MCLE Self Study

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May 2011  |  Earn one hour of MCLE Credit in Legal Ethics

Wow, can I accept this?

What should a lawyer do when a generous client gives him a gift?

By Wendy L. Patrick

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Patrick

MCLE Self-Assessment Test

May 2011

SAMPLE TEST QUESTIONS

BELOW ARE SAMPLE QUESTIONS FROM THIS MONTH'S MCLE SELF-ASSESSMENT TEST.

1. Violations of the California Business and Professions Code are only punishable through discipline by the State Bar.


2. ABA formal opinions are not relevant in California under any circumstances.


3. A lawyer who really doesn’t know that a client has a malicious objective in seeking representation can never be subject to discipline under Rule 3-200.


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You have achieved a great result for your client on a personal injury case and she is ecstatic. Although she already paid your legal fees, she is so delighted with the result that she wants to go over and above what she owes you legally in order to provide you with some additional compensation. She shows up at your office with a gift basket of fruits and nuts, which you graciously accept without any hesitation. Upon closer inspection, however, you notice that clipped to the top of the basket are a French Polynesian Hotel brochure and two tickets to Tahiti for you and your spouse. Suddenly, your ethical compass kicks in. As much as you would love to accept that lavish gift, ethically, can you?

Some lawyers reading this dilemma may be thinking, “Why don’t I ever get clients like that?” while others are so conservative they would even take a small box of candy sent to them by their client and put it out in the law firm lunch room instead of keeping it for themselves. Unless gifts are strictly prohibited per governmental policy, most lawyers fall somewhere in between these two extremes regarding their understanding of the circumstances that allow them to accept a gift from a client. In addressing this issue, this article will discuss the California Rules of Professional Conduct, the ABA Model Rules of Professional Conduct and relevant case law.

California Rule of Professional Conduct 4-400 –
Gifts from client 

This rule states that “a member shall not induce a client to make a substantial gift, including a testamentary gift, to the member or to the member’s parent, child, sibling or spouse, except where the client is related to the member.” The discussion section states that lawyers can accept gifts from clients, “subject to general standards of fairness and absence of undue influence.” It states further that “[t]he member who participates in the preparation of an instrument memorializing a gift which is otherwise permissible ought not to be subject to professional discipline. On the other hand, where impermissible influence occurred, discipline is appropriate.(See Magee v. State Bar (1962) 58 Cal.2d 423 [24 Cal.Rptr. 839].)”

Probate cases may involve particular issues by virtue of the subject matter of the representation, and there are several Probate Code sections that address such issues. See, e.g., 21350, Prohibited transferees; definitions, 21351, Exceptions to 21350; conditions, 16004, Conflicts of Interest. In our hypothetical, however, we can analyze the issue under standard ethics rules from California and the ABA.

An analysis of whether or not a lawyer can accept a gift from a client will necessarily depend on many different circumstances. These may include whether or not the lawyer asked for a gift, mentioned that they believe they deserved additional compensation or could have charged more money for the legal services, or whether the client just decided to give the lawyer a gift because he or she was sincerely delighted with the outcome, as in our hypothetical with the personal injury client. While merely doing a good job on a case without anything more would be unlikely to constitute “inducing” a client to give a gift, any other language regarding the attorney discussing getting anything beyond their fee may be scrutinized. 

And what about the prosecutor who receives an unexpected gift from an assault victim after a successful prosecution of her attacker? Because the victim is not the “client” of the prosecutor, analysis under Rule 4-400 is not appropriate. There may, however, certainly be other ethical considerations that may apply to the ethics of accepting gifts from crime victims. Similarly, what if a lawyer does not receive a gift directly from his or her client, but from a friend or family member of the client? Again, there are other rules that may govern any showing of undue influence by the lawyer, including taking advantage of either the client or his or her contacts, in order to gain an undeserved benefit.

Restatement of the Law Governing Lawyers Section 127 – A client gift to a lawyer

The Restatement also discusses gifts from clients. Section 127 states in paragraph (2) that “a lawyer may not accept a gift from a client, including a testamentary gift, unless: (a) the lawyer is a relative or other natural object of the client’s generosity; (b) the value conferred by the client and the benefit to the lawyer are insubstantial in amount; or (c) the client, before making the gift, has received independent advice or has been encouraged and given a reasonable opportunity to seek such advice.”

Note that this language is more stringent than California Rule 4-400, which does not require a lawyer to advise a client to seek independent advice, even if the gift is substantial. The issue under Rule 4-400 is whether the lawyer “induced” the client to make a substantial gift.

ABA Model Rules of Professional Conduct

Although not binding in California, practitioners often find it helpful to look at the ABA Model Rules for ethical guidance. And regarding ethics opinions, while an ABA formal opinion “does not establish an obligatory standard of conduct imposed on California lawyers,” the ABA Model Rules may be considered as a “collateral source” where there is no direct ethical authority in California. (State Compensation Insurance Fund v. WPS Inc. (State Fund) (1999) 70 Cal.App.4th 644, 656)

Some of the ABA Model Rules that address concepts similar to the applicable rules in California relating to the professional responsibility issues that may be implicated by substance abuse problems are listed below. The ABA Model Rules of Professional Conduct may provide further guidance on analyzing the issue of gifts from clients. 

Rule 1.8, Conflict Of Interest:
current clients; specific rules

This rule states in paragraph (c) in pertinent part, “A lawyer shall not solicit any substantial gift from a client, including a testamentary gift, or prepare on behalf of a client an instrument giving the lawyer or a person related to the lawyer any substantial gift unless the lawyer or other recipient of the gift is related to the client.”

Comment [6] states that a lawyer may accept a gift from his or her client, as long as “the transaction meets general standards of fairness.” The comment gives as an example of a permissible gift, “a simple gift such as a present given at a holiday or as a token of appreciation.” This comment warns, however, that “[i]f a client offers the lawyer a more substantial gift, paragraph (c) does not prohibit the lawyer from accepting it, although such a gift may be voidable by the client under the doctrine of undue influence, which treats client gifts as presumptively fraudulent. In any event, due to concerns about overreaching and imposition on clients, a lawyer may not suggest that a substantial gift be made to the lawyer or for the lawyer’s benefit, except where the lawyer is related to the client as set forth in paragraph (c).”

Comment [7] discusses the issue of recommending independent counsel, in stating that “[i]f effectuation of a substantial gift requires preparing a legal instrument such as a will or conveyance the client should have the detached advice that another lawyer can provide. The sole exception to this rule is where the client is a relative of the donee.”

Rule 8.4, Misconduct

Rule 8.4 deals with maintaining the integrity of the legal profession. It states in pertinent part that it is professional misconduct for a lawyer to:

 (b) commit a criminal act that reflects adversely on the lawyer’s honesty, trustworthiness or fitness as a lawyer in other respects;

(c) engage in conduct involving dishonesty, fraud, deceit or misrepresentation;

(d) engage in conduct that is prejudicial to the administration of justice.

Similar to the potential applicability of the California Business and Professions Code sections, the circumstances surrounding the receipt and acceptance of a client gift could be analyzed in the same fashion in order to determine whether there was any undue influence or underhanded conduct by the lawyer.

Rule 8.3, Reporting Professional Misconduct states in pertinent part that “(a) a lawyer who knows that another lawyer has committed a violation of the Rules of Professional Conduct that raises a substantial question as to that lawyer's honesty, trustworthiness or fitness as a lawyer in other respects, shall inform the appropriate professional authority; (b) a lawyer who knows that a judge has committed a violation of applicable rules of judicial conduct that raises a substantial question as to the judge’s fitness for office shall inform the appropriate authority.” This section may come into play along with Rule 8.4 in Model Rule jurisdictions where it comes to an attorney’s attention that another attorney has wrongfully accepted a gift from a client.

California Business and Professions Code

In addition to California Rule 4-400, there are several sections of the California Business and Professions Code that may be implicated where there is an allegation that a lawyer used some type of undue influence in order to obtain a gift from a client. 

Section 6106, Moral Turpitude, Dishonesty or Corruption Irrespective of Criminal Conviction discusses actions unfit for an attorney, which may result in discipline. The section states in pertinent part: “The commission of any act involving moral turpitude, dishonesty or corruption, whether the act is committed in the course of his relations as an attorney or otherwise, and whether the act is a felony or misdemeanor or not, constitutes a cause for disbarment or suspension.”  

Section 6128, Deceit, Collusion, Delay of Suit and Improper Receipt of Money as Misdemeanor provides that an attorney is guilty of a misdemeanor when he or she “(a) is guilty of any deceit or collusion, or consents to any deceit or collusion, with intent to deceive the court or any party; (b) willfully delays his client’s suit with a view to his own gain; or (c) willfully receives any money or allowance for or on account of any money which he has not laid out or become answerable for.” This section also provides that any violation of its provisions is punishable by imprisonment in the county jail not exceeding six months, or by a fine not exceeding $2,500, or by both. 

Section 6067, Oath sets forth the attorney’s oath “to faithfully discharge the duties of an attorney at law to the best of his knowledge and ability.” Violations of any of these California Business and Professions Code sections may result in punishment over and above what may be imposed pursuant to a violation of Rule 4-400.

Objectives of Representation

Sometimes gifts from clients come accompanied by a request to take action that would be unethical and sometimes illegal. Some clients are genuinely unaware that there are boundaries to the types of cases a lawyer is permitted to take. Regarding the objective of representation, Rule 3-200, Prohibited Objectives of Employment, states in pertinent part that a member shall not “seek, accept or continue employment” if the member knows or should know that the objective of such employment is “(A) to bring an action, conduct a defense, assert a position in litigation or take an appeal without probable cause and for the purpose of harassing or maliciously injuring any person; or (B) to present a claim or defense in litigation that is not warranted under existing law, unless it can be supported by a good faith argument for an extension, modification or reversal of such existing law.” 

Clearly, a client is not entitled to legal representation in pursuit of improper motives or objectives. In fact, an attorney may have a either an option or a duty to withdraw from representation if a client’s motives or objectives are illegal or improper.

Rule 3-700 Termination of Employment states in the pertinent part of subsection (B), Mandatory Withdrawal, that “a member representing a client before a tribunal shall withdraw from employment with the permission of the tribunal, if required by its rules, and a member representing a client in other matters shall withdraw from employment” if “(1) the member knows or should know that the client is bringing an action, conducting a defense, asserting a position in litigation, or taking an appeal, without probable cause and for the purpose of harassing or maliciously injuring any person; or (2) the member knows or should know that continued employment will result in violation of these rules or of the State Bar Act.”

Subsection (C) Permissive Withdrawal, states in pertinent part that an attorney may have grounds to withdraw when the client: “(a) insists upon presenting a claim or defense that is not warranted under existing law and cannot be supported by good faith argument for an extension, modification or reversal of existing law, or (b) seeks to pursue an illegal course of conduct, or (c) insists that the member pursue a course of conduct that is illegal or that is prohibited under these rules or the State Bar Act, or (d) by other conduct that renders it unreasonably difficult for the member to carry out the employment effectively, or (e) insists, in a matter not pending before a tribunal, that the member engage in conduct that is contrary to the judgment and advice of the member but not prohibited under these rules or the State Bar Act.”

CONCLUSION

Generous clients require an attorney to carefully analyze the surrounding circumstances whenever the client gives the attorney a gift. A working knowledge of the applicable ethics rules and underlying principles will permit the informed attorney to be able to identify situations under which they can legally and ethically accept gifts from clients, and those under which they may not. 

Disclaimer: the information in this column is intended to be informational only and does not constitute legal advice. Please shepardize all case law before using. 

• Wendy L. Patrick is a San Diego County Deputy District Attorney in the Sex Crimes and Stalking Division. She has been a Chair of the San Diego County Bar Association Legal Ethics Committee for more than five years and is Vice Chair of the California State Bar Committee on Professional Responsibility and Conduct (COPRAC). 


Certification

This self-study activity has been approved for Minimum Continuing Legal Education credit by the State Bar of California in the amount of one hour of legal ethics.

The State Bar of California certifies that this activity conforms to the standards for approved education activities prescribed by the rules and regulations of the State Bar of California governing minimum continuing legal education.


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