by Members of the OCBA Professionalism & Ethics Committee
2025 saw many important ethics and lawyer liability cases that may have an impact on lawyers’ practices. The OCBA Professionalism and Ethics Committee has compiled those cases and summarized the more significant ones, addressing issues such as AI hallucinations, attorney-client privilege, formation of the attorney relationship, anti-SLAPP, witness coaching, legal malpractice, disqualification, and even the statute of limitations on a malicious prosecution action.
Artificial Intelligence In Noland v. Land of the Free, 114 Cal. App. 5th 426 (2025), the first published California appellate opinion regarding the use of generative artificial intelligence (AI) tools, the court found that nearly all of the legal quotations in plaintiff’s opening brief, and some in the reply brief, were “fabricated,” that the purported quotes did not appear in the cases cited, that many of the cases cited by plaintiff did not discuss the topics for which the cases were cited, and a few of the cases did not exist at all. The court cited numerous examples of the plaintiff’s brief referencing cases for specific propositions, when the cases said nothing even close, indicating that the opening brief contained twenty-three cases, of which twenty-one were fabricated. Plaintiff did not read the cases cited by the AI sources. The court stated that no brief, pleading, motion, or any other paper filed with the court should contain any citations which the plaintiff has not read and verified. This is a basic duty counsel owed to both the client and the court.
Although the court said the reliance on nonexistent legal authority would justify striking the brief or dismissing the appeal, because the plaintiff was not aware of the fabricated legal authority, and the defendant addressed the appeal on the merits, the court did the same. The appellate court issued an OSC as to why the court should not sanction plaintiff’s counsel for the fabricated quotes and citations in the plaintiff’s appellate briefs. The attorney indicated that he had used AI, that he had not been aware that AI frequently fabricates or hallucinates legal sources, and that he did not manually verify the quotations. The court reviewed numerous decisions from other jurisdictions regarding fraudulent citations and non-existent legal authority, and held that relying on fabricated legal authority was sanctionable, finding that the problem of AI hallucinations had been discussed extensively in cases and in the press for several years. The court awarded sanctions in the amount of $10,000, payable to the court, and ordered the attorney to provide a copy of the court’s opinion to his client.
Attorney-Client Privilege In Greer v. San Diego Union Tribune, LLC, 127 F.4th 1216 (9th Cir. 2025), Frankie Greer sued San Diego County to recover for injuries he received while in county custody. The county convened a Critical Incident Review Board (CIRB) in which involved staff met with the Sheriff’s department Director of Legal Affairs to discuss potential liability arising from the injuries and to assess changes to policies and procedures to prevent future claims. The meeting also discussed some other administrative or policy issues. After settlement of the case, the San Diego Union Tribune and other media organizations intervened in the action to unseal the CIRB report because of high public interest in the subject.
Reversing the trial court, the Ninth Circuit held that the document was privileged and did not need to be turned over to the intervenors. The court held that discussions not only of liability for past acts but also prevention of future claims are appropriate client conversations with an attorney which are covered by the attorney-client privilege.
In another significant holding, the court held that the Ninth Circuit test for privilege of documents that include both privileged and non-privileged information is the primary purpose test. The court ruled that a communication can only have one primary purpose, and that in this case the county policies creating the CIRB made clear that the primary purpose was attorney-client consultation, even if other topics were discussed.
In In re Grand Jury Subpoena, 98 F.4th 1123 (2025), the Ninth Circuit reversed a district court’s order compelling a law firm to provide the government with a privilege log of documents connected to a client under investigation. The decision clarified how Fisher v. United States, 425 U.S. 391 (1976), and the Fifth Amendment’s “act-of-production” privilege apply when an attorney is subpoenaed for client materials.
A grand jury investigating tax offenses subpoenaed the client, who invoked the Fifth Amendment. The government subpoenaed the client’s former law firm, seeking the same materials or, if withheld, a privilege log identifying them. The firm refused, arguing that producing such a log would indirectly violate the client’s Fifth Amendment rights by revealing the existence, authenticity, and possession of potentially incriminating documents. Notwithstanding, the district court ordered production of the privilege log.
On appeal, the Ninth Circuit reversed the district court, holding that a privilege log itself exposes protected information about client documents and is testimonial in nature. Per the holding in Fisher, documents sent from a client to an attorney for legal advice maintain the same privilege as if in the client’s hands. Compelling the law firm to identify or describe those documents for the government would effectively force disclosure of information the client could not be compelled to reveal directly.
The court reasoned that such disclosure would undermine both the client’s Fifth Amendment privilege and the attorney-client privilege, predominantly because it could enable the government to later invoke the “foregone-conclusion” doctrine to compel the client’s production. Instead, the proper procedure is for the district court to conduct an in-camera review to determine whether the “Fisher criteria” are met before requiring any disclosure.
Attorneys should carefully assess what is put in a privilege log (and what description is given) to ensure they do not indirectly disclose a client’s testimony. Privilege logs, a procedural formality to many cases, may themselves be privileged when their disclosure would reveal protected, testimonial information about the client.
Formation of Attorney-Client Relationship In Gogal v. Deng, 112 Cal. App. 5th 1161 (2025), a husband and wife prevailed as co-plaintiffs on a retaliatory eviction claim against their landlord. They later brought a motion to recover their statutory attorneys’ fees, arguing that the husband, who is an attorney, had represented the wife in the lawsuit. The trial court denied the fee motion on the grounds that the interests of the husband and wife were “joint and indivisible” and, thus, the wife had not suffered any damages separate and apart from those suffered by the husband.
The court of appeal affirmed the trial court’s denial of the fee motion. In doing so, however, the court noted that the critical question is whether a “true attorney-client relationship” existed between the spouses. The court rejected any brightline rule that would preclude an attorney-client relationship in any situation where spouses have joint interests and are seeking coincident damages. “While joint interests and coincident damages are relevant and often determinative considerations, they do not necessarily preclude an attorney-client relationship any more than separate interests and distinct damages define it.”
Rather, to determine whether a “true” attorney-client relationship existed between spouses, courts must engage in a fact-specific inquiry regarding the circumstances of the consultations between the non-attorney spouse and the attorney spouse. For example, courts are to examine whether the non-attorney spouse consulted the attorney spouse in his or her professional capacity and whether their relationship, in terms of the lawsuit, was for the purpose of obtaining legal advice. Hindsight belief that an attorney-client relationship existed is irrelevant. Facts that tend to show the non-attorney spouse played a significant substantive role in the litigation, rather than merely deferring to the attorney spouse, tend to support the finding of an attorney-client relationship. Applying these principles to the facts at hand, the court concluded that the husband and wife co-plaintiffs “did not introduce sufficient evidence to overcome the natural inferences that arise from an attorney-spouse pursuing an entirely joint claim with entirely coincident damages” as required to demonstrate a bona fide attorney-client relationship in that context.
In De Meo v. Cooley LLP, 115 Cal. App. 5th 17 (2025), De Meo and Beniwal co-founded ReTech Labs, Inc. In 2014, De Meo signed an agreement engaging Cooley as ReTech’s counsel, which stated Cooley was only ReTech’s attorney. De Meo and Beniwal later formed Rebotics, LLC. Cooley prepared documents for a 2017 transaction where De Meo transferred part of his interest in Rebotics to ReTech, but Cooley was not involved in the negotiations.
In 2021, ReTech and Rebotics were to be sold to Symphony AI. Cooley represented ReTech and Rebotics in the transaction. De Meo engaged other counsel but communicated directly with Cooley attorneys. During a call in which De Meo’s counsel did not participate, Cooley attorneys advised De Meo they did not represent him, and briefly described the purpose of various transaction documents. Ultimately, De Meo did not enter into that agreement and reached a separate deal with Symphony AI, without Cooley’s involvement.
De Meo filed suit, claiming Cooley represented him personally concerning the 2017 and 2021 transactions. De Meo alleged he would have proceeded differently had he known otherwise. In support of causes of action for breach of fiduciary duty and fraudulent concealment, De Meo further claimed Cooley breached California Rule of Professional Conduct 1.13(f) by failing to explain exactly who Cooley’s client was.
In affirming summary judgment for Cooley, the court of appeal held Cooley and De Meo did not enter into an express or implied attorney-client relationship. De Meo was properly precluded from using a declaration contrary to his deposition testimony to create a triable issue as to whether Cooley attorneys told him they believed Cooley did not represent De Meo. The court held those statements weighed strongly against finding an implied attorney-client relationship, as did De Meo’s sparse contact with Cooley over the years and his repeated references to others as “his” attorneys. De Meo’s few direct communications with Cooley did not contain information that generally would be communicated between attorney and client. The court also found that Cooley did not owe De Meo a fiduciary duty, as he was not an intended third-party beneficiary of Cooley’s representation of the companies.
Anti-SLAPP In Callister v. James B. Church & Associates, P.C., 108 Cal. App. 5th 185 (2025), the court of appeal held that a law firm’s special motion to strike under the anti-SLAPP statute (Cal. Civ. Proc. Code § 425.16) was properly denied where the firm’s alleged failure to file a refund claim and failure to advise its client to file such a claim was not protected speech but merely a failure to act.
The case arose from a contentious probate action. The Church firm served as counsel for Shogren, personal representative of the estate of the decedent. The parties to that action eventually settled their differences and distributions from the estate made to certain beneficiaries, including a relative of the decedent (Sagehorn) and a group known as the Carter Beneficiaries. Id. at 188-89.
Shogren filed an estate tax return with the Internal Revenue Service (IRS) and paid sizeable taxes from the estate funds. Shogren incurred considerable attorney fees after filing the tax return, but did not amend the return or file a timely protective claim for a refund on the return to claim the attorney fees as tax deductions. Sagehorn and the Carter Beneficiaries then sued the Church firm, asserting causes of action for negligence and breach of contract. They alleged that the Church firm failed to file a protective refund claim and failed to advise Shogren to do the same. Filing such a protective claim would allegedly have resulted in a tax refund of $5 million had the attorney fees been claimed as deductions. Id. at 190.
The Church firm filed an anti-SLAPP motion, arguing that all of its alleged conduct was based on statements made in the probate action. The trial court denied the motion and the court of appeal affirmed. The court held that the alleged claims against the Church firm arose not from speech but from failing to file the refund claim and failing to advise Shogren to do so: “[T]he Church Firm’s alleged failure to file a protective claim for a refund and its alleged failure to advise its client to file a protective claim for a refund are not protected speech and petitioning activities.” Id. at 196 (italics in original).
Witness Coaching Agnone v. Agnone, 111 Cal. App. 5th 758 (2025), addressed sanctions for potential witness coaching at deposition. In a marital dissolution, a third party was subpoenaed to appear for a remote deposition. The witness appeared through his webcam. Counsel for the witness was in the same room but refused despite repeated requests to turn on his webcam. The party taking the deposition expressed concern about potential signaling or coaching of the witness and terminated the deposition. The examining party brought a motion to compel seeking sanctions against the counsel under Code of Civil Procedure § 2016.010 et seq. When the dissolution action settled, the motion to compel was withdrawn but the request for sanctions proceeded to hearing. Sanctions were awarded for $9,981. On initial review, the court of appeal determined that the Code of Civil Procedure did not authorize monetary sanctions for this conduct. The California Supreme Court granted review, during which an unrelated appeal, City of Los Angeles v. PricewaterhouseCoopers LLP, 17 Cal. 5th 46 (2024) (“PwC”), concluded that a court may invoke its independent authority to impose monetary sanctions under sections 2023.010 and 2023.030 when confronted with an “unusual form of discovery abuse, or a pattern of abuse, not already addressed by a relevant sanctions provision.” Id. at 74. Following this development, the California Supreme Court transferred the case back to the court of appeal with directions to reconsider in light of the new authority. Based on PwC, the court of appeal concluded that the trial court had independent authority, and affirmed the ruling. Despite the absence of any evidence of coaching the witness, the court determined that California Rules of Court, rule 3.1010(a)(3) and (b), could not be read as allowing the deponent’s attorney to participate only by audio means while physically present with his client in the same room where one could surreptitiously coach the deponent outside of opposing counsel’s view. Although the trial court did not expressly find that the applicable statutes authorized the imposition of sanctions for this conduct, the court of appeal implied such a finding based upon the abusive conduct evidenced in the deposition transcript.
Legal Malpractice In Kaushansky v. Stonecroft Attorneys, APC, 109 Cal. App. 5th 788 (2025), the plaintiff retained a law firm and its sole principal lawyer (collectively, the “Firm”) to file an action against her landlord for breach of the implied warranty of habitability and negligent maintenance, alleging damages of $91,734,29. Once filed, the Firm did nothing on the plaintiff’s case and substituted out, after which the plaintiff was unable to find another lawyer and settled for $2,500. The plaintiff then filed a complaint against the Firm for professional negligence and breach of fiduciary duty. The trial court ruled in the plaintiff’s favor on both claims. On appeal, the Firm did not dispute the trial court’s finding of its misconduct, but argued the plaintiff failed to prove her landlord had access to funds to cover the $91,734.29 in damages. The court of appeal affirmed the award of $25,000 emotional distress damages for the plaintiff’s breach of fiduciary duty claim. However, the court reversed the negligence award due to a lack of proof as to collectability, stating, “Collectability is part of the plaintiff’s case, and a component of the causation and damages showing, rather than an affirmative defense which the Attorney Defendants must demonstrate.”
In an opinion concurring the emotional distress damages were justified, Justice John L. Segal asked, “Why does a legal malpractice plaintiff have to prove a judgment in the underlying action would have been collectible? And is that a good rule? . . . In my view, the rule is legally and economically misguided.” In no other area of law does a plaintiff have “to prove not only the elements of a cause of action, but also that the defendant has the financial ability to pay the judgment. Other than entitlement to punitive damages [citation], the defendant’s ability to pay the judgment is irrelevant.” Id. at 808. When asking “how did we get what I think is a bad rule?” Justice Segal turned to Campbell v. Magana, 184 Cal. App. 2d 751 (1960), and commented: “[T]he plaintiff in Campbell failed to prove by a preponderance of the evidence two elements of the case within the case: breach and causation. . . . But that’s not really a collectability issue; that’s a failure to prove the merits of the case within the case.” Kaushansky, 109 Cal. App. 5th at 810. Turning to California Supreme Court cases, Justice Segal noted they also involved cases in which the plaintiffs failed to prove the merits of the underlying cases, which were not based upon a collectability analysis.
Disqualification The court in Johnson v. Department of Transportation, 109 Cal. App. 5th 917 (2025), addressed Law Firm’s use and dissemination of opposing counsel’s attorney-client privileged email. In this case, Law Firm’s client sued the California Department of Transportation (“Caltrans”) alleging discrimination, harassment and retaliation. During the litigation, Caltrans’s attorney sent an email to plaintiff’s supervisor labeled: “CONFIDENTIALITY NOTICE – This is a privileged attorney-client communication.” The email was sent in the context of Caltrans investigating the claims and preparing its defense.
The non-party Caltrans employee who received the email sent it to plaintiff’s Law Firm. Caltrans’ counsel promptly notified Law Firm the email was privileged and demanded its deletion or return. After much back and forth between the lawyers, Law Firm refused to delete the email, contending it was not privileged and, even if it was, the privilege was waived. Caltrans moved for a protective order, which was granted by a discovery referee and, later, the trial court. Specifically, Law Firm was ordered to destroy or return all copies of the email, identify all persons to whom it had been disclosed, and refrain from further dissemination. Instead, Law Firm continued using the email by disclosing it to expert witnesses and claiming it would seek to admit the email into evidence at trial.
Caltrans then filed a motion to disqualify Law Firm and the three experts who had seen the email, arguing violation of the protective order and continued breaches of ethical duties regarding the privileged email. The trial court granted disqualification. On appeal, Law Firm argued the email was not privileged, that Caltrans waived the privilege through delay, and that disqualification was an abuse of discretion.
The court of appeal affirmed. First, it held that the email was protected by the attorney-client privilege because its dominant purpose was to obtain information from the Caltrans employee with whom defense counsel shared the email, pointing in part to the confidentiality warning transmitted with the email. Second, Caltrans did not waive the privilege: it promptly objected, demanded return, and moved for enforcement; the mere passage of time did not in this case constitute a waiver. Third, applying the holdings in State Comp. Ins. Fund v. WPS, Inc., 70 Cal. App. 4th 644, 656-57 (1999) and McDermott Will & Emery LLP v. Superior Court, 10 Cal. App. 5th 1083, 1108-09 (2017), the court found Law Firm breached its duties by continuing to review, disseminate and use the email after learning of its privileged nature and entry of the protective order, thus creating a reasonable probability of unfair advantage and a risk to the integrity of the proceeding. Finally, the court held the trial court did not abuse its discretion in disqualifying counsel and experts: protecting confidentiality of attorney-client communications and preserving public confidence in the judicial process outweighed the burden of counsel substitution.
Ultimately, Johnson serves as a warning to attorneys and experts that adopting too aggressive a position after exposure to privileged information can render the information not only inadmissible but may also result in disqualification.
Statute of Limitations: Malicious Prosecution In Escamilla v. Vannucci, 17 Cal. 5th 571 (2025), the California Supreme Court held that the one-year statute of limitations imposed by Civil Procedure Code section 340.6 does not apply to claims against attorneys that are brought by parties who were never their clients or the intended beneficiaries of their clients.
Escamilla had sued an opposing attorney, Vannucci, for malicious prosecution. Vannucci moved to strike the complaint under the anti-SLAPP statute and asserted that the claim was barred by the one-year statute of limitations applicable to claims against attorneys. The court of appeal agreed with the trial court’s decision that section 340.6 governed, and Escamilla’s claim was time-barred. That decision was in line with other decisions holding that section 340.6 applied to malicious prosecution claims against attorneys.
However, the California Supreme Court reversed the court of appeal’s decision and held that section 340.6 should not apply to the malicious prosecution claim, as Escamilla had never been a client of Vannucci.
First, the court observed that while its decision in Lee v. Hanley, 61 Cal. 4th 1225 (2015), had been cited by later decisions regarding section 340.6, that opinion did not address whether section 340.6 applied to claims brought by nonclients.
The court concluded that the text of section 340.6 was ambiguous. Further, when looking at the legislative history and purpose of the statute, the court observed that there was no indication that the legislature intended that section 340.6 apply to malicious prosecution claims, or any action brought by someone outside the attorney-client relationship. It also was clear from the legislative history that a purpose behind section 340.6 was the legislature’s desire to counteract the rising costs of legal malpractice lawsuits and related insurance premiums. Permitting a malicious prosecution claim would not undermine this purpose.
The court also held that policy considerations supported its decision. To hold otherwise might result in different statutes of limitations for the same alleged misconduct based on whether the claims were brought against an attorney or client. That would put a greater burden on clients than attorneys, even though attorneys have superior knowledge as to whether a claim lacks probable cause or not.
The court ultimately held that the two-year period for tort claims under Code of Civil Procedure section 335.1 applied, and that the trial court thus erred in granting the motion to strike on untimeliness grounds.