Current and Timely Information and Analysis About
California Attorney Ethics in Practice

Advance Conflict Waivers, Arbitration–and Fees–Tossed for Conflicts

The recent Second District Court of Appeal opinion in Sheppard, Mullin, Richter & Hampton, LLP v J-M Manufacturing Co., Inc. sent a shock wave through California law firms.  The case started when a firm sued a former client for $1.3 million in unpaid fees, after it had been disqualified from a matter for that client because of conflicts.  The case ended (at least for now) with an order from the Court of Appeal that rejected the firm’s advance conflict waivers and neutered the arbitration provision in its fee agreement.  Instead of collecting an additional $1.3 million in fees, the firm has to refund nearly all of the $3.8 million in fees it collected for the underlying matter.  Among other things, the case illustrates the limited application of advance conflict waivers and what happens when they are not effective to prevent or to cure conflicts.  It also may portend a much more difficult landscape for analyzing conflicts of interest, and what is now at stake if that analysis turns out to be incorrect.More

5 Legal Ethics Questions for Your In-House Legal Team

There is an emerging consensus that the role of in-house legal departments is changing dramatically, and these changes raise significant legal ethics issues for in-house legal teams.  The workload for in-house lawyers, which has been substantial for some time, is increasing in many industries, as in-house lawyers navigate significant increases in regulatory issues and compliance.  And the composition of work handled by in-house lawyers is changing: a significant amount substantive work that was previously referred to outside counsel is now being handled internally in corporate legal departments by in-house lawyers.  These changes are likely to continue, and to accelerate, because in-house lawyers are more cost-effective for certain matters, more closely connected to the legal issues and principals at the company, and more immersed in the details of the subject businesses.  But as the role of in-house attorneys continues to evolve, it is critical to consider the legal ethics implications for the attorneys on your in-house legal team.More

Negotiating for Your Clients: How Far is Too Far?

California attorneys have a well-established duty to be zealous advocates for their clients’ interests.  But the boundaries for that zealous advocacy are not always clear. The California Rules of Professional Conduct do not contain a rule analogous to ABA Model Rule 4.1 and related comments, addressing the boundaries of acceptable puffery, which is ok, and false representations of material fact, which (surprise!) are not.  Formal Opinion No. 2015-014 from California’s Standing Committee on Professional Responsibility and Conduct appears intended to fill this gap, and more clearly to define the boundary between zealous advocacy and, well, lying.  In general, the analysis mirrors 4.1, so puffery and posturing is permissible, but false statements of fact, or implicit misrepresentations of material facts, are not.  The opinion details five examples to illustrate this distinction.More

Considering Litigation Funding? Ask Some Questions.

Litigation funding appears to be receiving increased attention and it is often presented as a way for parties and attorneys to mitigate the risk of large and risky cases.  If true, this would be a good thing, right?  Certainly many parties who have meritorious cases decline to bring them because they, or their attorneys, cannot fund them.  By facilitating valid litigation, litigation funding can serve an important purpose.  But any attorney considering litigation funding has to ask some serious questions before committing.More

How to Stay on Top of New Rules Affecting Your Practice

Several significant amendments to the Federal Rules of Civil Procedure became effective on December 1, changing obligations for attorneys and parties in civil litigation in federal court.  Significant amendments to California’s Code of Civil Procedure, affecting demurrer procedure, 998 offers, peremptory challenges, expedited trials in limited jurisdiction cases, among other changes, also took effect this year.  These changes have the potential to be quite important, ranging from duties of the attorneys and parties to limit the scope of discovery to duties to preserve electronically stored information, which is an emerging change that heightens the competence obligations of attorneys dealing with this technology.  Litigators know that significant amendments to the federal rules are rare, but even small revisions have the potential to dramatically change how their cases are litigated.  From a practice management perspective, here’s how to make sure your firm has the right systems and procedures in place to monitor and to incorporate new rules into your practice in a comprehensive way.More