Fresh Eyes May Require Fresh Disclosures
Whether newly admitted or highly experienced, working in a small firm or a large firm, or practicing in litigation or transactional law — an attorney in a law firm is likely to become involved in the handling of an existing matter for a firm client at some point. In the process of becoming familiar with the history of the file, the newly added attorney may find they are acting as a Monday morning quarterback, which may include questioning the positions and actions of others involved in the litigation, including the opposing party, other counsel, the Court — or perhaps another attorney within their own firm. When concerns arise regarding this latter category, attorneys must remain mindful of their professional obligations and the ethical limitations pertaining to client disclosures and conflicts of interest.
Rule 1.4(a)(3) of the California Rules of Professional Conduct [CRPC], and Business and Professions Code section 6068(m), require attorneys to keep their clients reasonably informed about significant developments relating to the representation.
Where a lawyer “believes that he or she has committed legal malpractice, the lawyer must promptly communicate the factual information pertaining to the client’s potential malpractice claim against the lawyer to the client, because it is a ‘significant development.’” (State Bar of Cal. Comm. On Prof. Resp. and Conduct, Formal Op. No. 2009-178, p. 4, quoting Beal Bank, SSB v. Arter & Hadden, LLP (2007) 42 Cal.4th 503, 514 [“attorneys have a fiduciary obligation to disclose material facts to their clients, an obligation that includes disclosure of acts of malpractice”].)
“While not every ‘mistake’ mandates disclosure to the client, when a lawyer is aware of a significant mistake, the rule and the State Bar Act provision require disclosure.” (SDCBA Legal Ethics Opinion 2017-1, p. 7.) As such, any suspected issue as to past handling in an ongoing representation should be promptly and carefully evaluated, so that the attorney can then comply with the duty of communication with the client in whatever manner the circumstances may require.
Additionally, lawyers owe their clients an ethical obligation to represent the client free of any competing interests or loyalties, including the lawyer’s own personal interests, which would materially impair the lawyer’s representation of the client. (Cal. Rule Prof. Conduct, 1.7(b), Com. [1]; see also People v. Bonin (1989) 47 Cal.3d 808, 835 [“Conflicts of interest broadly embrace all situations in which an attorney’s loyalty to, or efforts on behalf of, a client are threatened by … his own interests.”].)
Accordingly, the CRPC prohibit lawyers from representing a client, without the informed written consent of the client, if there is a significant risk the lawyer’s representation of the client will be materially limited by the lawyer’s own interests. (CRPC, rule 1.7(b).)[1] “Even where there is no direct adversity, a conflict of interest requiring informed written consent under paragraph (b) exists if there is a significant risk that a lawyer’s ability to consider, recommend, or carry out an appropriate course of action for the client will be materially limited as a result of the lawyer’s other responsibilities, interests, or relationships, whether legal, business, financial, professional, or personal.” (CRPC, rule 1.7, Com. [4].)[2]
As the attorneys handling the client’s ongoing representation would naturally have a business, financial, and/or personal interest in avoiding, minimizing, and otherwise defending against any eventual claim against the law firm, a potential conflict of interest would arise as to the firm’s continued representation of the client, which requires the informed written consent of the client.[3] Under such circumstances, “the lawyer must balance the duty to disclose material facts against the reality that the lawyer has a conflict of interest that bars the lawyer from advising the client concerning the legal significance of that error.” (SDCBA Legal Ethics Opinion 2017-1, p. 7.)
The attorney must disclose the pertinent facts surrounding the potential error, but the attorney need not – and should not – advise the client about whether those facts support a valid claim for malpractice. (Id., p. 8.) Here, too, any prior handling concerns should be diligently investigated and related disclosures timely made to allow the client to obtain independent counsel as may be appropriate and make an informed decision regarding whether to continue the representation with current counsel.
Whether an attorney has appropriately communicated and addressed such issues with the client will depend on the facts and circumstances of each case.[4] To avoid a potential violation of the CRPC, attorneys must diligently and timely address any disclosure of significant information and conflict of interest issues in connection with an ongoing representation.
[1] “Informed written consent” means a client’s agreement in writing to a proposed course of conduct after the lawyer has communicated and explained in writing (i) the relevant circumstances and (ii) the material risks, including any actual and reasonably foreseeable adverse consequences of the proposed course of conduct. (CRPC, rule 1.0.1(e), (e-1).)
[2] Notwithstanding a client’s informed written consent, the lawyer is still prohibited from representing the client unless the lawyer reasonably believes that the lawyer will be able to provide competent and diligent representation to the client. (CRPC, rule 1.7(d).)
[3] Even if an advanced conflict waiver was previously provided by the client, “[a] material change in circumstances relevant to application of the rule may trigger a requirement to make new disclosures and, where applicable, obtain new informed written consents.” (CRPC, rule 1.7, Com. [10].)
[4] Notably, subordinate attorneys remain responsible for their own compliance with the California Rules of Professional Conduct and must not simply assume the infallibility of their supervising attorneys’ determinations where a violation of the rules could result. See June 15, 2021, San Diego County Bar Association, For the Record titled “Supervisory Direction does not Result in Subordinate Immunity” <https://blawg401.com/supervisory-direction-does-not-result-in-subordinate-immunity/>