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California Attorney Ethics in Practice

12 STEPS TO A HEALTHIER PRACTICE IN 2020: STEP 2 – TREAT OTHERS THE WAY YOU WANT TO BE TREATED

Happy February! In November 2018, 69 new or amended California Rules of Professional Conduct (“CRPC”) were thrust upon California’s more than 250,000 lawyers. These rules were renumbered and reorganized to align with the American Bar Association’s (“ABA”) Model Rules and replaced the 46 ethics rules that California lawyers had been following for nearly 30 years.  Despite each of us having been responsible for adhering to these rules over the last year, many California lawyers and law firms still do not know, or do not fully appreciate, the significance of the modifications. Therefore, as we enter into this new decade and the second full year of these rules being in effect, I invite you and your firm to join my 12-step program to healthier law practice in 2020 and the years to come. Each month I will feature an article on the key ethics rule changes aimed at guiding you and your firm to a healthier law practice by better managing your risk of liability.  Step 1 – Responsibility was published in January 2020.

You can access each article directly on this blog page or you can subscribe to this blog to ensure that you don’t miss any of the 12-steps.  Please note that the articles on this blog are not legal advice and do not take into account specific facts or circumstances for which a tailored analysis and risk management plan is recommended.

STEP 2 – TREAT OTHERS THE WAY YOU WANT TO BE TREATED

We all know of the “Golden Rule” (or variations thereof): “Treat others the way you want to be treated.” According to Wikipedia, this moral “can be considered an ethic of reciprocity in some religions[,]” and “may appear as a positive or negative injunction governing conduct.”  The maxim is golden because its application has value in every aspect of our lives.  The workplace or, more specifically for our purposes, the practice of law, is no exception.  Much like in society at large, this “golden rule” is not naturally followed by every lawyer, so it had be made into an actual legal ethics rule, … or should I say rules, with an “s”.

There are several California ethics rules that stress the importance of treating others with fairness, respect and honesty, whether it be our clients or perspective clients (e.g. Rule 7.1 – Communications Concerning a Lawyer’s Services), the court (e.g. Rule 3.3 – Candor Toward the Tribunal), the opposing party or opposing counsel (e.g. Rule 3.4 – Fairness to Opposing Party and Counsel), or others (e.g. Rule 4.1 – Truthfulness in Statements to Others).  I dare say there is no one among us who has not been disrespected, cheated and/or lied to in the practice of law, or in life, unfortunately. On a basic level, it is because each one of us has been on the receiving end of such mistreatment that we can, or at least should be able to, gage our behavior and, hopefully, choose not subject others to the same or similar mistreatment. 

What about mistreatment that some among us have been fortunate enough not to experience firsthand, such as harassment, discrimination and/or retaliation? Is it possible for someone to avoid bad behavior that he or she has no personal understanding of, or, perhaps, does not recognize as bad, unfair, disrespectful or inappropriate? 

The California Rules of Professional Conduct are “intended to regulate professional conduct of lawyers through discipline.”  Rule 1.0(a).  A willful violation of any rule is a basis for discipline, and it does not require that the lawyer intend to violate the rule. Rule 1.0(b)(1), Comment [3]. Although an ethics rule concerning discrimination has been on the books in California since March 1, 1994, long before subsection (g) was added to Model Rule 8.4 in 2016, old California rule 2-400, entitled “Prohibited Discriminatory Conduct in a Law Practice,” was a mere gesture.

Old rule 2-400 only applied to “the management or operation of a law practice” and did not expressly cover retaliation.  Significantly, despite there being no other rule of professional conduct that limited the original jurisdiction of the State Bar, old rule 2-400 also required a final, civil adjudication of a discrimination claim before the State Bar could even investigate that claim.  The pre-adjudication requirement stated, “[n]o disciplinary investigation or proceeding may be initiated by the State Bar against a member unless and until a tribunal of competent jurisdiction … shall have first adjudicated a complaint of alleged discrimination and found that unlawful conduct occurred.” No actual discipline could be imposed until the finding of unlawfulness was either: (1) upheld and final after appeal; (2) the time for filing an appeal had expired; or (3) the appeal was dismissed. See old rule 2-400(C). Even then, the finding or verdict from the required, prior litigation cold only be used as mere evidence in the State Bar action.  In other words, while the rule potentially regulated discrimination, the prerequisite rendered the old rule impossible to enforce because if prior litigation was not pursued, the conduct was ultimately adjudicated to not be discriminatory, the decision was reversed on appeal, or the litigation was resolved through settlement, the lawyer could escape State Bar castigation.  In fact, when the new rule was being proposed, the rules commission cited to the fact that there is no record of any lawyer being disciplined under old rule 2-400.

California’s new rule 8.4.1 entitled “Prohibited Discrimination, Harassment and Retaliation,” is much more comprehensive than the old rule and its Model Rule counterpart, rule 8.4(g).  Rule 8.4.1(a)(1) prohibits a lawyer from unlawfully harassing, unlawfully discriminating or knowingly permitting such harassment or discrimination against persons on the basis of any protected characteristic.  “Protected characteristic” is defined to mean “race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, genetic information, marital status, sex, gender, gender identity, gender expression, sexual orientation, age, military and veteran status, or other category of discrimination prohibited by applicable law, whether the category is actual or perceived. Rule 8.4.1(e)(1).  Rule 8.4.1(a)(2) prohibits a lawyer from unlawfully retaliating as well.

Paragraph (b) addresses law firm operations, which further prohibits unlawful discrimination or knowingly permitting the unlawful discrimination on the basis of a protected characteristic (Rule 8.4.1(b)(1)(i)), as well as prohibiting unlawful harassment or knowing permitting the unlawful harassment of an employee, an applicant, an unpaid intern or volunteer, or a person providing services pursuant to a contract on the basis of any protected characteristic (Rule 8.4.1(b)(1)(ii)). It further prohibits the unlawful refusal to hire, employ, select, bar, or discharge a person from employment or a training program leading to employment on the basis of a protected characteristic. Rule 8.4.1(b)(1)(iii).  Additionally, a lawyer shall not discriminate against a persons on the basis of a protected characteristic in compensation or in terms, conditions, or privileges of employment (Rule 8.4.1(b)(1)(iii)); or unlawfully retaliate (Rule 8.4.1(b)(2)).

The scope of the rule is limited to unlawful conduct as determined by reference to applicable state and federal statutes and decisions, and excludes conduct protected by the First Amendment.  Importantly, it imposes upon “all law firm lawyers the responsibility to advocate corrective action to address known harassing or discriminatory conduct by the firm or any of its lawyers or non-lawyer personnel.” Rule 8.4.1, Comment [1]. Comment [1] further clarifies, “[n]either this rule nor rule 5.1 or 5.3 imposes on the alleged victim of any conduct prohibited by this rule any responsibility to advocate corrective action.”  See also Step 1 – Responsibility, published on this blog in January 2020, which details a lawyer’s responsibilities to others under rules 5.1-5.3.  Comment [5] additionally addresses what constitutes a failure to advocate corrective action under paragraph (c)(2). 

Significantly, the new rule is not just for show, but allows the bar to act on its own and open an investigation into such allegations without the need for a triggering civil finding by another agency.  Comment [8] to the rule makes clear that discipline may be imposed “for conduct that would not necessarily result in the award of a remedy in a civil or administrative proceeding if such proceeding were filed.”  A lawyer who receives notice of a disciplinary charge under this rule is required to self-report and notify state and federal workplace-fairness agencies of the disciplinary charge.  Rule 8.4.1(e).  This requirement gives relevant government agencies the opportunity to get involved so that they may implement and advance the broad legislative policies with which they have been charged.

The Golden Rule is not contingent on the color of our skin, religious creed, national origin, ancestry, physical disability, mental disability, medical condition, genetic information, marital status, sex, gender, gender identity, gender expression, sexual orientation, age, military and veteran status, or other category of discrimination prohibited by applicable law.  Every single one of us wants to be treated with dignity and respect, and, in turn, we should treat all others the way we expect to be treated.  As required by rule 5.1, law firms should have policies and procedures in place addressing discrimination, harassment and retaliation, not only in an effort ensure its lawyers’ compliance with this rule, but, even more importantly, to insist on providing a safe and healthy workplace environment and culture.

Please contact author, Kendra Basner, if you have any questions about this article or if you would like guidance as to the application of or compliance with these rules.

12 Steps to a Healthier Law Practice in 2020: Step 1 – Responsibility

By: Kendra L. Basner

Happy New Year! In November 2018, 69 new or amended California Rules of Professional Conduct (“CRPC”) were thrust upon California’s more than 250,000 lawyers. These rules were renumbered and reorganized to align with the American Bar Association’s (“ABA”) Model Rules and replaced the 46 ethics rules that California lawyers had been following for nearly 30 years.  Despite each of us having been responsible for adhering to these rules over the last year, many California lawyers and law firms still do not know, or do not fully appreciate, the significance of these modifications. Therefore, as we enter into this new decade and the second full year of these rules being in effect, I invite you and your firm to join my 12-step program to healthier law practice in 2020 and the years to come. Each month I will feature an article on the key ethics rule changes aimed at guiding you and your firm to a healthier law practice by better managing your risk of liability.

You can access each article directly on this blog page or you can subscribe to this blog to ensure that you don’t miss any of the 12-steps.  Please note that the articles on this blog are not legal advice and do not take into account specific facts or circumstances for which a tailored analysis and risk management plan is recommended.

STEP 1 – RESPONSIBILITY

The criterion that each California lawyer is responsible for his or her own competent (Rule 1.1) and diligent  (Rule 1.3) ethical conduct is not new; however, three new ethics rules make clear how a lawyer can be held responsible for the conduct of others as well. 

A lawyer’s duty to supervise the work of a subordinate attorney and non-attorney employees or agents was implicit in old rule 3-310 (Failing to Act Competently), but the old rule said nothing about the subordinate lawyer’s duties. Now in-step with the Model Rules, not only have these duties garnered placement as separate rules 5.1 (Responsibilities of Managerial and Supervisory Lawyers) and 5.3 (Responsibilities Regarding Nonlawyer Assistants), but the duties of subordinate attorneys are now expressly defined under rule 5.2 (Responsibilities of a Subordinate Lawyer), by stating that a subordinate lawyer generally cannot defend a disciplinary charge by pointing the finger at a supervisor. Rules 5.1 and 5.3 also extend beyond the duty to supervise and include a duty on firm managers to have policies and procedures in place that cultivate ethical conduct within a firm.

Rule 5.1(a) addresses the managing lawyers of a law firm requiring that lawyers with managerial authority must make reasonable efforts to ensure compliance by the other lawyer(s) in the firm. Paragraph (b) concerns lawyers with direct supervisory authority over another lawyer, whether or not that other lawyer practices within the law firm, and requires the supervisory lawyer to make reasonable efforts to ensure compliance by the lawyer being supervised.  As the rule’s comments clarify, “reasonable efforts” contemplate that firms should have enforceable policies and procedures in place to ensure that all firm lawyers will comply with the CRPC and State Bar Act.  Rule 5.1, Comments [1] & [4].  This includes, but is not limited to, implementing policies and procedures “to detect and resolve conflicts of interest, identify dates by which actions must be taken in pending matters, account for client funds and property, and ensure that inexperienced lawyers are properly supervised.” Rule 5.1, Comments [1].  Risk management policies and procedures will vary depending on the size of the firm, its locations, its structure and the nature of its practice.  Rule 5.1, Comment [2].  Firms should also consider including procedures that encourage the reporting of any ethical issues or concerns to the appropriate personnel.  Rule 5.1(a), Comments [1], [2] and [4]; see also D.C. Bar Ethics Opn. 377. Permitting anonymous reporting, perhaps through a hotline or through designating a neutral firm representative who does not supervise or manage lawyers, may help reduce the reluctance or fear of reporting a colleague to ensure issues are detected and resolved expeditiously.   In sum, supervisory or managerial lawyers within the firm will not be disciplined for a colleague’s unknown violation of the rules if reasonable efforts were made to institute policies and procedures designed to assure ethical compliance. Rule 5.1(a-b).

However, a lawyer could be held vicariously responsible for another lawyer’s ethical violation if under rule 5.1(c): (1) the lawyer orders or, with knowledge of the relevant facts and of the specific conduct, ratifies the conduct involved; or (2) the lawyer, individually or together with other lawyers, possesses managerial authority in the law firm in which the other lawyer practices, or has direct supervisory authority over the other lawyer, whether or not a member or employee of the same law firm, and knows of the conduct at a time when its consequences can be avoided or mitigated but fails to take reasonable remedial action.  Paragraph (c) also extends beyond the law firm to lawyers outside the firm who are being directly supervised.  Comment [8] explains that each subparagraph of the rule creates an independent bases for liability, and paragraph (c) of this rule and rule 8.4(a) (Misconduct) can impose disciplinary liability on a supervisory or managerial lawyer for the conduct of a partner, associate or subordinate lawyer if that supervisor or manager has knowledge of the misconduct and fails to act. The question of whether a lawyer can be liable civilly or criminally for another lawyer’s conduct is beyond the scope of these rules. Rule 5.1, Comment [8].

Under new rule 5.2(a), a subordinate lawyer has an independent duty to comply with the CRPC and the State Bar Act and cannot blindly follow the instruction of his or her superior.  Although subsection (b) states that a subordinate lawyer is not in violation if s/he acts in accordance with a supervisory lawyer’s “reasonable resolution of an arguable question of professional duty[,]”  the Comment to 5.2 cautions that “[i]f the subordinate lawyer believes that the supervisor’s proposed resolution of the question of professional duty would result in a violation of these rules or the State Bar Act, the subordinate is obligated to communicate his or her professional judgment regarding the matter to the supervisory lawyer.”  As a best practice, lawyers in this position should put their communications in writing.  However, merely communicating an objection to a supervisor does not fully discharge a subordinate lawyer’s duties. A lawyer’s personal responsibilities to a client are paramount.  The Comment to rule 5.2 instructs: “When lawyers in a supervisor-subordinate relationship encounter a matter involving professional judgment as to the lawyers’ responsibilities under [the CRPC] and the State Bar Act and the question can reasonably be answered only one way, the duty of both lawyers is clear and they are equally responsible for fulfilling it.”  

Therefore, notwithstanding an attorney’s duties to his or her colleagues under rules 5.1 – 5.3, each lawyer has separate and independent ethical duties to protect each client and must prevent or mitigate any consequences of known misconduct.  

Please contact author, Kendra Basner, if you have any questions about this article or if you would like guidance as to the application of or compliance with these rules.

Sharing Confidential Information with a new Firm Can Create Risks

An increasingly common problem for partners considering departing a law firm and joining another is whether and to what extent the partner can share confidential business information about the lawyer’s practice with the new firm without violating legal and ethical obligations. It is difficult to imagine any law firm agreeing to bring in a lateral partner or group of lawyers without reviewing detailed information about the prospective practice, including financial information like revenue and profitability details, client details, staffing considerations, and related business information. But for a partner at a firm, disclosing any of these categories of information to a new firm in negotiations can implicate the partner’s duties to the old firm and to clients.

California’s Rules of Professional Conduct include some of the strictest client confidentiality requirements in the country, making this issue especially relevant for California partners.  What are the risks of disclosing information in negotiations with a potential new firm? In summary, there are several:

  • Potentially violating your fiduciary duties, duties of confidentiality, and similar obligations to your firm and violating other partnership agreement provisions;
  • Potentially violating your ethical obligations of client confidentiality and loyalty; and
  • Potentially revealing your departure planning just by accessing the confidential information at your firm.

You can mitigate these risks, but it requires detailed advance effort and practical planning. You need to know the rules governing these potential disclosures and develop a specific strategy to navigate them.

California Supreme Court Approves Major Revisions to Ethics Rules

The California Supreme Court yesterday approved a significant overhaul of California’s legal ethics rules, moving California’s rules closer to the structure of the ABA’s Model Rules for the first time. The Court’s Order approved 27 rules as submitted last year by the State Bar’s Commission for the Revision of the Rules of Professional Conduct, 42 rules as revised by the Court, and denied approval of one proposed rule (regarding a lawyer’s obligations representing a client with diminished capacity). The revised rules, effective November 1, 2018, change the numbering and format of California’s rules.  Substantively, the revised rules relate to personal relationships with clients, conflicts imputed through a law firm, attorney advertising, and attorney’s fees, and represent a years-long effort to simplify and to update the rules that govern California lawyers.

California Supreme Court Overturns Jewel Doctrine

The Jewel doctrine is no more in California.  In Heller Ehrman v. Davis Wright Tremain, the California Supreme Court held that a dissolved law firm has no property interest in fees generated after dissolution for hourly matters that were in progress when the firm dissolved.  The immediate implication is that a lawyer who leaves a dissolved law firm and takes clients to a new law firm does not have to give back profits earned on those matters at the new firm.  The case also has significant implications for partners departing even when the firm is not dissolving, since it confirms that client matters are not the property of the firm.