By Andrew A. Servais
As most know, on November 1, 2018, 69 new California Rules of Professional Conduct replaced 46 current Rules of Professional Conduct in an effort to bring the California Rules in closer alignment with ABA Model Rules.
By Edward J. McIntyre
The green rush is on in California. The State already holds the lion’s share of the $5.7 billion cannabis industry, and the market is primed for unprecedented growth with the recent legalization of recreational use for adults. Cannabis law has come a long way since California became the first state to legalize medical cannabis use over 20 years ago. However, there is still a long road ahead to create a fully operational and legitimate market.
Industry participants and law enforcement have faced an uphill battle attempting to navigate the ever-changing landscape of cannabis laws. Since the Compassionate Use Act (CUA) broadly established an affirmative defense for the medical use of cannabis in 1996, and then the Medical Marijuana Program Act (MMPA) established an affirmative defense for collectively and cooperatively producing and distributing medical cannabis in 2003, the industry has largely operated in a legal gray area. Poorly drafted legislation provided little guidance on the breadth and depth of legalization, and the case law developed slowly over the years. Judges and prosecutors in many jurisdictions throughout California strictly interpreted cannabis laws, which led to unnecessary arrests, wasted resources and, in some cases, wrongful convictions. In San Diego alone, we saw three landmark cannabis decisions that began as erroneous rulings summarily denying patient-defendants their right to present an affirmative defense and were ultimately overturned on appeal. See People v. Konow, 102 Cal. App. 4th 1020 (2002), as modified (Nov. 6, 2002), review granted and opinion superseded, 63 P.3d 212 (Cal. 2003), and revised, 88 P.3d 36 (2004); People v. Jackson, 210 Cal. App. 4th 525 (2013), as modified on denial of reh’g (Nov. 20, 2012); People v. Orlosky, 233 Cal. App. 4th 257 (2015). Notably, the liberal MMPA allows a defendant to present a defense to cannabis-related offenses under a variety of circumstances. A written doctor’s recommendation is not required; oral approval is enough. People v Jones, 113 Cal. App. 4th 341 (2003). A written agreement is not required to form a collective or cooperative; the act of informally associating is enough. People v. Orlosky, 233 Cal. App. 4th at 573. Business formalities such as accounting records and nonprofit formation are merely elements for a jury to consider in determining whether a collective or cooperative is operating lawfully. These principles have in large part been developed through case law at the expense of unlucky judges and prosecutors. What this means for criminal defense attorneys and for our clients is that under the MMPA, we can use the gray area to our advantage. However, law enforcement can use that same gray area to arrest our clients, seize their assets and initiate criminal and/or civil action.
In order to eliminate these uncertainties, decriminalization should go hand-in-hand with regulation. The changing legal landscape has been driven by changing perceptions. For the first time in our nation’s history, the majority of the public is in favor of cannabis legalization. People now view cannabis offenses as less serious than they would other criminal offenses. However, mere decriminalization does not guarantee the safety and efficacy of cannabis and cannabis-related activities. The experiences of states like California, who have boldly legalized cannabis in spite of the continued federal prohibition, have taught lawmakers about how and why to regulate cannabis. The California Legislature recognized that, in order to move into a legitimate industry, regulations needed to be enacted, restrictions put in place and taxes imposed. With the Medical Cannabis Regulation and Safety Act (MCRSA), the state of California attempted to comprehensively govern the cultivation, manufacturing and sale of medical cannabis and medical cannabis products. The Legislature adopted important elements from the measures that passed in Colorado, Washington and Oregon, while avoiding some of the mistakes initially seen with the regulatory frameworks in those states. A centralized Bureau was established within the Department of Consumer Affairs to create all of the detailed regulations that would control and govern how cannabis businesses would operate.
While the state was figuring out how to control the medical cannabis industry, several different interest groups began organizing recreational cannabis initiatives in order to alter the regulatory landscape. The initiative that ultimately made it to the ballot and gained enough votes to pass in 2016 was Proposition 64. A citizen’s initiative, Proposition 64 was much more business-friendly than the MCRSA. There were some key differences between the two pieces of legislation. For example, Proposition 64 did away with restrictions on vertical integration and cultivation limits, and created an open distribution model. The Brown Administration and the State Legislature realized that they would have to reconcile the differences between MCRSA and Proposition 64. The result was a budget trailer bill, known as Senate Bill 94, which was signed into law on June 27, 2017, to create a unified regulatory framework. Senate Bill 94 repeals and replaces much of MCRSA, and regulatory agencies will now have to quickly modify the proposed medical regulations in order to begin licensing by the statutorily imposed deadline of January 1, 2018.
What does SB 94 mean for existing cannabis businesses? Twelve months from the date that the state begins accepting applications, collectives and cooperatives will have to become licensed at the state level. If businesses do not receive a state license within that 12-month period, they must cease operating. The gray area that collectives and cooperatives have been relying on for years just turned very black and white. By early 2019, if you have a state license, you are legal; if not, you are illegal. In order to obtain a state license, there are many hoops to jump through. For example, you must establish that you are in full compliance with local laws and regulations before the state will issue a license. Over 98 percent of the industry is currently operating without any local authorization, approval, licenses or permits. This means that most businesses operating today will either close their doors, or be forced entirely into the black market. On the other hand, people who have hidden in the shadows for years will have an avenue to come forward and join the tightly regulated marketplace. Investors from out of state will also be coming to California to capitalize on this emerging industry.
For attorneys who are practicing in this field, we have to be prepared to evolve. The fun days of arguing affirmative defenses in court are slowly fading away. Criminal defense cannabis practices will be left with low-level misdemeanors, felony extraction cases, local municipal code violations and the occasional cannabis DUI. Fairly dry corporate and regulatory work will fill the void. Attorneys interested in practicing cannabis law should focus on areas related to the new regulated market. There are great opportunities for employment attorneys, in-house counsel, real estate attorneys, land-use attorneys, securities attorneys and attorneys practicing in so many other crossover areas. Just as the industry is adapting to a regulated market, we too must be prepared to move into the future.
Michael Cindrich is a solo practitioner.
This article originally appeared in the
July/August 2017 issue of San Diego Lawyer.
An amendment to the California Evidence Code on mediation confidentiality will require attorneys representing clients in connection with mediation to provide written disclosures to their clients about mediation confidentiality beginning January 1, 2019.
California law and public policy provide that all communications that take place in anticipation of and at mediation are confidential. “To carry out the purpose of encouraging mediation by ensuring confidentiality, the statutory scheme . . . unqualified bars disclosure of communications made during mediation absent an express statutory exception.” Even after mediation ends, communications and writings protected by the statutes are to remain confidential.
The restrictions on disclosure of mediation communications has been vigorously debated following the California Supreme Court’s decision in Cassel v. Superior Court (2011) 51 Cal.4th 113 confirming the broad scope of mediation confidentiality in holding a party to a mediation may not use confidential information obtained in the mediation to sue his or her attorney for alleged legal malpractice occurring at the mediation. (Cassel v. Superior Court, supra, 51 Cal.4th 113, 128 [Evidence Code section 1119 extends to “oral communications made for the purpose of or pursuant to a mediation, not just to oral communications made in the course of the mediation.”])
Although the new amendment does not provide any exception allowing disclosure in malpractice or other lawsuits, it will attempt to ensure clients understand the restrictions on mediation communications before participating in mediation by providing that except “in the case of a class or representative action, an attorney representing a client participating in a mediation or a mediation consultation shall, as soon as reasonably possible before the client agrees to participate in the mediation or mediation consultation, provide that client with a printed disclosure containing the confidentiality restrictions described in Section 1119 and obtain a printed acknowledgment signed by that client stating that he or she has read and understands the confidentiality restrictions.” (Cal. Evid. Code § 1129 (a).) Subdivision (d) specifies the “disclosure” language deemed to comply with subdivision (a) if it is (1) “printed in the preferred language of the client in at least 12-point font”; (2) “printed on a single page that is not attached to any other document provided to the client”; and (3) includes “the names of the attorney and the client and be signed and dated by the attorney and the client.”
As stated, the written disclosure must be provided “as soon as reasonably possible before the client agrees to participate in the mediation or mediation consultation…” Given the prevalence of mediation in civil litigation, providing the written disclosure sooner than later to allow for client inquiries is in the best interests of both the client and practitioner.
Andrew Servias is an attorney at law.
**No portion of this summary is intended to constitute legal advice. Be sure to perform independent research and analysis. Any views expressed are those of the author only and not of the SDCBA or its Legal Ethics Committee.**
Duncan hovered at Macbeth’s door, another man in tow. “Can we disturb you, Uncle? My friend, Smedley.”
“You have. But come in and take a seat. Shall we invite Sara to join us?”
When everyone was comfortable, Macbeth turned to Duncan: “Did you and Mr. Smedley have a question for us?”
Duncan nodded toward Smedley. He started.
“I have an office here. Also one in Phoenix. Got a couple of difficult clients at the moment. Don’t like questions they’re asking. Stuff they’re saying. I think it’d be good if I used my Phoenix office to talk to them. Record the calls.”
“Because Arizona is a single-party consent state?”
“Precisely. California requires both parties to agree.”
“Your concern is ethics?”
“Among other things, but yes.”
“As a California lawyer, you’re still governed by our Rules of Professional Conduct. And our State Bar Act.”
“OK.”
“Let’s look at this based on the new rules that go into effect November 1.”
“Makes sense to me.”
“Rule 8.4, subdivision (c) says it is professional misconduct to engage in conduct involving dishonesty or deceit or intentional misrepresentation.”
“OK, but —”
“And rule 4.1 prohibits making a material false statement to a third person when representing a client.”
“But —”
“Then, rule 1.4 requires a lawyer to keep a client reasonably informed about significant developments relating to the representation.”
“So —”
“And, of course, section 6068 (e)(1) and rule 1.6 still require us to protect client confidences and secrets at every peril to ourselves. That did not change.”
“Yeah, but —”
“Finally, we have our duty of loyalty. Hallmark of our profession. Key to our relationship with a client.”
Macbeth looked at all three young lawyers. “Against this backdrop, how would you analyze surreptitiously recording a client’s call?”
Sara spoke first. “When the ABA re-examined an older opinion in 2001, its committee on ethics and professional responsibility was divided on whether a lawyer could record a client call without a client’s knowledge. But the committee agreed it was inadvisable to do it.”
Macbeth nodded. “State Bar opinions across the country are split on nonconsensual taping, even where it’s legal. They don’t give us much guidance. So let’s look at it with fresh eyes.”
Duncan spoke. “Can’t hurt.”
Macbeth picked up the thread. “Is surreptitious taping a client’s call deceitful conduct, under rule 8.4(c), at least implicitly? And if rule 4.1 prohibits a lawyer from making false statements to total strangers, do we not owe a special duty of genuine candor to clients?”
Smedley spoke. “Lawyers take notes of calls with clients all the time. Or dictate memoranda. What’s the difference?”
Duncan shrugged and nodded.
Macbeth spoke. “Good question. When a lawyer takes notes, don’t we have — for the most part — the lawyer’s impressions of what the client said? Even when the lawyer puts down a quote or two, we don’t have a recording that captures the ‘client’s exact words, no matter how ill-considered, slanderous or profane’ as the ABA opinion expressed it.”
Smedley spoke. “True but —”
“Then don’t we have to consider the embarrassment and harm to the client if the recording falls into unfriendly hands. By operation of law. Or inadvertent disclosure. Or even illegally. Don’t we agree that the recording would be much more damaging to the client than just the lawyer’s notes?”
Smedley again. “Well sure, but —”
“If we have the duty to preserve our client’s confidences and secrets at every peril to ourselves, don’t we put that obligation at risk by making secret recordings of client conversations? What countervailing good do we serve by doing it?”
Smedley spoke. “As I said, I don’t like stuff these clients are saying. Questions they’re asking. Frankly, I need to protect myself.”
“Aren’t there better ways to protect yourself, as you put it? If the relationship is deteriorating to the point you think you need to tape their calls, maybe you should disengage.”
Smedley just shrugged.
“Let’s also consider the duty to keep a client reasonably informed about significant developments. Do any of us think that secretly recording a phone call is not significant? It’s certainly a development in the representation. I think rule 1.4 also has a role to play in this discussion.”
Smedley looked down at his hands.
“What about your duty of loyalty to these clients? How would they react if they learned of the secret recording?”
“Pissed.”
Macbeth nodded in agreement. “Rightly so.”
Smedley looked up. “So you think it’s wrong?”
“Given the rules and principles we considered, I think it’s unethical. Could a State Bar prosecutor make out a discipline case against you to a clear and convincing standard? Hard to say. Could one of your clients assert a breach of fiduciary duty claim against you, using the rules to define your duty to the client? More likely — in my view. Is there a single black-letter rule I can point to that says it’s verboten? As we saw, no. Yet I conclude it’s unethical for a California lawyer to do it — at least after November 1.”
Sara added: “As the ABA said in 2001, although it couldn’t reach a conclusion about the ethics of secretly recording a client’s call, the committee agreed it was inadvisable.”
Editor’s note: The ABA opinion to which Sara referred is Formal Opinion 01-422 (June 24, 2001), which cites some of the State and County Bar opinions on the subject. New and revised Rules of Professional Conduct are effective November 1, 2018, in California.
Edward McIntyre is an attorney at law and co-editor of San Diego Lawyer.
No portion of this article is intended to constitute legal advice. Be sure to perform independent research and analysis. Any views expressed are those of the author only and not of the SDCBA or its Legal Ethics Committee.
This article originally appeared in the
July/August 2018 issue of San Diego Lawyer.
When the new and revised Rules of Professional Conduct become effective on November 1, 2018, California will finally join the other 49 states which have already adopted some version of American Bar Association (ABA) Model Rule 4.1 “Truthfulness in Statements to Others.” California’s Rule 4.1 provides:
“In the course of representing a client a lawyer shall not knowingly:
