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Ethics update

By JONATHAN BISHOP and MARK TAXY

This feature highlights recent authorities in the area of attorney professional responsibility including new cases, advisory ethics opinions, pending legislation and proposed rule amendments.

Cases

McPhearson v. Michaels Co. (Mar. 4, 2002) 96 Cal.App.4th 843

In McPhearson, a plaintiff's attorney represented a client against the client's former employer for discrimination and harassment.

The attorney then represented another client in a similar action against the same employer and intended to call the former client to testify as a witness against the employer even though the former client was subject to a confidential settlement agreement.

The Court of Appeal held that the trial court abused its discretion in disqualifying plaintiff's attorney because the terms of the former client's settlement agreement were not admissible in the current client's action, and the attorney could advise the former client without violating professional obligations owed to the current client.

City National Bank v. Adams (Feb. 20, 2002) 96 Cal.App.4th 315

A bank obtained a legal opinion from an attorney recommended by a bank customer regarding the removal of a restrictive legend from certain stock pledged by the customer as collateral on a loan. Subsequently, the same attorney was retained to defend the customer in the lawsuit brought by the bank in an action for breach of contract for failure to repay the loan.

The Court of Appeal found that disqualification of the attorney was warranted absent the informed written consent of both the former client and the present client because the attorney's current representation of the defendant-customer was substantially related to the previous matter in which an attorney-client relationship had been formed by the payment of fees and creation of work product on the same matter.

Ethics Opinions

State Bar Formal Opinion No. 2001-157

The State Bar has issued a formal opinion addressing closed client file retention. As no rule or statute specifies a time period for retention of client files, an attorney should make reasonable efforts to locate the former client and obtain his or her consent before disposition of non-criminal files.

Destruction is not permitted where preservation of the items is required by law, or destruction would cause prejudice to the client. If the attorney has no personal knowledge of the contents of a file, there may be an obligation to review it before determining whether preservation or destruction is appropriate.

Criminal files should not be destroyed without the former client's consent while the former client is alive.

State Bar Formal Opinion No. 2002-158

The State Bar has issued a formal opinion addressing the creation of a physically separate "firm" within a public defender's office in order to avoid conflicts of interest in representing multiple criminal defendants. The separation of a public defender's office into two physically different branches is legally permissible, but adequate safeguards must be taken to maintain the separateness of the two "firms."

Rule amendment

Proposed Amendment to Rule 3-310 Pending with Supreme Court

The State Bar has submitted for Supreme Court approval a proposed amendment to California Rule of Professional Conduct 3-310 (Avoiding the Representation of Adverse Interests).

The proposed amendment was developed in response to a legislative study mandated by Business & Professions Code §6068.11.

The amendment would add clarifying language to the rule Discussion section concerning the application of the rule to concurrent representation conflicts of interest arising in the insurance defense context.

Legislative news

Senate Judiciary Committee Passes Assembly Bill No. 363 (Steinberg)

On Aug. 6, the Senate Judiciary Committee passed AB 363 by a vote of 4 to 1. In its current form, AB 363 would establish a limited exception to an attorney's statutory duty of confidentiality (Bus. & Prof. §6068(e)).

The limited exception would permit an attorney representing a governmental organization to report serious governmental misconduct to an appropriate law enforcement agency or governmental oversight agency in order to prevent or rectify substantial harm to the public interest.

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