Informed Written Consent

Geringer v. Blue Rider Finance, No. B316718 (D2d7 Aug. 22, 2023).

This is a very long-running dispute over some film financing. It purportedly settled back in 2010, but then a dispute over the settlement led to more litigation. The Lawyer who inked the settlement for Plaintiff is still its litigator, all these years later. Which poses a problem, because he’s now also a key witness.

Under Rule of Professional Conduct 3.7, a lawyer can’t try a case in which he or she is likely to be a witness unless: (1) the testimony is about something uncontested; (2) the lawyer is testifying about the nature and value of the services he rendered; or (3) the client gives informed written consent. Here, Lawyer informed the court of the issue, associated in a counsel to conduct his examination, and submitted a declaration from client that said client was aware of all the facts, and given that the lawyer has had the case for 16 years and the client’s near-insolvency, client had neither the time nor the wherewithal to hire another lawyer to get up to speed for a trial. 

Notwithstanding the informed written consent of the client, Defendant moved, first to exclude the testimony, and then to DQ. Defendant argued that it would be prejudiced and that the testimony of Lawyer would impair the judicial process. The trial court granted the motion.

If you know anything about California legal ethics, you know that California takes a client’s right to counsel of choice very seriously. There are very few things that limit that, provided there is informed written consent. Short of representing opposite sides of the same litigation, almost all conflicts are waivable. Same thing with Rule 3.7, which deviates from the national model rule on the point. 

If a client gives informed written consent, the fact that its trial lawyer is a witness can only lead to a DQ if the other side would be severely prejudiced or if it would seriously threaten the integrity of the judicial process. There’s a very messy family law case from 2011 where it happened. Once.

There’s no prejudice here to defendant. The anticipated trial was a bench trial, so there’s not even a jury to get confused. And on the other hand the prejudice to plaintiff would be enormous. Further, the record showed that Defendant knew Lawyer was going to be a witness for years. Yet they only raised the issue on the verge of trial and as an alternative remedy to excluding Lawyer’s testimony. That smacks of a strategic DQ, which is something that California legal ethics is very much not about.

Reversed.

Do Not Settle. Do Not Collect a Contingency Fee. Go Straight to the State Bar.

Amjadi v. Brown, No. G059069 (D4d3 Aug. 30, 2021)

Sometimes clients won’t settle when their lawyers think they should. No matter how much you explain to them that it’s a good deal, that it’s better than anything they could expect even if they win at trial, or that they are letting emotional issues get in the way of what litigation is really about: money, they just won’t come around to your view of the situation. But if you didn’t want to deal with that, you should have told the interviewers at OCI that you want to be a capital markets lawyer. Because, as fools who decided to pursue a life in litigation, clients who don’t take our settlement advice are an occupational hazard we just need to suck up and deal with. 

Lots of strategic and tactical decisions in litigation belong to the attorney, not the client. But not settlement. Rule 1.2 of the Rules of Professional Conduct unequivocally states that a “lawyer shall abide by a client’s decision whether to settle a matter.” 

The plaintiff lawyers here (working on a contingency, no less) thought they could end around that rule by putting in their retainer agreement that the client delegated them the authority to decide if and when to settle, so long as the lawyers thought it was in the client’s interests. Bad idea.

Not only is that prohibited by the RPCs, cases have found that frustrating a client’s authority on when and under what terms to settle can constitute “moral turpitude.” So this all results in the Court of Appeal invalidating a settlement entered over the client’s objection, the Court declaring the retainer agreement void, and the lawyers being reported to the state bar, not just for the retainer agreement, but also for disclosing a bunch of client confidences in the course of the dispute over the settlement.

Reversed.

The Limits of a Pro Hac

Big Lots Stores, Inc. v. Superior Court, No. D077486 (D4d1 Nov. 20, 2020)

Defendants in this employment case are primarily represented by lawyers from an Ohio firm who are admitted pro hac vice. On several occasions the Ohio lawyers also claimed to represent ten deponents—eight former employees and two current store managers—in the case, for whom they had never been authorized to represent pro hac. When the trial court got word of this, it revoked the Ohio lawyers’ pro hacs. Defendants took a writ.

The Court of Appeal splits the difference. It is true, the Court holds, that a pro hac permits an out of state lawyer to represent only a particular party in a particular case. In a slightly different context, Rule of Professional Conduct 4.2(a) says that a lawyer who represents a company also represents officers, directors, managing agents, and Rule 4.2(b) says that lawyer also represents other current employees whose admissions could be held against the company. But that didn’t apply to former employees. Nor did it apply to current store managers, who could not have made binding admissions given the factual particulars of the case. Thus the Ohio lawyers were not authorized to represent the witnesses.

But that said, the revocation of the pro hacs—an effective disqualification—was too drastic a remedy that deprived Defendants of their choice of counsel. No doubt, the Ohio lawyers misinterpreted the pro hac orders and the relevant rules. But the mistakes were innocent. So a DQ was not warranted.

Writ granted.

Too Close for Combat

Doe v. Yim, No. B299856 (D2d4 Oct. 5, 2020) 

Eight months after her divorce became final, Mother, an attorney, represents her adult Daughter in an action alleging that her Ex-Husband sexually abused Daughter during the marriage while Daughter was a minor. Ex moves to DQ Mother, both under the attorney-witness rule and because Mother was privy to various marital confidences during her 17-year marriage to Ex. The trial court granted the motion.

The advocate-witness rule, currently codified as Rule of Professional Conduct 3.7, says an attorney cannot be an advocate in a trial where she is likely to be a witness unless the issue is minor or related to her fees. There’s an informed consent of the client exception, but the commentary explains that client consent isn’t enough of the representation will potentially mislead the jury or prejudice the opposing party. This can occur when, for instance, there can be confusion over when the attorney is testifying as to personal knowledge versus making arguments as an advocate. Further, although the rule is facially limited to trial representations, it has also been expanded to cover pre-trial testimony, as well as situations where it would reveal to the jury that a trial witness was, at one point, an advocate for one of the parties, such as taking and defending depositions. 

Here, there was no doubt that Mother would be a key trial witness on any number of highly contested topics. Given that, it was reasonable for the trial court to find that permitting her to participate as an advocate would be confusing to the jury or prejudicial, notwithstanding that Daughter might have given informed written consent. It was thus appropriate to DQ Mother from representing Daughter at trial, as well as in any pre-trial evidentiary hearings or depositions in the case.

Further, disqualification can also be ordered to protect against a lawyer’s running afoul of non-lawyer confidential or fiduciary relationships. Here, there is little doubt that much of what Mother knows and could testify to was obtained through communications over which Ex could invoke the martial communications privilege. See Evidence Code § 980. As an advocate, she further could use that knowledge to a strategic advantage in the litigation. Under the circumstances, disqualifying Mother as an attorney for Daughter was an appropriate prophylactic measure to prevent the potential misuse of confidential marital information.

Affirmed.

Acknowledgement vs. Consent

Reeve v. Meleyco, No. C085867 (D3 Mar. 24, 2020)

California is in the minority of jurisdictions that permit lawyers to pay referral fees to other lawyers who do not continue to work on a case. Under the Rules of Professional Conduct—old RPC 2-200 and new RPC 1.5.1—the referral fee can’t increase the client’s total bill—it needs to come out of the referred attorney’s take. The attorney also needs to disclose the key facts to the client in writing and the client needs to give written consent. 

Here, after being provided with the information, in writing, the client signed an “acknowledgement.” But it did not expressly say the client “consented” to the arrangement. Even though the client later testified that he had, in fact, agreed to the arrangement, the acknowledgement wasn’t enough to satisfy the rule’s requirement of written consent. That rendered the referral contract invalid as a matter of law.

Reversed.

How to Lose Your Appeal

Davis v. TWC Dealer Grp., Inc., No. A155030 (D1d2 Oct. 30, 2019)

So I have to cop that I only got around to writing up the Supreme Court’s decision in Kho because I read this case. It involves the essentially same Toyota arbitration agreement that the Supreme Court invalidated in Kho this past August. The same firm that represented the Toyota dealership in Kho represents a Toyota dealership here. Kho was decided a few weeks after the last brief was filed in this case. But nobody gave any notice of supplemental authority. 

The Court of Appeal flagged Kho in a pre-argument notice and asked the Dealership to explain why the parts of the agreement the Court in Kho found so oppressive were replaced with ellipses in the Dealership’s briefs. It also requested an explanation for why the Dealership never apprised the Court of the Kho decision, citing “Batt v. City and County of San Francisco (2007) 155 Cal.App.4th 65, 82, fn. 9,” which deals with attorneys’ duty of candor. (The Court later explains that the duty has been made express by the recent restyling of the Rules of Professional Conduct, which now, in Rule 3.3, require attorneys to “disclose to the tribunal legal authority in the controlling jurisdiction known to the lawyer to be directly adverse to the position of the client and not disclosed by opposing counsel[.]”) 

The Dealership’s law firm (called out by name in the opinion) sent an associate to the argument—his name wasn’t even on the briefs. He had no explanation for the ellipses—he didn’t write the brief and hadn’t spoken to the attorney who did. He didn’t read the footnote in Batt. The arguing claimed only that the Dealer didn’t give notice Kho as supplemental authority because it was “different.”

This all, quite understandably, makes the Court of Appeal very mad. Especially when framed in the context of the somewhat hyperbolic arguments the Dealership made in its brief. Arguments like a claim—unsupported by citation—that arbitration clauses “identical in all material terms to arbitration provisions that have been routinely enforced by appellate courts, including the state Supreme Court.” 

The Court, describing the Dealership’s arguments as “wrong on all counts,” “easily affirm[s]” the trial court’s denial of the motion to compel arbitration. The opinion concludes by noting that “It is hard to imagine legal authority more ‘directly adverse to the position of’ [the Dealership] than Kho—hard to imagine a more obvious violation of Rule 3.3.” 

Easily Affirmed.

Can I Get a Witness...

Doe v. Superior Court, No. D075331 (D4d1 Jun. 13, 2019)

The case deals with the no-contact rule, recently re-codified as Rule of Professional Conduct 4.2. Plaintiff is suing a College for sexual harassment. There’s another College Employee who was allegedly similarly harassed. Plaintiff’s Attorney reaches out to Employee #2 prior to her deposition. When the College learns about the contact, it moves to DQ Plaintiff’s Attorney under Rule 4.2. College argues that because Employee #2 was a College employee, Attorney made improper ex parte contact with a party represented in the litigation. The trial court granted the motion.

But that’s not right, and the Court of Appeal grants a writ.

No Soul to Damn, No Body to Kick, and No Authority to Hire

Jarvis v. Jarvis, No. H044930 (D6 Mar. 19, 2019)

Interesting DQ question. It’s unusual in that it is about a conflict of authority, not a conflict of interest. 

No Bar Doesn't Bar DQ

O’gara Coach Co. v. Ra, No. B268730 (D2d7 Jan. 7, 2018)

This is kind of a tricky one. Attorney went to law school but didn’t take the bar. He eventually became the CEO of a Company that is the defendant in this case. Company doesn’t have a GC, but because of his law training, one of (then unlicensed) Attorney’s responsibilities is in interacting with Company various outside counsel. 

DQ Is an Equitable, Not Per Se, Standard

Antelope Valley Groundwater Cases, No. F078517 (D5 Dec. 20, 2018)

Firm represents two water districts. District 1 has been embroiled in a litigation for almost two decades. District 2—for which a Firm partner acted as outside general counsel—was originally not in that litigation. But it was eventually brought in, although it retained different counsel. For twelve years, Firm represented District 1 in the litigation and District 2 as its general counsel. The litigation resolved through a settlement that resulted in entry of judgment. A month later, District 2 terminated the GC relationship. And then six months after that, District moved to DQ Firm from representing District 1 in the litigation due to conflicts.  

Prophylaxis, Not Punishment

City of San Diego v. Superior Court, No. D073961 (D4d1 Dec. 19, 2018) 

Plaintiff is a detective, bringing some employment-related litigation with city’s police Department. Plaintiff’s lawyer also represents someone claiming that the Department fouled up a child sex assault investigation. As part of the leak investigation, Department's internal affairs interviewed Plaintiff, suspecting that she might be the leaker. The IAB folks ask about Plaintiff's conversations with her lawyer. Over her objections, they tell her―on insinuated threat of discipline―that she needs to answer. And she does. Some of these interviews were attended by a Deputy City Attorney. Plaintiff was repped in the interviews by a union lawyer, but her employment litigator was not present.

Plaintiff then moves to DQ the City Attorney’s office in the employment case, for invading her privilege. It not particularly debatable that City improperly violated Plaintiff’s attorney-client privilege. Moreover, because Deputy City Attorney participated in questioning Plaintiff about matters related to litigation when Plaintiff's lawyer wasn’t there, the Deputy violated Rule of Professional Conduct 2-100, which prohibits an attorney from communicating with a represented party.

That all said, a transcript of the interview was filed with the Court in camera. Whatever was elicited had nothing whatsoever to do with Plaintiff's employment case. Because DQ is premised on an opponent’s obtaining an unfair advantage, getting privileged, but irrelevant, info shouldn’t merit disqualifying the City Attorney's office. If there’s no prejudice to the ligation, whether the City Attorney should be subject to some sanction for violating the rules is not the Court’s role. That’s for the State Bar.

Affirmed.

Informed Consent Is Cruicial to a Conflicts Waiver

Sheppard, Mullin, Richter & Hampton, LLP v. J-M Manufacturing Co., Inc., No. S232946 (Cal. Aug. 30, 2018)

Back in 2016, the Court of Appeal vacated an arbitration award in an attorney fee arbitration, holding that a law firm’s retainer agreement (and the arbitration clause within it) was completely void under Rule of Professional Conduct 3-310(C)(3) due to an undisclosed conflict of interest. At the time the client engaged the firm, the firm was adverse to the client in an unrelated matter. Thus, notwithstanding the agreement’s general forward conflicts waiver, there was no informed consent because the actual conflict was not specifically disclosed. And that meant the law firm couldn’t get paid anything and had to disgorge what it had been paid to date. The Supreme Court granted review.

Conflicts and the Pretend Partnership

Lynn v. George, No. G053563 (D4d3 Sept. 21, 2017)

This case presents an interesting quandary about how to deal with a scenario where the facts relevant to a motion to disqualify a lawyer substantially overlap with the merits of the case where the DQ motion is brought.

Conflicts and the Closely Held Corporation

Beachcomber Mgmt. Crystal Cove, LLC v. Superior Court, No. G054078 (D4d3 Jul. 28, 2017)

This case addresses the interpretation Rule of Professional Conduct 3-310—the rule on client conflicts—in the somewhat unusual context of a stockholder derivative action. 

Client Conflicts Confound Counsel on Class Claims

Walker vs. _________, No. D069713 (D4d1 Oct. 28, 2016)

Counsel represents plaintiffs in two wage-and-hour class actions against the same Employer. The class in the first case is certified. A non-exempt Employee who is a member of the class in Case #1 subsequently got promoted to an exempt position as a low-level manager. She’s now a potential Employer witness in this second—yet-to-be-certified—class case. Indeed, she fired some of the employees in Class #2. So Employer moves to DQ Counsel in Case #2 on the grounds that he might have to cross examine his own client. The trial court agreed.

Trouble with Clients, Present and Past

Ontiveros v. Constable, No. D066412 (D4d1 Mar. 14, 2016)

and

Costello v. Buckley, No. D068536 (D4d1 Mar. 16, 2016)

These are a pair of attorney disqualification appeals decided by Division One of the Fourth District in a three-day period last month.

Undisclosed Conflicts Prevent Law Firm from Getting Paid

Sheppard, Mullin, Richter & Hampton LLP v. J-M Mfg. Co., Inc., No. B256314 (D2d4, as modified, Feb. 26, 2016)

Law Firm represented Client 1 in as a defendant in a qui tam litigation where the plaintiff/government agency intervenor was also arguably current client, albeit in totally unrelated labor and employment matters. There’s no specific waiver in Client 1’s retainer letter permitting Law Firm to represent the agency in unrelated cases. And given the current representation of an adverse party at the time the letter was signed, the general advance waiver that was in the letter was potentially inadequate to give the requisite informed consent. 

A Law Licence Is Necessary, But Not Sufficient, to Invoke CCP § 340.6

Lee v. Hanley, No. S220775 (Cal. Aug. 20, 2015)

Code of Civil Procedure § 340.6 provides a one-year-from-discovery statute of limitations in an “action against an attorney for a wrongful act or omission, other than for actual fraud, arising in the performance of professional services[.]” As reported here, here, here, here, here, and here, there is a longstanding split of authority over how broadly to read the statute, particularly with respect to certain torts that, if committed by anyone other than an attorney, might have a much longer limitations period. 

Some courts have read the statute literally, to include, for instance, a malicious prosecution action against a lawyer. Others, including the case on review here, have looked to the spirit of the statute and limited its application to cases of attorney professional negligence. The California Supreme Court stepped in to resolve the split.

Conflicts and the Dissolving Partnership

Coldren v. Hart, King & Coldren, Inc., No. G050202 (D4d3 Aug. 5, 2015)

Departing Partner in a 50/50 two-partner law firm sued his Firm and his Remaining Partner over the terms of his retirement. Firm and Remaining Partner sued back. Remaining Partner and Firm were represented in the litigation by the same Attorney, who had never previously represented Firm or Departing Attorney. Departing Partner brought a DQ motion, claiming that Attorney couldn’t represent both Remaining Partner and the Firm—in which Departing Partner continued to claim his 50 percent stake. After waffling on the tentative, the trial court granted the motion. 

But the court of appeal reverses. The decision rests on two grounds.

Some Limits in the Ethical Wall

Castaneda v. Superior Court, No. B259950 (D2d8 Jun. 24, 2015)

L.A. Superior Court runs a mediation program called CRASH, where two volunteer attorney referees, assisted by a settlement judge, try to work out settlements in employment cases. To plaintiff’s displeasure, six months after a CRASH mediation where his counsel allegedly disclosed confidential strategies to the panel, one of the attorney volunteers’ partners substituted in as counsel for the defendant. Nobody disputes that the volunteer would be DQed from the case. The issue is whether the conflict should be vicariously imputed to her partner. The trial court held that, regardless of whether confidential info had been disclosed, an ethical screen-off of the volunteer would be sufficient to impute any conflict. Plaintiff took a writ.