A Pending California State Bar Opinion Explains And Gives Guidance On Lawyer Ethical Duties
By Charles Berwanger
Lawyers are often put into the position of knowingly (or even unknowingly) receiving client direction to, for example, include in a contract an illegal provision. Too, lawyers are often directed to enforce such an illegal provision.
What are the ethical considerations such lawyers must be aware of?
The State Bar of California Committee on Professional Responsibility and Conduct (COPRAC), which publishes advisory opinions regarding the ethical propriety of hypothetical lawyer conduct, has proposed Formal Opinion Interim 19 – 003. Although COPRAC’s opinions are not binding, they are often cited in the decisions of the Supreme Court, the State Bar Court Review Department, and the Court of Appeal. Proposed Formal Opinion Interim 19 – 003, although not final, most likely will become final and substantially in its present form.
The Opinion cites several hypotheticals which set up the Opinion’s discussion. In summary, the hypotheticals include a lawyer who is asked by a client to include an illegal provision in a contract and who either knows or, per the Opinion, should know that the provision is illegal. The lawyer who knows of the illegality is the subject of the Opinion. A lawyer who does not know of the illegality does not escape ethics considerations. Such a lawyer may be found to be incompetent, a violation of Rule of Professional Conduct 1.1.
Lawyers who are aware of the illegality are then separated into categories of lawyers who do and do not advise the client of the illegality; and are further divided into those lawyers who do and do not counsel the client to include such a provision; and finally divided into those lawyers who are asked to enforce such a provision.
The concept of “illegal” is found in Rule 1.2.1 (a) which states that a “lawyer shall not counsel a client to engage, or assist a client in conduct what the lawyer knows is criminal, fraudulent, or a violation of any law, rule, or ruling of a tribunal.” The Opinion by using the term “illegal” contemplates a provision or conduct which is “a violation of any law, rule, or ruling of a tribunal.”
As an example of such an illegal provision, the Opinion identifies a non-compete provision to be included in an employment agreement, which is generally unenforceable. That the provision is unenforceable triggers its categorization as “illegal.”
What is the lawyer who is asked to include such a provision in an employment agreement to do?
First and foremost, a lawyer may not knowingly advise a client to propose an illegal provision in the contract that will be offered to a third party. The Opinion states that by Rule 1.2.1 (b) lawyer is allowed “to discuss the legal consequences of any proposed course of action and conduct or assist a client in interpreting application of any law, rule or ruling to that course of action.” Further, the duty of competence expressed in Rule 1.1 would compel the conclusion that the lawyer should disclose to the client the fact that the proposed course of conduct is illegal.
Second, the Opinion then focuses on what it describes as the duty not to assist enforcement of an illegal contract provision. If the client insists upon including the illegal provision, for example for its in terrorem effect, “the lawyer must advise a client regarding limitations on lawyer’s conduct, including that lawyer will not represent the client in advocating or attempting to enforce an illegal provision.” (Rule 1.2.1, comment [5]; rule 1.4 (a) (4).)
If client insists upon including such a provision, must the lawyer withdraw?
The Opinion concludes that “lawyer may withdraw but is not compelled to withdraw merely because a client chooses to use an illegal provision, despite lawyer’s admonition, even if the use of that contract provision is deemed fraudulent or is criminal.” However, if client conditions lawyer’s further representation of client upon use of such a provision, “lawyer may be required to withdraw under rule 1.16(a)(2) which makes withdrawal mandatory if the lawyer knows or reasonably should know that the representation will result in violation of these Rules or the State Bar Act.”
In conclusion, the Opinion, which most likely will become a formal and final opinion, contains a wide-ranging discussion of not only a lawyer’s duties when confronted with a client who seeks to engage in illegal conduct, but also a lawyer’s duty of honesty in expressing matters of fact and the law. For any lawyer who encounters a client that calls upon the lawyer to draft a document or express an opinion which may cross the line into being illegal or dishonest the opinion provides excellent guidance.