340.6, which does not provide a standard for determining when the attorney’s representation in the “specific subject matter” has ended.

Here, the court reviewed prior cases addressing continuous representation tolling for the purpose of determining how the statutory tolling is to be applied. Representation ends when the client actually has or reasonably should have no expectation that the attorney will provide further legal services. To make that determination, a court is to objectively examine evidence of an ongoing mutual relationship and of activities of the parties in furtherance of a continuing relationship. The court held that the attorney’s estate failed to carry its burden of establishing that the representation of the former client ended more than one year before the date the action was filed. It was conceivable from the attorney’s emails to the client that a trier of fact could determine either that he had withdrawn, or alternatively, had merely threatened to withdraw without yet terminating the relationship. Accordingly, there was a triable issue of material fact as to whether the client could have a reasonable expectation that the attorney would continue to provide legal services. Factual issues therefore precluded summary judgment on the issue of whether the statute of limitations was tolled by continuous representation, and the judgment was reversed.

Advocate-Witness Rule
Lopez v. Lopez, 81 Cal. App. 5th 412 (2022), clarified the standards applicable to a disqualification motion based on the advocate-witness rule set forth in California Rule of Professional Conduct 3.7. The case involved a plaintiff represented by her husband, a lawyer, pro bono or at a discounted rate. After the lawyer informed plaintiff that he would likely need to testify at trial about receiving certain communications from defendant, he obtained plaintiff’s informed written consent to his dual role as an advocate and witness. After four years of litigation, and two months before trial, defendant successfully moved to disqualify plaintiff’s lawyer under the advocate-witness rule.

The court of appeal reversed the disqualification order because the trial court failed to apply the proper legal standards. First, the trial court relied on the American Bar Association’s version of Rule 3.7, which does not allow informed written consent. Id. at 424. Second, the trial court made no finding that disqualification was necessary to “protect the trier of fact from being misled or the opposing party from being prejudiced.” Id. Instead, the trial court found that the lawyer’s dual role would “impair his credibility” as a witness (for his own client), and “diminish his effectiveness” as an advocate (for his own client). It made no finding of prejudice to his client’s adversary or any potential confusion. Id. at 424-25. In addition, the limited factual record revealed no dispute regarding the subject matter of the lawyer’s testimony—i.e., receipt of certain emails from defendant. Id. at 425.

Finally, the court held that the trial court abused its discretion in failing to apply Rule 3.7’s limitation to advocacy “in a trial.” Generally, a disqualification order based on the advocate-witness rule may bar the lawyer from representing the client at trial or in “pretrial activities which carry the risk of revealing the attorney’s dual role to the jury,” such as taking or defending depositions. Id. at 424. However, given the lawyer’s four-year mastery of the case and the financial hardship of replacing a pro bono lawyer, it was error to extend disqualification to all pretrial activities. Id. at 425.

Bar Admission
In In re Yagman, 38 F.4th 25 (9th Cir. 2022), a divided Ninth Circuit panel denied reinstatement to civil rights attorney Stephen Yagman. The court held that, although Yagman had been reinstated to the California Bar after being disbarred, he remained disbarred in New York and thus would not be permitted to practice before the Ninth Circuit.

In 2006, Yagman was convicted of money laundering, bankruptcy fraud, and attempting to evade federal income taxes. Following those federal convictions, he was disbarred by the New York State Bar. Several months later, Yagman also was disbarred by the California State Bar.

In 2019, Yagman successfully petitioned for reinstatement to the California State Bar, which found that Yagman had “‘met his heavy burden for reinstatement’” by showing “‘evidence of rehabilitation in light of the moral shortcomings that previously resulted in discipline.’” In re Yagman, 38 F.4th at 30 (quoting State Bar Hearing Dept. ruling). The California Supreme Court reinstated Yagman in May 2021. Yagman did not seek reinstatement in New York.

Yagman then sought reinstatement in the Ninth Circuit, which denied his application. The majority opinion held: “[I]t is not enough for Yagman to show he is reinstated to the California bar when he remains disbarred from practicing law in New York. . . . We hold that Yagman cannot be reinstated to the bar of our court until he is authorized to practice law by the New York State Bar because he has not met [Ninth Cir.] Rule 46-2(h)’s requirement to ‘justify’ his reinstatement.” Id. at 32. The majority relied on In re Girardi, 611 F.3d 1027, 1039 (9th Cir. 2010), for the proposition that attorneys must show they are in good standing in all jurisdictions to which they are admitted to justify reinstatement. In re Yagman, 38 F.4th at 31.

In dissent, Justice Berzon argued that the majority incorrectly required Yagman to show that he was in good standing in every other court in which he had been admitted. Judge Berzon would have deferred to California’s decision to reinstate Yagman. Id. at 33 (Berzon, J., dissenting).

Legal Malpractice Causation
In Mireskandari v. Edwards Wildman Palmer LLP, 77 Cal. App. 5th 247 (2022), the client, Shahrokh Mireskandari, sued his former attorneys at Edwards Wildman Palmer LLP for legal malpractice. Mireskandari claimed that his former lawyers negligently failed to advise him of California’s anti-SLAPP statute before they filed a complaint on his behalf against a newspaper publisher in California federal district court. The lawsuit ultimately drew a successful motion to strike.

The trial court granted the defendants’ motion for summary adjudication as to the professional negligence claim, holding that the plaintiff could not establish causation under the “case-within-a-case” method because he could not prove he would have prevailed in the underlying lawsuit “but for” the attorneys’ negligence. The defendants’ summary adjudication motion was expressly limited to challenging only the causation element of the plaintiff’s professional negligence claim.

The court of appeal emphasized that in malpractice cases, the “crucial causation inquiry is what would have happened if the defendant attorney had not been negligent.” 77 Cal. App. 5th at 260 (citing Viner v. Sweet, 30 Cal. 4th 1232 (2003)). Plaintiffs must show that “but for” the alleged malpractice, the plaintiffs would have obtained a more favorable result. The court held that Mireskandari’s claim, premised on allegations that he would have avoided litigation expenses and attorney fees sanctions but for the defendants’ negligent failure to advise him about the anti-SLAPP statute, met that standard. An attorney’s duty to exercise care that a reasonably careful attorney would use extends to prelitigation investigation. If an attorney does not advise a client of reasonably foreseeable risks of litigation before a complaint is filed, the client need not prove that the litigation would have been successful. The client can establish causation by showing that they would have obtained a more favorable result by proving that they would not have pursued the litigation and not incurred damages attributable to the undisclosed risk. One way to do this is to show that they would not have filed the litigation and would have been better off. In Mireskandari’s case, had the attorneys advised him of the anti-SLAPP statute, he claimed he would not have filed his case in California, and would not have incurred fees to litigate an anti-SLAPP motion nor been subject to a sanction for attorneys’ fees. The court ultimately held that the trial court erred in granting summary adjudication.

Online Bios
Orange County Bar Association Formal Opinion 2022-01 explores an attorney’s ethical duty of confidentiality in the context of an attorney’s online bio. The opinion begins by noting that the duty of confidentiality is broader than the attorney-client privilege and can extend even to information that is publicly available, including where disclosure of such information would be detrimental or embarrassing to the client. Analyzing four different hypothetical factual scenarios, the opinion examines the nature and extent of client-related information an attorney can permissibly include in his or her online bio without obtaining the informed consent of the client.

The opinion concludes that including information about a representation that involves potentially embarrassing allegations, such as defending a client against a sexual harassment claim, likely would violate the attorney’s duty of confidentiality to the client. The opinion reaches this conclusion even where the information has been included in a published opinion and where the attorney successfully reversed a problematic jury verdict against the client on appeal. These considerations apply equally to current and former clients, the opinion notes, because the duty of confidentiality survives the termination of the attorney-client relationship. The opinion further cautions that, in addition to the duty of confidentiality, attorneys should also ensure that they are complying with the ethical rules regarding advertising, including obtaining client consent before listing names of clients in a manner that suggests that the attorney “regularly represents” those clients.

Finally, the opinion advises that, even where the information is not likely to be detrimental or embarrassing to the client, the safest course is always to seek the informed consent of the client before including his or her information in an online bio.

Anti-SLAPP Motions
In Bowen v. Lin, 80 Cal. App. 5th 155 (2022), the owners of an office damaged by a water leak engaged an attorney to prosecute a civil action. The owners’ son allegedly breached an agreement to cooperate and convinced the owners to engage new counsel (who happened to be owners’ daughter), who then settled the action. The former attorney sued the owners for unpaid attorneys’ fees, and filed a cross-complaint against the owners’ son and the successor attorney. The former attorney also alleged the owners and their son fraudulently induced former attorney to provide legal services.

All cross-defendants filed anti-SLAPP motions. The trial court granted the successor attorney’s motion, concluding her actions were protected activity and, given the litigation privilege, the former attorney could not demonstrate a probability of prevailing. However, the trial court denied the other parties’ motions, concluding the alleged conduct was “probably not” protected activity. It did not decide whether the former attorney established a probability of prevailing.

The court of appeal held that all of the former attorney’s subject claims against the owners and their son constituted protected activity. The former attorney’s claims regarding the son’s lack of cooperation all concerned the prosecution of a civil action. The son’s alleged encouragement of his parents to stop cooperating and the owners’ purported intent that the former attorney litigate the case until just before trial were similarly protected. An attorney threatening litigation against former clients for such decisions would chill the constitutional right of petition by preventing the clients from fully and openly discussing litigation matters. The court of appeal remanded for determination whether the former attorney could establish a probability of prevailing.

The court of appeal affirmed the granting of the successor attorney’s anti-SLAPP motion as to claims she urged the owners to stop cooperating with the former attorney and to fire him. The allegations clearly implicated protected activity, per Taheri Law Group v. Evans, 160 Cal. App. 4th 482 (2008). The claims against the successor attorney were all based on advice she gave regarding the settlement of the underlying action. The litigation privilege clearly applied. Silberg v. Anderson, 50 Cal.3d 205, 212 (1990).

No Contact Rule
American Bar Association Formal Opinion 502 addresses a pro se lawyer’s ethical duties relating to communication with a represented person. The opinion concludes that a pro se lawyer is an attorney who is representing a client (i.e., themselves) therefore triggering Model Rule 4.2, also known as the “no-contact” or “anticontact” rule. In reaching its conclusion, the committee reasoned that the risks, such as overreaching, disruption of an attorney/client relationship, and elicitation of uncounseled disclosure, outweighed the benefit of permitting a pro se lawyer to communicate with the other represented party. Therefore, unless the pro se lawyer has the consent of the represented person’s lawyer or is otherwise authorized by law or court order to communicate directly with the represented party about the subject of the representation, such communication is prohibited. Note, however, that a pro se lawyer may speak with the other represented person about matters that do not constitute the subject of the representation.

Recognizing that in certain situations direct contact would be beneficial (consistent with comment 4 of Model Rules R. 4.2), the committee suggested a pro se lawyer reach out to the represented client’s lawyer to discuss parameters of proposed communications. The committee went on to provide advice for lawyers contacted by a pro se lawyer seeking such agreement and opined that it would be prudent for the lawyer to discuss the benefits and risks of such communications, and where it appears that the pro se lawyer is acting in bad faith, to consider advising the client not to communicate with the pro se lawyer directly. The committee also suggests memorializing in writing the clear scope and parameters of the authorized communication.

Interestingly, ABA Formal Opn. 502 included a dissenting opinion suggesting a change to the rule itself as, in the author’s opinion, the rule is straightforward and inapplicable to pro se lawyers (because they are not “representing a client”). The dissenters went on to reiterate comment 4 of Model Rules R. 4.2 (permitting parties to speak directly). The author, in dissenting, points out that because the rule appears clear, it is highly unlikely a lawyer would know to further research the topic, thereby creating an inappropriate “trap” for pro se lawyers. Hence, the need for a change to the rule and not another opinion that may be lost on lawyers.

In Shapell Socal Rental Properties, LLC v. Chico’s Fas, Inc., 2022 WL 9755390 (Oct. 17, 2022), the court held that lawyers have both ethical and statutory obligations to warn opposing counsel before seeking a default judgment, and to give a reasonable opportunity to file a responsive pleading, in a spirit of courtesy and professionalism. This obligation is rooted in decades of case authority (as referenced in LaSalle v. Vogel, 36 Cal. App. 5th 127, 137 (2019)), and reinforced by Civil Procedure Code section 583.130, which creates a policy that all parties cooperate in bringing an action to trial or other disposition. Importantly, the court stated, this policy takes precedence over the obligation to represent a client effectively. Chico’s had requested that Shapell communicate directly with Chico’s legal counsel regarding the unlawful detainer dispute, but Shapell’s counsel served the complaint on a store associate who did not forward the complaint to management and did not send copies to Chico’s legal counsel, registered agent, or corporate headquarters. Shapell’s counsel further sought and obtained a default judgment without notification of Chico’s or its legal counsel. The court characterized this strategy as the use of “stealth and deviousness” and “underhand litigation tactics.” Chico’s moved to set aside the default judgment pursuant to Civil Procedure Code section 473, et seq., and Shapell argued it had no obligation to notify Chico’s counsel about the complaint or Shapell’s intent to seek a default judgment. The trial court denied the motion, but the appellate court reversed and set aside the default and default judgment, finding that Shapell had ignored its ethical and statutory duties.