October 2017 | Earn one hour of MCLE Credit in Legal Ethics
By Joel A. Osman
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The State Bar provides various resources and sponsors activities designed to increase awareness of the Rules of Professional Conduct both within and without the profession. The Committee on Professional Responsibility and Conduct (COPRAC) is a standing committee of the State Bar Board of Trustees. The committee's primary charge is the development and issuance of advisory ethics opinions to assist attorneys in understanding their professional responsibilities. COPRAC also does outreach to the profession by providing speakers to various bar organizations on the subject of legal ethics, providing Minimum Continuing Legal Education training and publishing monthly articles on legal ethics such as this one.
COPRAC volunteers are given the opportunity to publish these self-study articles. Notwithstanding variations in the content, or in the wit and humor with which they are presented, each of these efforts is tied together by a common theme. To wit: Legal ethics matter and should be a part of every practitioner's day-to-day awareness and practice. Regrettably, some in our profession seem to be all too happy to believe they may abandon the subject once they pass the Multistate Professional Responsibility Examination portion of the California Bar Examination. This is obviously not so.
Attorney conduct is at all times governed by the Rules of Professional Conduct which are "intended to regulate professional conduct of members of the State Bar through discipline. They have been adopted … to protect the public and to promote respect and confidence in the legal profession." See Rule of Professional Conduct 1-100(A). The Rules of Professional Conduct are not exclusive. Attorneys licensed to practice in California are also bound by applicable law including the State Bar Act (Business & professions Code §6000 et seq.) and opinions of California courts. Per the Rules of Professional Conduct, opinions of ethics committees in California, though not binding, should also be consulted by members for guidance on proper professional conduct. See again rule 1-100(A).
The ongoing importance of legal ethics in the everyday practice of law is not novel. It is, however, so critically important that it bears repeating (on at least a monthly basis). The best way to illustrate this point is by example. With this in mind consider the following hypothetical. Note that this is a hyperbole, intended to illustrate a number of ethical rules. It is an extreme example for illustrative purposes only. It is not intended nor is it recommended as a course of conduct that anybody should follow. The reason for this should be obvious when you look up the many rules implicated in this hypothetical.
Lawyers A and B met and became best friends in law school. Their friendship was based in large part on a mutual fascination with the law and desire to graduate at the top of their law school class. They achieved this goal and graduated first and second in their law school class (Though they may not have paid sufficient attention in their legal ethics class). Unfortunately, they achieved the success by exclusively devoting their attention for three years to academic law. As of the date the two of them passed the bar neither had had any practical experience whatsoever working in the law.
A and B decide to go into practice together. They conclude that branding would be an important element of establishing their practice. They therefore go into business as the "Top of the Class Law Group" and promptly establish an Internet and social media presence in which they tout the depth and breadth of their knowledge and experience in each of the subjects they studied in law school.
This branding and social media publicity effort appears to have worked: On the day of the grand opening of their law offices a potential client walks into the "Top of the Class Law Group" and explains that he is involved in a long-running, very acrimonious intellectual property dispute with Prof. C regarding a contract law hornbook. Both A and B were students of Prof. C in law school and performed so well in the professor's class that they had become close social acquaintances with the professor throughout the remainder of their law school careers. Neither A or B had ever done an IP dispute case, or indeed any case. They do not tell the potential client this, nor do they reveal their prior relationship with Prof. C. Instead A and B quote the potential client an hourly rate of $600 per hour, which the client accepts. The client hands A and B a $50,000 retainer check and walks out the door. A and B deposit the check in the office operating account and, anxious to get a head start on paying down their crushing student loan debt, immediately draw checks from that operating account to make their first student loan payments.
How many different ethics rules are implicated in the hypothetical above? Let's count them down.
1. The qualifications an individual must possess in in order to be admitted to the practice of law in California are set forth in the State Bar Act, Business & professions Code §6060 et seq. The code does not require any sort of apprenticeship or minimum amount of practical experience working in a law office. Thus, A & B having successfully completed law school and having been admitted to practice after successfully passing the bar examination are entitled to set themselves up in private practice. The only limitation on this right (see below) is the duty of competence set forth in Rule of Professional Conduct 3-110.
2. Attorneys' ability to advertise and solicit business is regulated pursuant to Rule of Professional Conduct 1-400. That rule regulates any "communication" concerning the availability of an attorney for professional employment directed to any former, present or prospective client. This includes, but is not limited to, any use of firm name, trade name, fictitious name or other professional designation; and any advertisement (regardless of medium) of such member or law firm directed to the general public. The rule specifically forbids any such communication which contains an untrue statement or contains any matter which is false, deceptive or which tends to confuse, deceive or mislead the public. In the hypothetical above A & B hold themselves out as the Top of Class Law Group. While this trade name truthfully reflects their performance in law school, it might well be considered false or deceptive with respect to their abilities in practice. Likewise, their social media claims regarding the depth and breadth of their expertise in any subject that they happened to study in law school could be considered to be false and deceptive.
3. Attorneys have a particular duty to monitor and ensure that their presence in social media is truthful and accurate. This duty is the subject of a COPRAC opinion that was recently circulated for public comment. The opinion must be approved by the Board of Trustees before it is published. Stay tuned for further developments in this regard.
4. A & B have agreed to take on a case that may be beyond their competence as they have never previously handled an intellectual property law dispute. This implicates Rule of Professional Conduct 3-110 which prohibits a lawyer from failing to act competently. This does not mean that A & B cannot take the case—if that were so how would any new lawyer ever be competent to take their first case? What is does mean is that in order to comply with this rule A & B must take steps necessary to inform themselves so that they can undertake this representation competently.
5. There is no indication in the hypothetical of whether A & B undertook any sort of conflict check before agreeing to undertake this engagement. Rule of Professional Conduct 3-310 as interpreted by California courts precludes an attorney from accepting or continuing representation of a client whose interests are directly adverse to those of another current client. As a practical matter, law office risk management requires that a conflict check be performed before the acceptance of any new representation. In the context of large firms conflict checking can be a significant process. In the context of small firms it can be more informal. In this instance there is no indication whether the potential for a conflict even occurred to A & B. It should have, given their relationship with Prof. C. The relationship of teacher-student does not give rise to a conflict of interest, but their personal relationship might do so (See RPC 3-310(B)(1)). This relationship should have been disclosed to the client.
6. The hypothetical does not describe a written retainer agreement for this hourly engagement. Further, given the size of the retainer we can presume that it was reasonably foreseeable that the total fees would exceed $1,000. Business & Professions Code §6148 prescribes written retainer agreements in such situations and provides that if no such agreement exists or if the conditions set forth in the section are not complied with the retainer is "voidable" and the attorney upon the retainer being voided may only collect a reasonable fee.
7. Rule of Professional Conduct 4-200 provides that an attorney shall not enter into an agreement for, charge, or collect an illegal or unconscionable fee. Unconscionability of the fee is determined on the basis of all facts and circumstances existing at the time the agreement is entered into. Among the factors to be considered are the relative sophistication of the attorney and the client. In the current legal marketplace, a $600-an-hour fee may well be appropriate for a senior and sophisticated practitioner. On the other hand, it might reasonably be questioned whether it would be "unconscionable" for the newly admitted and inexperienced A & B to charge the same hourly rate.
8. A & B put the $50,000 retainer into the law firm's general operating account in violation of Rule of Professional Conduct 4-100, which requires that all funds received or held for the benefit of clients including advances for costs and expenses shall be deposited in one or more identifiable trust accounts.
9. A & B compound their failure to deposit the retainer into their Client Trust Account by immediately withdrawing a portion of that amount for their personal use, i.e. to make a payment on their student loan debt. Rule of Professional Conduct 4-100 (A) (2) forbids disbursement of funds from a Client Trust Account to an attorney until the attorney's interest in that portion of the funds becomes "fixed." For our purposes herein, the term "earned" can be substituted for the term "fixed" used in rule 4-100 (A) (2). A & B had not yet done anything to earn the fees ,which should've been held in trust for the client, and thus had no right to immediately draw any portion of the retainer for any purpose.
Obviously, this hypothetical situation is an exercise in hyperbole. It does, however, clearly demonstrate the central point of this article: Ethics are not just for ethicists. They are, of necessity, a central part of every lawyer's day-to-day practice. Lawyers who fail to conduct themselves accordingly not only put themselves at risk but also perpetuate the negative reputation of the profession as a whole.
Joel A. Osman is senior counsel at Parker Mills LLP, concentrating on litigation and trials, and a member of the State Bar Committee on Professional Responsibility and Conduct. Views expressed are his own.
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