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State Bar rules can apply to out-of-state lawyers too

By Amy Yarbrough
Staff Writer

California law corporations must follow State Bar rules even if none of their attorneys is admitted to practice law here, an appellate court has ruled.

The First District Court of Appeal ruled that a San Francisco judge did not overstep his bounds when he required the firm formerly known as Immigration Practice Group PC (IPG) to notify clients that its founder was no longer allowed to practice law. Martin Resendez Guajardo resigned from his State Bar membership in 2008 after being accused of a series of missteps, including failing to return unearned fees and perform services competently. Authorities alleged that IPG allowed Guajardo to continue to represent clients.

The decision, which was issued in December and published as precedent Jan. 3, reinforces existing law, State Bar Deputy Executive Director Robert Hawley said.

In affirming Superior Court Judge Peter J. Busch’s ruling, Presiding Justice J. Anthony Kline dismissed arguments by attorney Christopher Stender, who took over Guajardo’s practice, that he was not bound by State Bar rules because neither Stender nor his firm are members of the State Bar.

Kline pointed to Section 6167 of the California Business and Professions Code which states that “a law corporation shall not do or fail to do any act the doing of which or the failure to do which would constitute a cause for discipline of any member of the State Bar. ...”

“Appellants view section 6167 as solely a rule for discipline that does not make the corporation a member of the State Bar,” Kline wrote, referencing an opinion by the California Attorney General that law corporations are exempt from registering as tax preparers just as individual members of the State Bar are.

“The logic expressed in this opinion holds in the present context as well,” he wrote. “As a law corporation entitled to practice law in California, IPG is bound to adhere to the rules an individual member of the bar would be required to follow.”

Once a successful San Francisco immigration attorney, Guajardo received his first rebuke in 1991 when he was suspended from practicing before the Ninth Circuit for neglecting clients and repeatedly failing to respond to the court’s orders to show cause. Other discipline followed in 1993, 2006 and 2007, the latter of which led to his resignation in 2008. According to court documents, Stender replaced Guajardo as IPG’s president, secretary and treasurer in April 2008 and soon after became its sole shareholder.

Even so, authorities allege, Guajardo still appeared to be in charge of the practice and continued to meet with clients and discuss legal strategy with them.

In November 2010, San Francisco City Attorney Dennis Herrera filed a lawsuit against Guajardo, Stender and the firm, accusing Stender and IPG of aiding Guajardo in the unauthorized practice of law and defrauding vulnerable immigrants out of thousands of dollars by providing no services of value. It also alleged that the defendants misled clients into thinking Guajardo was their lawyer and failed to inform the State Bar that the firm was employing a resigned attorney. Firms are required to notify the State Bar whenever they employ a resigned, disbarred, suspended or otherwise inactive member and to acknowledge they will not be allowed to perform any prohibited tasks such as giving legal advice or handling clients’ funds.

Stender, who is licensed to practice law in New York and Connecticut but not in California, claimed in court filings that he had not allowed Guajardo to continue practicing law, that Guajardo no longer worked with firm and that he was not obligated to inform clients of his resignation or their right to seek representation elsewhere.

In a 2011 legal declaration filed in San Francisco Superior Court opposing the injunction, Stender said that requiring him to provide notice of Guajardo’s status would have “an irreparable and chilling effect” on clients’ cases, “especially in that many would not wish to give any information to any agency that may be able to prosecute them or that might have the ability to forward information to the Department of Homeland Security ....”

Stender also wrote glowingly of Guajardo, calling him a “highly experienced longtime immigration attorney who had a reputation of being able to help clients.

“It was my intent to learn how he was so successful in the vast majority of his cases, what contacts and resources he may have gained over the years, and to continue to represent his former clients as an extension of my own multiple-office network of immigration attorneys.”

Wendy L. Patrick, immediate past chair and an adviser to the State Bar’s Committee on Professional Responsibility and Conduct but speaking in her capacity as an individual, called the case “yet another illustration of the increasing (and well-deserved) scrutiny being given to those who hold themselves out to represent the legal interests of the public when they are, either temporarily or permanently, legally prohibited from doing so.”

“Clients trust their lawyers with the most sensitive of information and personal secrets, and trust they can do so with the confidence that a professional relationship exists,” she wrote in an email to the Bar Journal. “While there are many published cases discussing the unauthorized practice of law, the fact that such instances continue to come to light with some regularity highlights the importance of the issue to begin with – safeguarding the rights of the public.”