August 2016 | Earn one hour of MCLE Credit in Legal Ethics
What you can and cannot say to the opposing party or its lawyer
Client A engages Arthur Attorney to help her. Her Former Counsel not only lost her case but is demanding immediate payment of unpaid fees. Client A recites examples of misconduct on the part of Former Counsel, including what would seem to be violations of the Rules of Professional Conduct.
As a zealous advocate, Arthur Attorney picks up the phone and calls Former Counsel. He tells Former Counsel to drop his claim for unpaid fees immediately or Client A will report Former Counsel to the State Bar. Arthur Attorney confirms his statements in a follow-up letter.
Arthur Attorney’s next appointment is with Client B. The client’s dispute is with a licensed real estate broker who is demanding payment of a commission which the client does not think he should have to pay. Arthur Attorney writes to the broker, stating that unless the broker drops his claim for payment, the client will "pursue all available legal remedies."
That afternoon, Arthur Attorney sees Client C. Client C has a dispute with his neighbor that could be addressed by both civil remedies and by reporting the neighbor to the district attorney. The neighbor is apparently selling drugs out of her home, causing a nuisance to Client C as well as violating the law. After consultation, Arthur Attorney advises the client to file a report with the district attorney and tells the client that he will write a “cease and desist” letter, which he does, demanding that the neighbor cease and desist her criminal activities and warning that if she does not, Client C will file a civil complaint against her for creating a nuisance.
It’s been a busy day for Arthur Attorney, but are there any ethical issues with his conduct and advice? Has Arthur Attorney crossed over the line with Client A? With Client B? With Client C?
Let’s consult Rule of Professional Conduct 5-100.
“(A) A member shall not threaten to present criminal, administrative, or disciplinary charges to obtain an advantage in a civil dispute.” Rule 5-100(A).
A “civil dispute” is defined in the Rule 5-100(C) as a pending lawsuit in state or federal court; an action pending before an administrative tribunal; and any controversy or potential controversy, whether or not a formal proceeding has been initiated.
An employer suspected its former employee of soliciting employees to work for a competitor. The employer’s attorney wrote a letter to the competitor accusing it of unfair competition and demanding that the competitor put an end to the former employee’s actions. The attorney’s letter also implied that he would report the employee’s bad conduct to the employee’s probation officer. The court held that threatening to present criminal "charges to obtain an advantage in a civil dispute" was exactly what Rule 5-100 was intended to prevent. Nguyen v. Proton Technology Corp. (1999) 69 Cal.App.4th 140, 152.
An attorney was retained by a client in a civil matter to write a demand letter to the other side. No litigation had yet been filed. The attorney’s letter stated that "unless a prompt and satisfactory settlement is reached, all available legal remedies will be pursued." Because the "threat" in this example was not spelled out, it was considered ambiguous. The threat could have meant that the client would pursue its legal remedies by filing a civil suit, and since Rule 5-100(A) only prohibits threats of “criminal, administrative, or disciplinary charges,” there was no violation. California State Bar Formal Opinion 1991-124.
An attorney was owed his fees. He threatened to report the client’s wife to immigration authorities if he wasn’t promptly paid. This constituted a violation of Rule 5-100:
“[I]n his private conference with Alice Shelton Lansing, [attorney] made threats of action injurious to her and to his client, Ross Lansing, in an attempt to force through fear the payment of his bill for legal services, and that failing in this endeavor, his motive was punitive in writing, without justification, to the immigration authorities in an effort to incite an investigation of a supposed alien through a misrepresentation of facts.” Lindenbuam v. State Bar (1945) 26 Cal.2d 565, 573.
An attorney wrote a letter demanding action by opposing counsel, advised that he would move for monetary sanctions if opposing counsel did not comply, and also raised the possibility of initiating a criminal contempt proceeding if no action were forthcoming. Neither statement in the letter constituted a Rule 5-100 violation because “the Court finds that it contains no threat; it only mentions that Defendant believed that Plaintiff violated the law and that Defendant planned to move for sanctions.” Chamberlain v. Les Schwab Tire Ctr. of California, Inc., 2012 WL 6020103 (2012) at *8 (E.D. Cal. Dec. 3, 2012); see also Rule 5-100 Discussion (“Rule 5-100 is not intended to apply to a member’s threatening to initiate contempt proceedings ”)
An attorney threatened an oil company with reporting adulteration of its gasoline to the district attorney unless it paid his clients a monetary settlement. This was a violation of the Rule as well as an attempt to extort money, a violation under the Penal Code. Barton v. State Bar (1935) 2 Cal.2d 294, 297.
Attorney counseled client to threaten criminal charges in order to coerce a settlement, knowing that attorney herself was prohibited from making such a threat. This constituted a violation of Rule 5-100 by "assisting the client in doing indirectly" what the attorney could not do directly. State Bar of California Formal Opinion no. 1983-73; San Diego County Bar Association Ethics Opinion 2005-1. Note that there would be no violation if the party, on his or her own, without attorney involvement, made such a threat, as “members” of the bar.
A prosecutor offered to dismiss a colorable criminal action in exchange for a release from civil liability against the police department arising from defendant’s arrest. This was an implied threat to continue criminal prosecution if the defendant refused to give the release. Even though not an explicit threat, such action constituted a violation of Rule 5-100. State Bar of California Formal Opinion 1989-106.
A lawyer threatened to pursue criminal charges against his client’s ex-husband arising from an altercation, but agreed to drop the criminal charges if his fees were paid. This was a violation of Rule 5-100. Bluestein v. State Bar (1974) 13 Cal.3d 162, 170 (the court based its ruling on Business & Professions Code section 6106, finding that the lawyer’s actions constituted moral turpitude).
After losing at trial, the lawyer sent a letter to the opposing party, accusing him of committing perjury and demanding payment to his client, stating that unless payment was made, the lawyer would file a motion for new trial and a complaint for perjury. This constituted a violation of Rule 5-100 and further might have exposed the lawyer to criminal liability for extortion. Libarian v. State Bar (1952) 38 Cal.2d 328, 329-330. Note that merely threatening to move for a new trial absent action on a settlement would not violate the rule since the rule prohibits only threats “to present criminal, administrative, or ”not to make motions in pending cases.”
Before filing a complaint in court against a governmental entity, a claimant must first file a Government Tort Claim. Although this is essentially a "threat" to file a complaint if the claim is not paid, it is expressly excluded from Rule 5-100 and does not constitute a violation of the Rule. Rule 5-100(B) and Rule 5-100 Discussion (“[The rule] exempt[s] the threat of filing an administrative charge which is a prerequisite to filing a ”)
Application of the litigation privilege
Attorneys faced with claims of a possible Rule 5-100 violation have argued that their actions are protected by the litigation privilege found in Civil Code section 47(b). Although this privilege generally protects statements made during the course of judicial proceedings, there are exceptions to its application. At least one court has found the privilege inapplicable when the attorney’s statements were clear violations of Rule 5-100 and, further, were irrelevant to the dispute. Nguyen v. Proton Technology Corp., supra, at 152.
Other courts have found threatening statements made by attorneys to constitute extortion, which also takes the threat outside the litigation privilege. For example, in Flatley v. Mauro (2006) 39 Cal.4th 299, an entertainer sued counsel for a woman who contended she was assaulted. The attorney threatened to "go public" with a suit and its allegations unless a substantial payment was made. When Flatley later sued, Mauro, the lawyer, argued that his statements and threats were protected by the litigation privilege. However, the court held that "Civil Code section 47 states a statutory privilege, not a constitutional protection … [T]hat statutory privilege is specific and limited in nature." Id. at 324.
Mauro’s actions were found to constitute extortion, which is defined as obtaining property from another, with his consent, induced by a wrongful use of force or fear. Penal Code, section 518. Thus, the Flatley court concluded: "Attorneys are not exempt from these principles in their professional conduct. Indeed, the Rules of Professional Conduct specifically prohibit attorneys from ’threaten[ing] to present criminal, administration, or disciplinary charges to obtain an advantage in a civil dispute.’ (Cal. Rules of Prof. Conduct, rule 5-100(A).)" Id. at 327.
There is no hard and fast rule as to when a statement is a "threat" nor is there a hard and fast rule as to when a threat is made "to obtain an advantage in a civil dispute." Some of the examples cited above would seem to be clear violations of Rule 5-100 while others are more nuanced. Thus the State Bar and the courts will consider complaints of Rule 5-100 violations on a case-by-case basis, analyzing both the content as well as the context of the communication. Criminal extortion under the penal code will often be enough to sustain a finding of a Rule 5-100 violation, although an alternative finding of a “moral turpitude” violation under Business & Professions Code section 6106 may result from conduct that cannot be squarely placed within that prohibited by Rule 5-100.
Arthur Attorney’s conduct
We now return to Arthur Attorney’s busy day and the scenarios he encountered.
Arthur’s actions on behalf of Client A, namely threatening Former Counsel with a State Bar complaint unless Former Counsel dropped his demand for unpaid fees, comes within the scope of Rule 5-100. Arthur has threatened administrative or disciplinary charges in order to gain advantage for his client in a civil fee dispute. This would constitute a violation of the rule.
As to Client B, Arthur has threatened the real estate broker, telling him to drop his commission claim or B will "pursue all legal remedies." This statement is vague as to exactly what Arthur and his client might do. While they could mean that he will report the broker to his licensing agency and seek administrative or disciplinary action against the broker, it also might mean he will file a civil action seeking declaratory relief as to whether the commission was actually due or not. Since the threat in this scenario was not explicit, it is doubtful that the State Bar would pursue disciplinary action against Arthur for violation of Rule 5-100.
Lastly, Arthur advised Client C to report his neighbor to the district attorney for possible criminal prosecution. Advising a client with a legitimate claim to report it to the appropriate authorities does not come within the ambit of the rule and there is no violation here.
In writing the letter to the neighbor on behalf of Client C and demanding that the neighbor cease and desist her drug-selling activities, Arthur has also avoided violating Rule 5-100. First, he made no threat in his letter, but merely a demand that the illegal activities stop. Secondly, although Arthur threatened that C would file a civil complaint for nuisance against the neighbor, this is not a threat to present “criminal, administrative, or disciplinary charges to obtain an advantage in a civil dispute.” There has been no violation of Rule 5-100 as to Client C.
In our quests to be vigorous and effective advocates for our clients, it is easy to "cross over the line" and violate Rule 5-100. Threats to present criminal, administrative or disciplinary charges in order to obtain an advantage in a civil dispute, whether the subject of current litigation or merely anticipated litigation, are violations and can subject an attorney to disciplinary action by the State Bar. However, actually presenting such charges are not violations. Filing an administrative, disciplinary or criminal charge, where appropriate, is perfectly acceptable. Threatening to do so in order to gain an advantage in a civil dispute, is a violation of the rule.
Michele Trausch is a member of the State Bar Committee on Professional Responsibility and Conduct (COPRAC) and recently retired as general counsel of a mid-sized San Francisco law firm. She has written and lectures frequently on ethics and risk management issues. The opinions here are her own.