New California Rules: Where Will They Change?

The new California Rules of Professional Conduct are just over three months old. Aside from scattered murmurings of discontent, there is surprisingly little uproar.  A large number of lawyers seem blissfully unaware that there’s been any change at all in the landscape of their professional obligations.  That bliss will come to an abrupt end for some of them. There is a lot of new material to absorb; the new Rules with discussion are roughly three times longer than the former Rules.  There will undoubtedly revisions in the next few years, as with every edition of the Rules.

Three areas are the subject of some early dissatisfaction, one a sin of commision and two others by omission.

New Rule 3.3 – Candor to the Tribunal

There has apparently been some indignation about the application of new Rule 3.3 concerning candor to the tribunal in the context of ex parte applications. Enough such that it is rumored that The Supreme Court will be asked to change the rule. The new Rule 3.3(d) requires:

In an ex parte proceeding where notice to the opposing party in the proceeding is not required or given and the opposing party is not present, a lawyer shall inform the tribunal* of all material facts known* to the lawyer that will enable the tribunal* to make an informed decision, whether or not the facts are adverse to the position of the client.

That seems like longest of long shots at this point. If the new rules and be summarized in a phrase, it is that Rambo lawyering is long out of style in California, if it ever was. Coming of age in the courts of Los Angeles in the freewheeling 1980s certainly influences my view of this, which is that it is a very good thing. As a young habitué of law and motion departments in those freewheeling 1980s, the potential for abuse in the ex parte motion was not hard to see. And I think the California Supreme Court heartily agrees, as best as I can read their tea leaves.

No California Version of Model Rule 1.14 – Impaired Client

Some are more concerned with what was left out. California has no version of the American Bar Association (ABA) Model Rule 1.14, which address his clients with disabilities. It also has no version of ABA model rule 5.7, dealing with another hot topic, ancillary business activities conducted by lawyers.

Part of the reason that Model Rule 1.14 did not make the cut is that it touches the third rail of California ethical jurisprudence, confidentiality, in its section (c):

(c) Information relating to the representation of a client with diminished capacity is protected by Rule 1.6. When taking protective action pursuant to paragraph (b), the lawyer is impliedly authorized under Rule 1.6(a) to reveal information about the client, but only to the extent reasonably necessary to protect the client’s interests.

No matter their intentions, the Second Rules Revision Commission could not push beyond the envelope of the statutory sections that remain in the Business and Professions Code including California’s romantically uncompromising vision of client confidentiality in section 6068 (e) (“At every peril…an attorney shall maintain the confidences of the client…”) The archaic 19th century Field Code language that pervades the B&P Code shows no sign of being retired anytime soon, despite the fact that what were  “members” are now “licensees.”  The new California Rules have most of the moving parts to replace much of it, including Rule 8.4, which at this point seems largely useless in light of the statutes.

California’s approach to confidentiality is romantic but hardly realistic.  The Model Rules contain many common-sense exceptions to confidentiality that should be on the table, such as the compassionate and nuanced exception in Rule 1.4. But they are not and do not appear likely to be anytime soon.  But having witnessed at least two impossible things in my lifetime, I will not give up hope of seeing a third.

No California Version of Model Rule 5.7 – Law-Related Services

Model Rule 5.7 addresses the application of the Rules of professional conduct to the lawyer’s operation of a business that provides law-related services. the previous 2 commissions did undertake to revise California’s rules of professional conduct considered California versions of role 5.7 but ultimately chose not to recommend a rule. The Second Rules Revision Commission concluded that the nuances of the topic were already adequately addressed in California case law and other authorities. The model role provides that a lawyer providing law-related services, defined as services that could reasonably be performed in conjunction with legal services and that non-lawyers can perform, is subject to the rules when

(1) performed by the lawyer in circumstances that are not distinct from the lawyer’s provision of legal services to clients; or (2) in other circumstances by an entity controlled by the lawyer individually or with others if the lawyer fails to take reasonable measures to assure that a person obtaining the law-related services knows that the services are not legal services and that the protections of the client-lawyer relationship do not exist.

California case law and ethics opinions state subtly different definition than Model Rule 5.7, defining “non-legal” services  as “services that are not performed as part of the practice of law and which may be performed by non-lawyers without constituting the practice of law.”  Cal. State Bar Formal Ethics Opinion 1995-141. A subsequent State Bar opinion defined “non-legal” services “functional” terms: “is the lawyer performing a service that is performed as part of the practice of law and would constitute the [unauthorized] practice of law if performed by a non-lawyer? Cal. State Bar Formal Ethics Opinion1999-154. California discipline cases have uniformly held that a lawyer is subject to the rules whenever the lawyer performs any professional services of a fiduciary nature.  No California case law or ethics opinion has outlined the parameters of when a lawyer providing law-related services will not be subject to the Rules of Professional Conduct.

But things have changed even in a short time since the Second Rules  Revision Commission completed its work in 2017. The California State Bar has de-unified, spinning off many of its trade Association functions to the new California lawyers Association. The remaining entity is focused on protecting the public, but also focused on enhancing the delivery of legal services. The State Bar Board of trustees has created Task Force on Access Through Innovation of Legal Services (ATILS) in service of that second task, charged with “identifying possible regulatory changes to enhance the delivery of, and access to, legal services through the use of technology, including artificial intelligence and online legal service delivery models.”  ATILS is notable for being composed mostly of non-lawyers, with the explicit purpose “that the recommendations of the Task Force are focused on protecting the interests of the public.” ATILS mission statement includes evaluation of the extent to which non-lawyer ownership or investment in the entities providing legal services should be permitted by changing the current regulatory structure (e.g., California Rule 5.4, which prohibits non-attorney ownership.)  A similar re-evaluation on a national level is occurring with respect to ABA Model Rule 5.4, which is very similar, the so-called “fixing the fives” project which is being scrutinized by the Association of Professional Responsibility Lawyers (APRL) Alternative Business Structures/Multidisciplinary Practice/RPC 5.4 Subcommittee.  Although it might seem to be outside ATILS’s mission (encouraging lawyers to provide law-related services, as opposed to permitting non-lawyers to be more involved in providing legal and law-related services) the task force has expressed interest in the possibility of a California version of Model Rule 5.7 that might enhance the delivery of both to legal consumers, a topic to be discussed at their next meeting on February 28.

Every edition of the California Rules of Professional Conduct has been subject to some revision after a few years of life. These rules will be no exception. It is likely that the biggest changes will be forced by the accelerating transformation of the legal services marketplace. The anti-competitive aspects of some of the rules have been no secret for a long time. Recent developments make it apparent the lawyers are no longer in a position to successfully resist these changes.

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