Professional Responsibility

Question 1

Concurrent Conflicts of Interest

Answer 1

A lawyer owes her client a duty of loyalty and must avoid conflicts of interest. A concurrent conflict of interest exists when there is a significant risk that the representation of a client will be materially limited by the lawyer’s personal interests or by the interests of another client, former client, or third person.

Question 2

Concurrent Conflicts of Interest (Exception)

Answer 2

Under the ABA rules, a lawyer may undertake a representation despite a concurrent conflict of interest if the lawyer reasonably believes that she can competently and diligently represent each affected client despite the conflict, and each affect client gives their informed, written consent. The California Rule is different in three respects: (1) it does not contain a “reasonable lawyer” standard; (2) it applies to potential as well as actual concurrent client conflicts; and (3) it only requires “written disclosure” to a client where the conflict arises out of the lawyer’s prior relationships or personal interests.

Question 3

Duty of Competence

Answer 3

In representing a client, the ABA Rules provide that a lawyer must act with the legal skill, knowledge, thoroughness, and preparation reasonably necessary for the representation. A lawyer may become competent in a certain field through adequate preparation. In California, a lawyer is subject to discipline if she “intentionally, recklessly, or repeatedly” fails to perform legal services with competence.

Question 4

Fee Agreement (CA non-contingent)

Answer 4

California requires a written fee agreement if the fee will exceed $1,000, except when: (1) the client is a corporation; (2) its for routines services of a regular client; (3) its an emergency; or (4) it is impractical. The ABA Rules do not require a non-contingent fee agreement to be in writing, although it is recommended.

Question 5

Failure to Report Ethical Violation

Answer 5

Under the ABA Rules, a lawyer who knows that another lawyer has committed a violation of Rules that raises a substantial question as to that lawyer’s honesty, trustworthiness, or fitness as a lawyer must inform the appropriate professional authority. There is no corresponding California rule.

Question 6

Advancing Litigation Fees and Personal Loans (ABA)

Answer 6

The ABA rules prohibit a lawyer from providing financial assistance to a client in connection with pending or contemplated litigation, except that: (1) a lawyer may advance court costs and expenses of litigation, the repayment of which may be contingent on the outcome of the matter; and (2) a lawyer representing an indignant client may pay court costs and expenses of litigation on behalf of the client.

Question 7

Advancing Litigation Fees and Personal Loans (CA)

Answer 7

The CA rule is similar to the ABA, but it is different in three aspects: (1) the CA rule applies in all contexts, not just litigation; (2) the CA rule prohibits a lawyer from “buying” a potential client with a promise to pay the potential client’s business debts; and (3) after the lawyer is hired, he may lend the client money for any purpose if the client gives him a written promise to repay the loan.

Question 8

Contingency Fee Agreement (Disclosure Requirements)

Answer 8

Any contingency fee agreement must indicate litigation and other expenses to be deducted from the recovery, and whether such expenses are to be deducted before or after the contingent fee is calculated.

Question 9

Accepting Settlement Offers

Answer 9

A client has the ultimate authority as to whether to accept a settlement offer. In the course of representing the client, the lawyer must act in the client’s best interest at all times.

Question 10

Consensual Sexual Relationships

Answer 10

Under the ABA rules, a lawyer must not have a sexual relationship with a client. This rule applies even if the relationship is consensual, and even if the client is not harmed. The sole exception to the rule is when the lawyer and client had a consensual sexual relationship before the lawyer-client relationship began. California does not prohibit sexual relationships between lawyer and client unless the lawyer: (1) demands sexual relations with the client as a condition of professional representation; (2) enters into sexual relations with the client by coercion or undue influence; or (3) represents the client incompetently because of the sexual relationship.

Question 11

Oral Fee Agreement

Answer 11

The ABA Rules do not require that a fee agreement be in writing, so an oral agreement is proper. However, the CA Rules require a written fee agreement if the fee will exceed $1,000, except when: (1) the client is a corporation; (2) its for routines services of a regular client; (3) its an emergency; or (4) it is impractical.

Question 12

Property for Services

Answer 12

A lawyer may accept property in return for services (e.g., an ownership interest in a business), provided that this does not involve a proprietary interest in the cause of action or subject of litigation. The lawyer’s acceptance of property in return for services is also subject to scrutiny as a conflict of interest because it may be a business transaction between the lawyer and client.

Question 13

Business Transactions Between Lawyer and Client

Answer 13

A lawyer must not enter into a business transaction with a client or knowingly acquire an ownership or other pecuniary interest adverse to a client unless: (1) the transaction and terms under which the lawyer acquires the interest are fair and reasonable to the client and are fully disclosed and transmitted in writing to the client in a manner that can be reasonably understood by the client; (2) the client is informed in writing of the desirability of seeking, and is given reasonable chance to seek, the advice of independent legal counsel on the transaction; and (3) the client understands the lawyer’s role in the transaction, including whether the lawyer is representing the client, and the client gives informed consent in writing.

Question 14

Reasonable Fee

Answer 14

Under the ABA Rules, a lawyer’s fee must be reasonable, taking into account a number of factors, including the amount of work required, the complexity of the matter, the lawyer’s skill and experience, and other factors. Under the CA Rules, a fee must not be “unconscionable,” that is, it must not shock the conscience.

Question 15

Using Information Against Former Client

Answer 15

Under the ABA Rules and CA case law, a lawyer who has formerly represented a client in a matter may not thereafter: (1) use information relating to the representation to the disadvantage of the former client, except as permitted or required by the Rules (e.g. relating to the confidentiality of information) or when the information has become generally known; or (2) reveal information relating to the representation except as permitted or required by the Rules.

Question 16

Duty of Confidentiality (Financial Loss Exception)

Answer 16

The ABA Rules provide that a lawyer may disclose information relating to the representation of a client to prevent the client from committing a crime or fraud that is likely to cause substantial financial loss to a person if the client is using or has used the lawyer’s services to commit the crime or fraud. California does not recognize an exception for financial loss.

Question 17

Reporting Organization / Corporate Violations

Answer 17

A lawyer who represents an organization must act in the best interest of the organization. If the lawyer learns facts that would cause a reasonable lawyer to conclude that someone associated with the organization is engaged in action, intends to at, or refuses to act in a manner related to the representation that is in violation of a legal obligation to the organization, or a violation of law that reasonably might be imputed to the organization, and if the violation is likely to result in substantial injury to the organization, the lawyer must proceed as is reasonably necessary in the best interests of the organization. Usually, this involves reporting the violation to a higher authority in the organization. If necessary, the lawyer must report it to the organization’s highest authority (e.g., a corporation’s outside directors).

Question 18

Reporting Organization / Corporate Violations (ABA)

Answer 18

The ABA Rules provide that if the lawyer reports the violation to the organization’s highest authority, but the highest authority fails to take timely, appropriate action, the lawyer may report the relevant information to appropriate persons outside of the organization. This is true even if the information would otherwise be protected by the duty of confidentiality. However, the lawyer’s authority to report to outsiders applies only to the extent that the lawyer reasonably believes that reporting is necessary to prevent substantial injury to the organization.

Question 19

Reporting Organization / Corporate Violations (CA)

Answer 19

The CA Rules prohibit a California lawyer from disclosing confidential information about the violation to an outsider, unless disclosure is necessary to prevent a criminal act that will cause death or substantial bodily harm to someone. In certain instances (e.g., reporting securities violations to the SEC), federal law will preempt this rule and outside reporting is permitted.

Question 20

Conflict of Interest Regarding Former Client

Answer 20

A lawyer who has formerly represented a client in a matter must not thereafter represent another person in the same or a substantially related matter in which that person’s interests are materially adverse to the interests of the former client unless the former client gives informed consent, confirmed in writing.