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Wanted: Input on proposed changes to the Rules of Professional Conduct

By Justice Lee Smalley Edmon

Lee EdmonThe State Bar is in the midst of developing comprehensive amendments to the California Rules of Professional Conduct, which were last fully revised in 1987. Last month, the State Bar authorized a 90-day public comment period on 68 proposed amended and new rules, which are the result of 15 months of study by the State Bar’s Second Commission for the Revision of the Rules of Professional Conduct. The project’s anticipated completion date is March 31, 2017. By this date the entire package of rules must be adopted by the State Bar Board and submitted to the California Supreme Court for approval.

This endeavor has been an opportunity to consider rule amendments that are intended to enhance public protection and promote trust and confidence in the legal profession and the administration of justice. Commission members include practitioners from a broad range of practice fields, legal ethics experts, prosecutors, defense attorneys, government lawyers, legal services providers, judges and nonlawyer public members. Additionally, this project has been guided by input from advisors and liaisons, including an attorney liaison from the Supreme Court. Our work has been ably supported by a cadre of State Bar staff.

The commission’s deliberations have been robust. However, as thorough as our discussions have been, they are no substitute for public comment. This article surveys some of the key rule amendment proposals with the goal of encouraging written comment from the lawyers of California. The comment deadline is Sept. 27, 2016, and an online form for submitting comment is available on the public comment page of the State Bar’s website.

Referral fees

California permits “pure” referral fees, that is, with a client’s consent a lawyer may be compensated for referring a matter to another lawyer without requiring the referring lawyer’s continued involvement in the matter. Current Rule 2-200. California’s approach is different from the standard found in the majority of states, which have adopted rules based on ABA Model Rule 1.5(e). Model Rule 1.5(e) permits a referring lawyer to be compensated only for work actually done on the matter or if that lawyer has assumed joint responsibility for the matter.

The commission is proposing Rule 1.5.1 to replace current Rule 2-200. (As part of its proposal, the commission recommends adoption of the ABA Model Rules’ numbering system.) Proposed Rule 1.5.1 would continue California’s existing policy on referral fees while also implementing two significant changes intended to improve client protection. First, the agreement between lawyers to divide a fee would have to be in writing. Second, a client’s consent to the division of fees would be required at or near the time that the lawyers enter into the agreement to divide fees.

Lawyer-client sexual relations

Current Rule 3-120 prohibits a lawyer from engaging in sexual relations with a client if: (i) it is a condition of a representation; (ii) it is obtained by coercion, intimidation or undue influence; or (iii) it causes the lawyer to perform legal services incompetently. Nearly identical prohibitions are codified in the State Bar Act. See Bus. and Prof. Code Section 6106.9.

By contrast, a majority of other states have adopted a rule similar to ABA Model Rule 1.8(j), which imposes a bright-line standard prohibiting all sexual relations between a lawyer and client unless the sexual relationship was consensual and existed at the time the lawyer‐client relationship commenced.

The commission is proposing Rule 1.8.10 to replace current Rule 3-120. The proposed rule departs from California’s current approach and substantially adopts the standard in Model Rule 1.8(j). The commission recognizes that this represents a significant departure from California’s current rule and may implicate important privacy concerns.

Imputation and screening

Although imputation of conflicts and the implementation of an ethical screen to rebut presumptions of shared confidential information within a law firm are found in California case law, the current rules are silent on these concepts. See State Bar Formal Op. No. 1998-152.

The commission is proposing adding rules that are largely, but not wholly, similar to ABA Model Rules that address imputed conflicts and screening for attorney moves in private practice. The specific proposed rules are proposed rules 1.10, 1.11 and 1.12. It should be noted that these proposed rules would have the effect of importing into the Rules of Professional Conduct the standards developed in cases addressing attorney disqualification.

Protecting the interests of a client with diminished capacity

ABA Model Rule 1.14 provides that a lawyer who represents a client with diminished capacity is permitted to reveal that client’s confidential information or, in an extreme case, is permitted to institute conservatorship proceedings when such action becomes necessary to protect the client from harm such as physical abuse or financial victimization. California’s current rules permit a lawyer to commit a breach of confidentiality to prevent a criminal act likely to result in death or great bodily injury, but not to prevent financial or psychological harm.

The commission is proposing a new rule that is substantially more limited than Model Rule 1.14. Proposed Rule 1.14 would, in the limited circumstance where the lawyer is able to obtain the client’s consent, permit, but not require, a lawyer to notify an individual or organization that has the ability to take action to protect a client if the lawyer reasonably believes the client is suffering from significantly diminished capacity, cannot adequately act in his or her own best interest, and is at risk of substantial physical, psychological, or financial harm. Unlike the Model Rule, the proposed rule does not apply to the representation of minors, clients in criminal matters and persons who are already the subject of conservatorship proceedings. The proposed rule also recognizes an option for a lawyer to seek advance consent from a client to take protective steps in the event the client should subsequently suffer from significantly diminished capacity.

Advertising and solicitation

Current Rule 1-400 regulates lawyer advertising and solicitation under a single rule. The rule prohibits any “communication or solicitation” which is either false or deceptive, or that tends to confuse, deceive or mislead the public. The rule also contains 15 standards adopted by the State Bar Board of Trustees. A violation of a standard creates a rebuttable presumption of a violation.

The commission is proposing that California adopt the ABA Model Rule framework of five separate rules regulating lawyer advertising and solicitation. These rules prohibit any false or misleading communications (Rule 7.1), and regulate advertising (Rule 7.2), solicitation of clients (Rule 7.3), communications concerning specialization (Rule 7.4), and use of firm names and trade names (Rule 7.5). Although the commission is recommending the repeal of all the existing advertising standards, most of the substantive concepts addressed in those standards have been retained and relocated to either the black letter text or the comments of the proposed rules. Further, the commission determined that proposed Rule 7.1 should carry forward current Rule 1-400(E), which permits the State Bar Board of Trustees to formulate and adopt advertising standards as needed to regulate attorney conduct in light of future developments in communications or law practice.

Discrimination and harassment

Current Rule 2-400 prohibits an attorney, in the management or operation of a law practice, from unlawfully discriminating or knowingly permitting unlawful discrimination in: (1) hiring, promoting, discharging or otherwise determining the conditions of employment of any person; or (2) accepting or terminating representation of any client. The protected categories under the current rule are identified as “race, national origin, sex, sexual orientation, religion, age or disability.” Paragraph (C) of the current rule provides that no disciplinary investigation or proceeding may be initiated by the State Bar against an attorney under the rule unless and until a court other than the State Bar Court has first found that unlawful discrimination occurred and that finding stands after all appeal rights have been exhausted.

The commission is proposing two principal changes to current Rule 2-400 as reflected in the proposed Rule 8.4.1. First, the commission recommends expanding the categories protected under the rule to correspond to those recognized in federal and state anti-discrimination laws, along with a catchall provision for any “other category of discrimination prohibited by applicable law.” Second, the amended rule would eliminate the requirement of a final civil determination of wrongful discrimination before a disciplinary investigation can commence or discipline can be imposed. A majority of the commission concluded that current Rule 2-400(C) makes enforcement nearly impossible. By eliminating the requirement of a final civil determination, the State Bar Court will have original jurisdiction to adjudicate discrimination claims against attorneys under the current procedures of the disciplinary system.

The proposed elimination of current Rule 2-400(C)’s pre-discipline adjudication requirement has raised concerns among some members of the commission and the Board of Trustees concerning due process, the increased demands on State Bar resources that may result, and questions regarding any evidentiary or preclusive effects a State Bar Court decision may have in other proceedings. Accordingly, the board has authorized the circulation of two alternative versions of proposed Rule 8.4.1: Alternative 1, which is the version the commission recommended; and Alternative 2, which incorporates the expanded list of protected characteristics and broadening of the rule’s scope as reflected in Alternative 1, but which largely retains the jurisdictional limitation in current Rule 2-400(C).

The six rules highlighted above represent only some of the notable substantive changes and policy decisions under consideration by the commission. Interested persons are encouraged to review all of the proposed new and amended rules. Executive summaries of the proposed rules and redline/strikeout versions may be found on the Rules Commission’s pages of the State Bar website.

Lee Smalley Edmon is presiding justice of Division Three, 2nd District Court of Appeal and chair of the State Bar’s Second Commission for the Revision of the Rules of Professional Conduct. This column was originally published in the July 20 edition of the Daily Journal and is reprinted here with permission.