Recent Developments in the Law of Lawyering

The last year has brought numerous developments in legal ethics and the law of lawyering. This article will help attorneys stay abreast of major developments and spot ethical and other practice issues.

New Ethics Rules in the Works

The California State Bar Board of Governors has approved broad changes to the Rules of Professional Conduct. The proposed Rules are renumbered and contain numerous substantive revisions designed to bring California in line with the ABA Model Rules. The proposed new Rules will not take effect until the California Supreme Court approves them. The entire text is available for review on the State Bar’s website.

Mediation and Confidentiality

In a recent California Supreme Court decision, Cassel v. Superior Court (2011) 51 Cal. 4^th 113, the court addressed the effect of mediation confidentiality statutes on private discussions between mediating clients and the attorneys who represented them. In that case the client agreed in mediation to settle the underlying litigation but later alleged – in an action for legal malpractice, breach of fiduciary duty and fraud –  that the attorneys had a conflict of interest and induced the client to settle for less than the case was worth. The Supreme Court ruled that the trial court had correctly excluded all evidence of attorney-client discussions immediately preceding and during the mediation concerning the attorneys’ efforts to persuade their client to settle based on the mediation confidentiality statutes. The Cassel case reaffirmed the mediation privilege and now presents a strong defense to malpractice and other claims based on discussions between the attorney and client that took place in the mediation process.

Hybrid Fee Agreement Must Comply With Bus.& Prof. Code 6147

Arnall v. Superior Court (2010) 190 Cal. App. 4^th 360 held that “hybrid” fee agreements containing both hourly and contingency fee components cannot be enforced unless they comply with all the requirements for a contingent fee set forth in Business and Professions Code Section 6147. The consequences of failure to comply is that the client can void the agreement and the attorney can only collect a “reasonable” fee which may be significantly less in a large contingent fee case.

Specific One Year Statute in CCP 340.6 Applies to a Malicious Prosecution Case Against an Attorney Rather Than Two Year Statute in CCP 335.1

The Fourth District Court of Appeal recently addressed an ambiguity in the application of the statute of limitations to an attorney alleged to have engaged in malicious prosecution. In Vafi v. McCloskey (2011) 193 Cal. App. 4^th 874 the Court held that the one year statute in CCP Section 340.6 applied to a malicious prosecution claim against an attorney, not the two year statute set forth in CCP Section 335.1. Attorneys should calendar the one year statute to avoid a barred claim.

Taking Position Adverse To A Former Client

The California Supreme Court recently held that a lawyer breaches the fiduciary duty of loyalty by publicly expressing a personal position against a former client on an issue in which the attorney had previously represented the client. In Oasis West Realty v. Goldman (2011) 51 Cal. 4^th 811, a developer hired an attorney to obtain city approval of a development project. The attorney eventually withdrew from the representation and became personally involved in public measures opposing the development including obtaining signatures on petitions from neighbors and circulating a letter opposing the development. The court rejected the attorneys claim that his activity was protected by the First Amendment. The court stated that attorneys who take public positions on issues adverse to their clients on the very matters for which they were retained have breached their duty of loyalty and are subject to State Bar discipline.

Attorney Exposed To Conversion Claim For Negotiating Settlement Check With Knowledge Of Prior Attorney Lien

A Court of Appeal has held that an attorney’s negotiation of a settlement check without obtaining a signature or permission of another attorney/payee possessing of a valid lien may subject the attorney to liability for civil conversion. Plummer v. Day/Eisenberg LLP (2010) 184 Cal. App. 4^th 38. Therefore if you are aware of a prior attorneys lien on the case, make sure you obtain his or her endorsement on the check or permission to negotiate it in writing.

Ethical Screening Of Conflicts Of Interest

In general when an attorney is disqualified by a conflict of interest based on an earlier representation the attorney’s entire firm is also vicariously disqualified. One California appellate court has held that when an attorney tainted by a conflict from a previous representation moves to a new law firm, that new law firm may in certain circumstances rebut the presumption of imputed knowledge and vicarious disqualification by proving it implemented an effective ethical screen that prevented the sharing of clients confidences. Kirk v. First American Title Ins. Co. (2010) 183 Cal. App. 4^th 776.

Lorraine M. Walsh is a 30 year attorney with offices in Walnut Creek, who recently became a State Bar certified specialist in Legal Malpractice Law. The State Bar recently added this specialty to its certification program. She was also recently appointed by the Board of Governors of the State Bar of California to the State Bar Committee on Mandatory Fee Arbitration. She continues to focus her practice on controversies involving attorneys and clients including legal malpractice and malicious prosecution actions, fee disputes and expert witness consultation and testimony on the standard of care and conduct.