 A
philosopher once said that the reason people become lawyers is because
they think they are above the law. I have secretly obsessed about this
idea for decades. As lawyers, we all swear to uphold the law, not to
pick or choose, ignoring some laws and adhering to others. Human
beings constantly exercise free will and sometimes even lawyers make
discretionary decisions about which laws to follow. This may imply
that they are above the law, but maybe they are just too busy taking
care of their clients' needs to take care of their own interests.
This was illustrated recently in Cappiello,
Hofmann & Katz P.C. v. Boyle et al. 2001 Cal. App. LEXIS 202,
which involved "firmicide." A group of clients left one "law
corporation" (Cappiello) to be represented by a new firm (Boyle),
consisting of former members of the "law corporation." Cappiello
maintained that the clients were improperly solicited and that the
Boyle renegades had intentionally interfered with its prospective
economic relationship.
The appeal court held that Cappiello was barred
from recovery because its contingent fee agreements were illegal. The
Cappiello "law corporation" was engaged in the unauthorized
practice of law. Cappi-ello was illegitimate because it failed to
register with the State Bar as a "law corporation." According to
legal principles, the reasoning is valid. However, when public policy
is considered, some of the theories supporting the case seem askew and
result in a windfall where none was intended. And what about clients
denying that fees were earned?
Law corporations are required to register with
the bar in order to protect clients from professional negligence. Each
shareholder in a law corporation has joint and several liability,
arising out of the practice of law. This can be satisfied by a written
guarantee or malpractice insurance, but is intended for client
protection and not for the resolution of lawyer disputes. Often, if a
group of lawyers fails to specify what type of entity they are, the
default position is that they are a "partnership."
Unfortunately, the court also stated that
Cappiello, by its "unlawful practice of law" (B&PC §6125) had
violated B&PC §6126 (misdemeanor) and B&PC §6127 (contempt).
Did the Cappiello shareholders aid and abet the "unlawful practice
of law?"
Hopefully, the State Bar disciplinary system will
not become involved in lawyer disputes involving "bad blood."
Shalant v. State Bar (1983) 33 Cal. 3d 485. Also, "the State Bar is
not to be used as an
instrument for the furtherance of private grudges, and
. .
. evidence which bears the earmarks of private spite should be
scrutinized most carefully and accepted with extreme caution." Peck
v. State Bar (1932) 217 Cal. 47. If the shenanigans are truly heinous,
the bar will become involved, since client interests will be
implicated. However, the
bar's primary focus is upon client protection and not on acting as
an umpire.
Please choose your entity carefully and dot all
the i's and cross all the t's. The technicalities are no longer
discretionary. Remember the shoemaker's children who had no shoes. I
guess he was busy with other people's needs. |
