By Carole J. Buckner
Partner & General Counsel, Procopio, Cory, Hargreaves & Savitch, LLP
The practice of a lawyer engaging in work on the side while employed by a law firm, sometimes referred to as “moonlighting,” raises legal ethics issues, potential discipline concerns and civil liability risks.
Legal malpractice insurance covering a lawyer’s work as an employee of the law firm will not cover the lawyer’s work outside the firm. The lawyer can obtain separate malpractice insurance, or may be added to the moonlighting employer’s malpractice insurance policy, but if the moonlighting lawyer works without malpractice insurance in excess of four hours, Rule 1.4.2 of the California Rules of Professional Conduct requires that the lawyer advise the client in writing upon engagement that the lawyer does not have professional liability insurance.
A moonlighting attorney is also at risk for professional discipline. Under Rule 8.4 of the California Rules of Professional Conduct provides it is professional misconduct to engage in dishonesty, fraud, deceit, or reckless or intentional misrepresentation. An attorney who represented clients on the side for his own personal benefit while employed full-time by a law firm was engaged in dishonesty when he failed to disclose the side practice to the firm and never received permission from the firm to retain his own clients. Maryland Atty Grievance Comm’n v. Carithers, 421 Md. 28 (2011). The moonlighting lawyer’s deposit of funds from those clients into his personal account also constituted theft, a crime, in violation of Rule 8.4(c), which makes criminal conduct reflecting adversely on the lawyer’s honesty and fitness a form of professional misconduct. In Carithers, the conduct resulted in disbarment.
An associate attorney who used firm resources to perform work for outside clients in violation of the firm’s policy was suspended from practice. Florida Bar v. Kossow, 912 So.2d 544 (FLA 2005). The court described his conduct as a “serious breach of his duty of loyalty to his law firm” violating Rule 8.4(c), noting that the associate was blatantly untruthful when confronted by the firm regarding his personally profitable endeavors.
An attorney engaged in side work is also at risk for civil liability. An associate who privately and secretly handled cases on the side while employed by a firm breached his fiduciary duty to the firm, and his ethical duty of honesty to his employer to not compete with the employer without the employer’s prior knowledge. Prince, Yeates & Geldzahler v. Young, 2004 UT 26 (2004). The court ordered the moonlighting lawyer to disgorge to the firm the fees earned from the side work.
Assuming the above issues are properly addressed by firm consent and appropriate insurance disclosure, an attorney doing side work must also continue to comply with all Rules of Professional Conduct, including those governing conflicts of interest, Rule 1.7 and Rule 1.9. A moonlighting attorney must assure that any moonlighting work does not conflict with that of the attorney’s employer. See, Cal. State Bar Formal Op. 2004-165, 5 (2004).
Tackling the ethical issues involved in moonlighting in advance will avoid discipline and civil liability.