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Ethics Issues Finding Way Into Courts

Most of the significant decisions which have shaped the law of lawyer disqualification have come since 1990


by Stanley W. Lamport

California lawyers are practicing in an era of increasing ethical awareness and scrutiny. Whether this trend has resulted from the State Bar’s expanded disciplinary mandate, or lawyer MCLE requirements, or as a response to the public’s perception of the legal profession, there is little question that ethical issues are taking an increasingly prominent role in evaluating lawyer conduct.

It is therefore not surprising that these issues are finding their way into the courts. In 1995 alone, the courts of appeal published over a dozen cases involving lawyer ethical questions in contexts ranging from lawyer disqualification to malpractice to enforceability of lawyer agreements. Indeed, most of the significant reported decisions which have shaped the law of lawyer disqualification have been decided since 1990.

In deciding these cases, courts not only affect the rights of the parties before them, but the legal profession as a whole, in some cases profoundly. Under rule 1-100(A) of the California Rules of Professional Conduct, a lawyer’s ethical conduct is governed by opinions of California courts as well as by the Rules of Professional Conduct themselves. Given the volume of issues which confront the courts and the impact that court decisions have on the profession, it is important to understand the principles underlying ethical questions involved in these cases.

Lawyer conflicts of interest are the mostly commonly recurring ethical issue in the courts, underlying most disqualification motions and an increasing number of disputes over lawyer fees. In many legal malpractice cases, the dispute centers around whether a conflict of interest resulted in a deficient performance.

Yet as frequently as the issue arises, there is very little authority defining conflict of interest. To be sure, there are many anecdotal and situational definitions, but no unifying definition. The Rules of Professional Conduct address a number of situations that involve conflicts of interest, the most prominent being Rule 3-310, which address conflicts of interest in the representation of clients. In most cases, a lawyer is not precluded from accepting a representation that is subject to the rule if there is adequate written disclosure and, in some cases, written consent.

While Rule 3-310 identifies situations in which written disclosure and written consent are required, the rule does not include a conflict of interest definition. This makes it difficult for both lawyers and courts to apply Rule 3-310. The following discussion is intended to get behind Rule 3-310 and address the fundamental policies, underlying issues and conflicts of interest in general.

A conflict of interest is a situation that interferes with a lawyer’s ability to fulfill his or her basic duties to a client, because duties exist which a lawyer owes to another or because the lawyer has interests which are extraneous to the representation.

There are two types of conflicts of interest. Potential conflicts arise when the lawyer’s ability to fulfill the basic duties is not impaired, but under the circumstances, such a situation could arise during the representation.

Actual conflicts arise when the lawyer’s ability to fulfill the basic duties is strained or impaired.

Conflict of interest situations

There are four basic duties that may be violated in conflict of interest situations: (1) the fiduciary duty of undivided loyalty to a client, (2) the duty to inform a client, (3) the duty to maintain client confidences and secrets, and (4) the duty to represent a client competently.

All conflict of interest situations involve conflicting loyalties either between the lawyer’s interests and a client’s interests or between the interests of two or more clients. In situations where there are conflicting interests between the clients, there can be a tension between the duty to maintain confidential information of one client and the duty to inform the other client. These problems can impair a lawyer’s ability to represent a client competently.

The conflicts rules in Rule 3-310 are designed to address situations which inherently strain a lawyer’s ability to fulfill these basic duties. It is important to understand the scope of the basic duties and to keep them in mind when analyzing whether a lawyer has a potential or actual conflict. When in doubt, an analysis of the basic duties involved in conflict situations can help determine where a conflict may lie. It can also help determine what disclosures are needed to obtain a client’s informed consent.

Duty of undivided loyalty

“Perhaps the most fundamental quality of the attorney-client relationship is the absolute and complete fidelity owed by the attorney to his or her client.” (State Bar Formal Opn. 1984-83). “Few precepts are more firmly entrenched than that the fiduciary relationship between attorney and client is of the very highest character.” (Yarn v. Superior Court (1979) 90 Cal.App.3d 669, 675.)

In the conflicts of interest context, a lawyer’s duty of undivided loyalty encompasses three concepts. First, a lawyer has a duty to represent a client’s interests, rather than the interests of another. (Flatt v. Superior Court (1994) 9 Cal.4th 275, 289; Anderson v. Eason (1930) 211 Cal. 113, 116.) Second, a lawyer must exercise independent judgment on a client’s behalf, which means a lawyer must represent the interests of a client without being influenced by the interests of the lawyer or others that are extraneous to the lawyer-client relationship. (Anderson v. Eason, supra, 211 Cal. at 116; State Bar Formal Opn. 1995-141.)

The third concept is a duty to preserve the client’s trust and security in the lawyer-client relationship. (Flatt v. Superior Court, supra at 282.) The duty precludes a lawyer from assuming a role that is antagonistic to a client, based on the proposition that when a client engages a lawyer in a given matter, the client is entitled to feel that he or she has the undivided loyalty of the lawyer as his or her advocate or champion until the matter is over. (Flatt v. Superior Court, supra, at 286.) The confidence and trust which a client reposes in the lawyer is essential to the effective functioning of the fiduciary relationship and one of the foundations of the professional relationship. (Id at 282.)

Duty to inform a client

A lawyer has a duty to inform a client of significant developments related to the representation or employment and to promptly respond to reasonable requests for information. This duty is embodied in Business & Professions Code §6068(m) and rule 3-500 of the California Rules of Professional Conduct. The obligation is part of a broader duty of honesty and candor that a lawyer owes a client.

Duty to maintain confidences

B&P Code §6068(e) states that it is a lawyer’s duty "to maintain inviolate the confidence, and at every peril to himself or herself to preserve the secrets, of his or her client." Section 6068(e) encompasses a duty to preserve the confidentiality of information related to client representation.

The confidentiality duty in §6068(e) is broader than the lawyer-client privilege. (Goldstein v. Lees (1975) 46 Cal.App.3d 614, 621, n.5; State Bar Formal Opn. 1993-133.)

“This ethical precept, unlike the evidentiary privilege, exists without regard to the nature or source of information or the fact that others share the knowledge.” (ABA Code of Prof. Resp., E.C. 4-4, cited in Goldstein v. Lees, supra.) State Bar ethics opinions have defined the duty as encompassing not only privileged communications, but any information related to the representation of a client, from any source, which a client does not want disclosed or the disclosure of which is likely to be embarrassing or detrimental to the client. (See State Bar Formal Opn. Nos. 1976-37, 1980-52, 1981-58, 1986-87 and 1993-133 and LACBA Formal Opn. Nos. 386 (1980), 436 (1985), and 456 (1990).)

While courts and ethics opinions have recognized some exceptions to the duty of confidentiality, it is still extremely broad. Furthermore, it is a duty that survives the conclusion of the lawyer-client relationship. A lawyer is forever precluded from either disclosing a client’s confidential information or using that information against a client’s wishes.

Duty to practice competently

The duty to practice competently is found in rule 3-110 of the California Rules of Professional Conduct, which states that a lawyer “shall not intentionally, recklessly or repeatedly fail to perform legal services with competence.” Rule 3-110(B) states “competence in any legal service” means “to apply the (1) diligence, (2) learning and skill, and mental, emotional and physical ability reasonably necessary for the performance of such service.”

Keeping the four basic duties in mind can help demystify many of the conflict of interest claims a court will confront. Ultimately competent representation is a reflection of a lawyer’s ability to fulfill these duties.

In a disqualification motion context, it can assist a court in determining whether there is a conflict that requires a lawyer’s removal from the case or whether there was adequate disclosure and consent to the conflict.

In malpractice cases, the duty analysis can assist in evaluating the proximate cause between the conflict and the injury alleged and help clarify instructions to the jury on these issues. Duty analysis should result in greater consistency in deciding these issues.

Stanley W. Lamport of Cox, Castle & Nicholson LLP in Los Angeles is past chair of the State Bar’s Standing Committee on Professional Responsibility and Conduct.