State Bar Sues for Operating Uncertified Legal Referral Service

The State Bar of California has filed an action in San Francisco Superior Court alleging that is operating as an uncertified legal referral service.

This comes after the California Supreme Court’s denial of’s petition for review of the Court of Appeal decision in Jackson v. on March 11, 2020.

It also comes after has been operating for more than 20 years.  After a brief flurry of activity in the late 1990’s, the State Bar ignored uncertified legal referral services and and many similar businesses have operated with impunity.  No longer.  Mr. Jackson and the Court of Appeal have forced the State Bar’s hand, with some nudging from the Supreme Court.

Attached to the complaint as Exhibit A is a letter to dated March 31, 2020, from Alison Lippa, Assistant General Counsel of the State Bar.  It details’s failed efforts to submit an application to become a certified legal service after the Jackon decision came down, efforts that failed in part because of the requirement that lawyers who participate in a certified legal referral service have malpractice insurance.  It also references an earlier exchange of correspondence between Leah Wilson, former Executive Director of the State Bar, and, where sought assurances that lawyers who accepted referrals would not be subject to State Bar discipline.  Ms. Wilson, pointedly, could offer no such assurance.

Lawyers who accept referrals from an uncertified legal referral service could be subject to discipline under several legal theories.  Business and Professions Code section 6155(a) says that no lawyer shall accept referrals from an uncertified legal referral service.  A violation of that section could be prosecuted as a violation of Business and Professions Code section 6068(a), the “gateway” statute that says that it is an attorney’s duty to support the law (see In the Matter of Lilley (Review Dept. 1991) 1 Cal. State Bar Ct. Rptr. 476.)  Such a referral might also violate Business and Professions Code section 6152, which prohibits capping, again through 6068(a) gateway.  This stature also makes capping a crime.  Finally, Rule of Professional Conduct 7.2(b) prohibits payment “for the purpose of recommending or securing the services of the lawyer or the lawyer’s law firm” subject to an explicit exception for payment to a certified legal referral service (Rule 7.2(b)(2).)

Will the State Bar’s Office of Chief Trial Counsel (OCTC) actually prosecute lawyers for participating in uncertified legal referral services?

It did in the 1990s;  those cases were all settled for reproval level discipline, all but one private reprovals.

It may again.  It can’t be ruled out, especially given the recent zeal displayed by OCTC in seemingly trivial matters.  In the words of one State Bar discipline defense attorney, “no fish is too small to fry.”  Perhaps they will merely rely on the in terrorem effect of the recently filed action against  OCTC is largely moved by complaints and few, if any, complaints are made that involve uncertified legal referral services. But OCTC is not limited to complaints and can open its own investigations, dubbed SBIs, for “State Bar Investigations.”  Discovery in the action might yield a list of potential targets and a few might be prosecuted, just to put some teeth into that in terrorem effect.

In the meantime, lawyers who use these services are assuming the risk, a risk difficult to quantify.


Reinstatement: A Notable Dissent That Few Will Note


On March 25 ,2020, the California Supreme Court denied a petition for review of a State Bar Court decision in a reinstatement case filed by former attorney Stephen J. Liebb.  That in itself is unremarkable;  the Supreme Court denies most petitions for review of State Bar Court decisions.  Liebb is notable because Justices Liu and Cueller would have voted to accept Mr. Liebb’s petition and filed a statement of dissent. It is a little hard to read on the Court website, so it is reproduced below.

The issue is when Mr. Liebb’s rehabilitation clock begins to run.  The State Bar Court did not give Mr. Liebb credit for his good works done while serving time in prison for first-degree murder, citing the Court’s decision in In Re Menna (1995) 11 Cal.4th 975, 989 for the proposition that his clock doesn’t begin to run until his release from prison.  The Review Department, like the hearing judge, found the 13 months between his release and the reinstatement hearing insufficient to find a “sustained period of exemplary conduct”, the formula articulated in Menna required to establish rehabilitation.

What is notable is that two justices were willing to revisit that part of Menna that had been regarded as black letter law.  Of course, only the Supreme Court can do that.  The context is that the Supreme Court has granted very few petitions for review from any decisions of the State Bar Court since the California Rules of Court were revised in 1992.  Sometimes it seemed like they had exited the field altogether.  It is good to know that they haven’t, even if Liebb’s case did not make the cut.

The request for judicial notice is granted. Liu and Cuéllar, JJ., are of the opinion the petition should be granted.

DISSENTING STATEMENT BY LIU, J. In 1983, when petitioner Stephen Liebb was 26 years old, he was convicted of first degree murder and assault with a deadly weapon. Liebb, who was a lawyer at the time, resigned from the State Bar with disciplinary charges pending. In prison, Liebb turned his life around. He maintained a discipline-free record for three decades, participated in a dozen rehabilitative programs, obtained an associate’s degree, and provided legal assistance to fellow inmates. In all, Liebb spent 31 years in prison and three years on parole, which he completed early. Upon release, he continued his rehabilitation by volunteering with a law school organization and working at nonprofit organizations dedicated to helping the formerly incarcerated reenter society. In 2017, 36 years after committing his crimes, Liebb sought reinstatement to the bar. The Hearing Department of the State Bar Court (Hearing Department) found that “[e]vidence of [Liebb’s] rehabilitation is most compelling and impressive. He has taken responsibility for his life and past misconduct; he has resurrected himself into a trustworthy, law-abiding and conscientious member of the community.” Nonetheless, it denied his reinstatement on the ground that he had not demonstrated exemplary conduct for a sufficient period of time. The court declined to credit Liebb’s decades of rehabilitation efforts while in custody and considered only the 10 months between his discharge from parole and the filing of his reinstatement petition. The State Bar Court Review Department (Review Department) affirmed the denial on the same grounds, stating that Liebb’s more than three decades of rehabilitation in custody was entitled to “little weight.”

Our law has not applied such a draconian approach. We have said that evidence of conduct ordinarily required of inmates and parolees does not rise to the level of “exemplary conduct” necessary to show rehabilitation. (In re Gossage (2000) 23 Cal.4th 1080, 1096 (Gossage).) But that proposition, even if correct, does not address the situation here, where there is persuasive evidence that Liebb has demonstrated rehabilitative efforts in custody that go well beyond the conduct ordinarily required of inmates and parolees. Moreover, there are reasons to doubt that a decades-long record of ordinary good behavior in custody should be treated with greater skepticism than noncustodial good behavior, at least with respect to life inmates who have served sentences as long as Liebb has served. The compelling record in this case presents an opportunity to address what weight an applicant’s rehabilitation while in custody may be given in reinstatement proceedings, an issue we have not addressed in 20 years. Much has changed in those 20 years. Thousands of inmates have served long sentences, and many now have realistic hopes of release. Our Legislature has ameliorated the collateral consequences of a criminal conviction, allowing formerly incarcerated persons to serve on juries (Stats. 2019, ch. 591, § 1), to have a fair shot at employment (Stats. 2017, ch. 789, § 2), and to seal their records (Stats. 2019, ch. 578, § 7). Our electorate has recognized that rehabilitative behavior in custody may lead to sentencing reductions. (Cal. Const., art. 1, § 32, added by initiative, Gen. Elec. (Nov. 8, 2016), commonly known as Prop. 57.) I would grant review to consider when the legal profession may also afford second chances to formerly incarcerated individuals with compelling records of rehabilitation in custody.

Stephen Liebb’s past misconduct was as egregious as his subsequent redemption has been remarkable. In 1981, Liebb, then 25, had recently graduated from UCLA School of Law and become a member of the California bar. He began having disagreements with the landlord of his apartment, who was also the father of his friend Michael Diller. After several violent outbursts in which Liebb assaulted Michael’s brother and an employee in the apartment’s management office, Liebb confronted Michael and plunged a knife into his chest, killing him. Liebb was convicted of first degree murder and assault with a deadly weapon. He was sentenced to 26 years to life imprisonment with the possibility of parole. In 1983, Liebb was placed on interim suspension from the State Bar pending the final disposition of his criminal proceedings, and in 1989, he voluntarily resigned from the State Bar. While incarcerated, Liebb’s record was free of violence since 1989 and, according to the Hearing Department, “excellent since 1991.” He underwent psychological therapy to deal with his anger management issues. Liebb completed 12 rehabilitation programs and classes involving individual and group therapy and self-help treatment. He also completed a three-year paralegal program and received an Associate of Arts degree from a college program run by the Prison University Project. Throughout his participation in these programs, Liebb received overwhelmingly laudatory reports from program supervisors, teachers, and corrections officers. Liebb also assisted fellow inmates with legal work, helping them prepare habeas petitions, file civil rights lawsuits, and secure new parole hearings. In 2012, Liebb was granted parole after six previous denials. The parole board (Board) weighed the severity of his crimes against his age and progress toward rehabilitation, and concluded that Liebb no longer posed a danger to public safety. The Board considered the facts that Liebb was 56 at the time of the hearing, that he demonstrated genuine remorse, that he presented a low risk of violence to society, and that he had been free of discipline for 21 years in prison. He was released on parole in October 2013. On parole, Liebb continued his rehabilitation. He attended anger management classes and Alcoholics Anonymous meetings five days a week, participated in a mentorship program for recently released individuals, and attended weekly therapy sessions. In 2016, Liebb began working as a law clerk. Since then, he has also worked for two nonprofit organizations dedicated to assisting former inmates reintegrate into society, and he has volunteered with San Francisco Public Works and University of California Hastings College of the Law. Liebb was discharged from parole four years early in November 2016, which, according to expert testimony cited by the Hearing Department, “indicates, in the eyes of the parole board, that [Liebb] poses zero risk to public safety.” In support of his good moral character, Liebb presented an “impressive array of 17 highly reputable character witnesses credibly attesting on his behalf, ” including his employers and attorneys who knew him personally. The Hearing Department also found that Liebb had expressed remorse for his crimes and, as required by the rules governing reinstatement, possessed the present ability and learning in the general law. The Hearing Department “commend[ed] Petitioner’s tremendous efforts in successfully integrating into society and commitment to making amends for his crime.”

Nonetheless, the Hearing Department denied reinstatement on the ground that Liebb had not “shown exemplary conduct over an extended period of time since his discharge from supervised release in November 2016.” It declined to credit Liebb’s years of rehabilitation in prison and on parole because ” ‘[g]ood conduct is normally demanded of a prisoner and a parolee.’ (In re Menna [(1995)] 11 Cal.4th [975, ] 989.) ‘It is not enough that [Petitioner] kept out of trouble while being watched on probation; he must affirmatively demonstrate over a prolonged period his sincere regret and rehabilitation.’ (Seide v. Committee of Bar Examiners (1989) 49 Cal.3d 933, 939.)” The Review Department affirmed, stating that “little weight can be placed on good conduct while in prison for the purposes of showing rehabilitation in State Bar matters.” II. In California, a petitioner for reinstatement to the practice of law who previously had been disbarred or resigned with disciplinary charges pending must (1) pass a professional responsibility examination within one year prior to filing the petition; (2) establish rehabilitation; (3) establish present moral qualifications for reinstatement; and (4) establish present ability and learning in the general law by providing proof of taking and passing the Attorneys’ Examination within three years prior to the filing of the petition. (Rules Proc. of State Bar, rule 5.445.) There is no dispute that Liebb has fulfilled the first and fourth requirements. Only his rehabilitation and present moral qualifications are at issue. The Hearing Department and Review Department relied on a line of cases from this court to conclude that Liebb’s rehabilitation in custody was entitled to little or no weight. (See Gossage, supra, 23 Cal.4th at p. 1099; In re Menna, supra, 11 Cal.4th at p. 989 (Menna); Seide v. Committee of Bar Examiners, supra, 49 Cal.3d at p. 939 (Seide); In re Giddens (1981) 30 Cal.3d 110, 116 (Giddens).) But those cases do not establish such a broad rule; instead, they stand for the proposition that evidence of conduct ordinarily required of inmates and parolees usually does not rise to the level of “exemplary conduct” necessary to show rehabilitation. (Gossage, at p. 1096.) They do not suggest that evidence of rehabilitative efforts above and beyond the conduct ordinarily required in custody must or should be discounted. We first suggested that conduct ordinarily required of individuals in custody should be discounted in Giddens, supra, 30 Cal.3d 110, where we ordered the disbarment of an attorney for financing a months-long scheme to sell amphetamines. (Id. at p. 113.) At the time of the hearing, he had served two years in prison and was on parole. (Id. at p. 112.) Weighing the severity of the crime against mitigating factors, this court concluded that the attorney should be disbarred. (Id. at pp. 115-116.) We stated that although the attorney could apply for reinstatement at a later date, on the record before us “[t]he lack of any extenuating circumstances surrounding the misconduct convinces us that further proof is needed of the requisite ‘standard of fitness’ during a period when petitioner is neither on parole . . . nor under supervision of the bar.” (Id. at p. 116.) We did not explain our reasoning for this limitation.

This court offered somewhat more elaboration in Seide, supra, 49 Cal.3d 933, where we denied an applicant admission to the bar for multiple arrests and convictions for drug trafficking over a seven-year period, including when he was in law school and studying for the bar. (Id. at p. 936.) At the time of his State Bar hearing, five years after the commission of his last crime, the petitioner had served a sentence of 147 days in prison and was still on federal probation. (Id. at pp. 935-936.) He presented no evidence of rehabilitation while incarcerated. As evidence of his rehabilitation on probation, the petitioner showed that he had started a family, stayed out of prison, and found employment. But we afforded these achievements little weight, stating that they ” ‘fail[] to indicate the type of rehabilitation normally expected in this type of case. The majority of [petitioner’s] post-incarceration activities constitute what is ordinarily expected as a member of society.’ ” (Id. at p. 941.) The evidence the petitioner provided did not demonstrate that his conduct was above and beyond the ordinary. In Menna, supra, 11 Cal.4th 975, we declined to admit an applicant to the State Bar who, over a period of three years, engaged in compulsive gambling, misappropriated his clients’ funds to pay off his gambling debts, and manufactured methamphetamine for sale. When the petitioner applied for admission to the California State Bar after being permanently disbarred from New Jersey, it had been eight years since his last conviction and five years since he completed probation for that conviction. (Id. at pp. 980-981.) While incarcerated, the petitioner had organized and led a weekly Gamblers Anonymous meeting and continued to attend such meetings after his release. (Id. at p. 981.) But we declined to credit those three years in prison and on parole, stating that “[g]ood conduct is normally demanded of a prisoner and a parolee.” (Id. at p. 989, citing Seide, supra, 49 Cal.3d at p. 939, Giddens, supra, 30 Cal.3d at p. 116.) Most recently in Gossage, supra, 23 Cal.4th 1080, we declined to admit an applicant to the State Bar who had a nine-year-long history of drug, forgery, theft, and driving offenses, as well as a voluntary manslaughter conviction for killing his sister. (Id. at pp. 1084-1093.) The Review Department credited the petitioner with a 14-year period of rehabilitation between the time he entered prison for his last offense and the time he appeared for his State Bar hearing. (Id. at p. 1099.) The petitioner had spent two of those years in prison and on parole, and had subsequently “repeatedly violated state traffic laws and sustained several misdemeanor convictions for mishandling [those] matters in court.” (Id. at p. 1088.) The petitioner did not submit any evidence of rehabilitation while in custody, except that it was in prison that he vowed to become sober. Unlike the Review Department, we did not credit the petitioner’s years in prison or on parole, stating that “[s]ince persons under the direct supervision of correctional authorities are required to behave in exemplary fashion, little weight is generally placed on the fact that a bar applicant did not commit additional crimes or continue addictive behavior while in prison or while on probation or parole.” (Id. at p. 1099, citing Menna, supra, 11 Cal.4th at p. 989, Seide, supra, 49 Cal.3d at p. 941.) Moreover, we noted that the petitioner violated probation and accrued a number of driving offenses after his release. (Gossage, at p. 1099.)

None of the above cases held that any rehabilitative conduct in custody must be discounted in the reinstatement analysis. They concluded only that behavior consistent with the minimum requirements of custody is usually not evidence of the rehabilitation necessary for readmission to the bar because readmission requires demonstration of conduct above and beyond what is required. Our decisions said that not much weight can be given to ” ‘activities [that] constitute what is ordinarily expected as a member of society’ ” (Seide, supra, 49 Cal.3d at p. 941), behavior “normally demanded” of a person in custody (Menna, supra, 11 Cal.4th at p. 989), or the fact that a petitioner did not “commit additional crimes or continue addictive behavior” (Gossage, supra, 23 Cal.4th at p. 1099). But our cases did not discount good conduct above and beyond that which is ordinarily required of inmates and parolees. We had no occasion to consider such conduct because none of the petitioners in the cases above submitted substantial evidence of such conduct. Liebb’s crimes are more serious than the petitioners’ offenses in these previous cases. None of those petitioners committed first degree murder. But Liebb has also submitted overwhelming evidence of an unbroken decades-long path of affirmative conduct demonstrating his rehabilitation beyond that of an ordinary prisoner or parolee. His completion of a dozen self-help programs and academic degrees, his legal assistance to inmates, and his volunteer work on parole and early discharge from parole seems as exemplary as it gets for an individual in his circumstances. The Review Department disagreed, explaining that his programming in prison cannot be considered because “the Board required the positive programming he engaged in while in prison as a condition for his release.” But this reasoning moves the goalposts for what is required of inmates. Conditions for early release, which an inmate need not fulfill, differ from the rules and regulations that all inmates must follow. In any event, the Hearing Department indicated that Liebb exceeded even the requirements for release, noting that “[t]he Board later found him to have far exceeded the standard of rehabilitation.”

Moreover, it is significant that Liebb’s incarceration and record of affirmative good conduct in custody was far lengthier than those of the petitioners in the previous cases. (See Giddens, supra, 30 Cal.3d at p. 112 [two years in prison, two years on parole]; Seide, supra, 49 Cal.3d at p. 936 [147 days in prison, five years on probation]; Menna, supra, 11 Cal.4th at p. 980 [one year in prison, two years on parole]; Gossage, supra, 23 Cal.4th at pp. 1086-1087 [one year in prison, one year on parole].) Although avoiding discipline during a brief period of incarceration may have limited value as evidence of rehabilitation or good moral character, I do not think the same can be said of three decades of rehabilitative behavior comprising, in Liebb’s case, more than half of his life at the time of his release on parole. In sum, Liebb has shown compelling evidence of rehabilitation through decades of concerted effort, exemplary behavior, and positive contributions to his community both in and out of custody. He does not resemble the petitioners in our prior cases, and what we said in those cases does not address Liebb’s circumstances. III. The Review Department said that “[g]iven Liebb’s grievous misconduct, a longer period of time is required” after his discharge from prison and parole, and that despite Liebb’s remorse and rehabilitation efforts, “[a] truer indication of Liebb’s rehabilitation will be if he can demonstrate exemplary conduct over an extended period of time that establishes his moral fitness to practice law.” I recognize that the rehabilitation necessary to practice law may be greater than the rehabilitation necessary to be released from prison. But it is unclear what additional time would reveal about Liebb’s moral fitness that he has not already demonstrated. Liebb was 62 at the time of his hearing; almost 40 years have elapsed since he committed his terrible crimes; and Liebb has spent more than three decades in continuous efforts to rehabilitate himself, to “mak[e] amends for his crime, ” and to “successfully integrat[e] into society.” As the Hearing Department found, “He has taken responsibility for his life and past misconduct; he has resurrected himself into a trustworthy, law-abiding and conscientious member of the community.” Would another three, four, or five years of programming, steady employment, or community service – against the backdrop of Liebb’s “most compelling and impressive” rehabilitation efforts over more than three decades – tell us much more about his character than the record already shows? The Review Department provided no clear answer to this question. It did not dispute the hearing judge’s finding that “Liebb demonstrated remorse for his crimes and his victims.” The Review Department’s decision asserts that Liebb’s therapy and programming in prison, while “contribut[ing] substantially to his personal well-being, ” “do not demonstrate truly exemplary conduct in the sense of returning something to the community Liebb harmed.” But it is not clear why Liebb’s comprehensive record of therapy and self-help programming, even if focused on bettering himself, should not count as rehabilitative; indeed, Liebb’s serious and sustained engagement with therapy and programming while in prison seem paradigmatically rehabilitative. In any event, contrary to any suggestion that Liebb has not returned something to the community, the record is replete with evidence of Liebb’s volunteer and community service activities both in and out of prison. The Review Department merely recited these activities without considering them in its analysis.

The Review Department also noted that “Liebb has not continued anger management therapy after his release from supervised parole, which is important because it directly addresses his past violent criminal misconduct.” But any suggestion that Liebb may still pose a danger to the public is belied by the record. As the Hearing Department noted, Liebb had been violence-free since 1989, the Board found that he “presented a relatively low risk of violence in the free community, ” and an expert observed that Liebb’s “early discharge from parole indicates, in the eyes of the parole board, that Petitioner poses zero risk to public safety.” The Review Department did not address these facts. In sum, the Review Department did not explain how further indicia of rehabilitation over “a longer period of time” would materially alter the present portrait of this applicant. To be sure, the length of time since an individual’s misconduct is a consideration relevant to reinstatement. (See Gossage, supra, 23 Cal.4th at p. 1096 [“Cases authorizing admission on the basis of rehabilitation commonly involve a substantial period of exemplary conduct following the applicant’s misdeeds.”].) The more time that has elapsed since a person’s misconduct, the more confident one can be that the person has reflected on past wrongs and has changed, and “the more serious the misconduct . . . , the stronger the applicant’s showing of rehabilitation must be.” (Ibid.) But, as the Hearing Department observed, Liebb “has gone through a process of reformation and transformation. He is not the same person as he was in 1981, almost 37 years ago . . . . He has clearly now matured. He is one of the convicted who has so much to teach society about rehabilitation and redemption – what it takes to be a person again and give back to society.” Whatever the ultimate merits of Liebb’s reinstatement petition, I would grant review to address the important legal question this case presents: whether a reinstatement petitioner’s exceptional efforts devoted to rehabilitation must be discounted or ignored because they were made while in prison and on parole.

Separate and apart from the fact Liebb’s good conduct has gone well beyond what is ordinarily required in prison or on parole, I have doubts about discounting a petitioner’s good conduct in custody even if such conduct is ordinarily required. As noted, our cases have relied on the unexamined rationale that because good behavior in a custodial setting is mandatory, it is not probative of good moral character. This proposition seems questionable on several grounds. First, it is not clear what evidence supports the assertion that an inmate who displays good behavior in prison does so only because the rules require him to do so, and not because the inmate’s compliance is indicative of rehabilitative progress. A different view is that inmates, especially those with long prison terms, demonstrate good behavior not simply because they are supervised, but because over time they have “progressed through phases of increased conscience, remorse, self-discovery, and redemption through service to others.” (Kreager & Kruttschnitt, Inmate Society in the Era of Mass Incarceration (2018) 1 Annual Review of Criminology 261, 269.) Indeed, the “bad man” theory of compliance (Holmes, The Path of the Law (1897) 10 Harv. L.Rev. 457, 461) seems at odds with the basic penological principle that incarceration, among its many goals, serves to rehabilitate the offender.

Second, as the Hearing Department recognized, maintaining a discipline-free record is “difficult to do . . . in a prison setting.” Given the restrictive rules of prison and the myriad ways those rules can be violated (see People v. Contreras (2018) 4 Cal.5th 349, 378-379), it is all the more remarkable when an inmate avoids violence and other rule infractions while in custody for as long as Liebb did. Indeed, there is widespread agreement in the penological literature that opportunities and incentives for violence and misconduct abound in prison. (See Cochran & Mears, The Path of Least Desistance: Inmate Compliance and Recidivism (2017) 34 Just. Q. 431, 435; Bottoms, Interpersonal Violence and Social Order in Prisons (1999) 26 Crime & Just. 205, 241; Robertson, The Constitution in Protective Custody: An Analysis of the Rights of Protective Custody Inmates (1987) 56 U.Cin. L.Rev. 91, 93-94; see also Farmer v. Brennan (1994) 511 U.S. 825, 858-859 (conc. opn. of Thomas, J.) [“Prisons are necessarily dangerous places . . . . Regrettably, ‘[s]ome level of brutality and sexual aggression among [prisoners] is inevitable no matter what the guards do . . . .’ “].) Prison environments and their accompanying dangers often cause inmates to resort to violence to protect themselves or to assert social dominance, making brutality a common occurrence. (See Irwin, The Warehouse Prison: Disposal of the New Dangerous Class (2005); Rhodes, Total Confinement: Madness and Reason in the Maximum Security Prison (2004); Adams, Adjusting to Prison Life (1992) 16 Crime & Just. 275; Levin, Fight, Flee, Submit, Sue: Alternatives for Sexually Assaulted Prisoners (1985) 18 Colum. J.L. & Soc. Probs. 505, 508-509.) Underground economies involving the sale of drugs, cell phones, and other contraband create webs of exploitation and debts enforceable by violence. And understaffing and overcrowding have made these problems worse. (See Brown v. Plata (2011) 563 U.S. 493, 520 [noting that overcrowding in California prisons “promote[s] unrest and violence, making it difficult for prison officials to monitor and control the prison population”].) A clean record is therefore difficult for any prisoner to maintain. The fact that Liebb managed to do so for 21 years, including periods when his prisons (Corcoran and San Quentin) were badly overcrowded, seems quite probative of his character, separate from the positive programming he completed over those years.

Similarly, we have “recognize[d] the difficulties an exconvict faces in assimilating himself back into society.” (Seide, supra, 49 Cal.3d at p. 938.) Parole involves a high-supervision environment and strict rules of conduct that are easy to violate. (Hyatt & Barnes, An Experimental Evaluation of the Impact of Intensive Supervision on the Recidivism of High-Risk Probationers (2017) 63 Crime & Delinq. 3, 5-6, 26.) I do not see why Liebb’s spotless record on parole – which, along with his steady employment and community service activities, earned him an early discharge – should not be considered as evidence of rehabilitation in the reinstatement analysis. It is notable that several other jurisdictions give consideration to in-custody rehabilitation efforts in the bar reinstatement context. They have either expressly stated that good conduct while in custody is entitled to some weight (Statewide Grievance Comm. v. Ganim (2014) 311 Conn. 430, 467, fn. 35 [87 A.3d 1078]), or they have regarded such conduct to be so obviously relevant that they have considered the conduct without comment (Matter of Simmons (2018) 190 Wn.2d 374, 390 [414 P.3d 1111]; In re Cooke (2012) 425 Md. 652, 690 [42 A.3d 610]; In re Reinstatement of Ditrapano (2018) 240 W.Va. 612, 618 [814 S.Ed.2d 275]; Application of Rowell (1988) 305 Or. 584, 592 [754 P.2d 905]; In re Manville (D.C. 1988) 538 A.2d 1128, 1135). These decisions, several of which postdate Gossage, provide further context for why I believe this case presents an appropriate occasion for us to reexamine the relevance of in-custody rehabilitation for bar proceedings in our state. V. Liebb’s record of rehabilitation is compelling, and the Hearing Department and Review Department denied Liebb’s reinstatement petition on the sole ground that he had not shown a sufficient period of rehabilitation outside of custody. I would grant review to consider what weight may be given to his lengthy rehabilitation while in custody and under supervision in assessing his application for reinstatement to the State Bar. In light of the court’s denial of review, I note that it has now been more than three years since Liebb was discharged from parole and nearly two years since he was denied reinstatement by the Hearing Department. Liebb may reapply for reinstatement two years following the effective date of an adverse decision. (Rules Proc. of State Bar, rule 5.442(c).)


Client’s Mere Acknowledgement Insufficient to Satisfy Fee Splitting Rule

Reeve v. Meleyco, Third App. Dist., case no. C085867, filed 3/24/20.  Client contacts lawyer 1 about a serious traffic accident inuring the client’s wife and child.  Client and lawyer 1 meeting with lawyer 2 about the case and discuss a division of fees, 35% to lawyer 1.  Lawyer 2 and client sign a fee agreement without any discussion of the fee division.  Lawyer 1 continues to work on the case. Client becomes nervous that he will have to pay lawyer 1 in addition to paying lawyer 2 his contingent fee.  Lawyer 2 sends client a document that asks him to certify his “understanding” that lawyer 1 would receive 25% of the fees and that the total fee would not be increased because of the division.  Client signs the following acknowledgment “I, [client], acknowledge receipt of this letter and understand the contents.”  The case settles, the money is disbursed but lawyer 1 is not paid.  He files an action against lawyer 2 and recovers a judgment based on breach of the fee splitting agreement and quantum meruit.  On appeal, the judgment is reversed. The Court of Appeal finds the fee-splitting agreement is unenforceable because the client did not expressly approve the terms of the division, as required by former Rule of Professional Conduct 2-200 (now Rule 1.5.1. It also found that the quantum meruit claim was barred by the two-year statute of limitations (Code Civ. Proc. §339.)

ATILS Shrugged



On March 12, 2020, the Board of Trustees of the State Bar of California voted to shelve consideration of most of the proposals contained in the final report of the State Bar’s Task Force on Access Through Innovation of Legal Services (ATILS).  Among the most heralded of those proposals was the the so-called “sandbox”, a program that would relax regulatory standards for certain projects designed to test the efficacy of innovation in the delivery of legal services, including their potential for harm to the public.  The exact nature of these sandbox proposals was not precisely defined but presumably with revolve around one or more of these three axes – non-attorney ownership of legal service providers, relaxed unauthorized practice of law of rules, and commodification of legal services through technological platforms.  Utah and then Arizona had adopted the sandbox concept.  ATILS did not in its initial set of recommendations released for public comment in July 2019.  Those recommendations prompted a tsunami of negative comment, mostly from practicing lawyers. and largely about the proposed changes to Rule 5.4, the rule forbidding non-lawyers from owning a stake in law firms or dividing fees with lawyers

This seemed to be a surprise to the advocates of legal reform.  But it should not have been.  The crisis in “PeopleLaw” sector, to use Prof. Henderson’s nomenclature, is not only about clients who can’t get access to justice but about lawyers who can’t make a living serving those markets.  Opening up PeopleLaw to competitors fired with non-lawyer investment would make even more difficult for these lawyers to compete.  Not being able to beat them, they would be compelled to join them, becoming employees in larger, more bureaucratic legal service providers designed around efficiency, at less compensation with no control over their working conditions.  A similar path to that followed in recent decades by our fellow professionals in the medical field.

Moreover, ATILS did not present much evidence to support its view that relaxation of ownership rules would decrease the costs of legal services.  The evidence it did marshall was a law review article examining the implementation of “Alternative Legal Structures” in Great Britain which found that most non-lawyer investment went not to grossly underserved PeopleLaw sectors like family law but to areas that were much more lucrative like personal injury, products liability and mass torts (Robinson When Lawyers Don’t Get All The Profits, 29 Georgetown Journal of Legal Ethics 1.

Not exactly a surprise; investors, like Willy Sutton, go where the money is.

Sally and Johnny pondering the use of dispute resolution software platforms for in pro per marital dissoution litigants.

Hence, the sandbox, a safe space where entrepreneurs would be allowed to develop the evidence supporting the structural change advocated by the legal reformers. It is a curious concept, and not only the name, which conjures up children engaged in enjoyable frivolity. Perhaps this is meant to evoke the child-like creativity of the entrepreneurs who will find use it to find new ways to deliver legal services at low cost, without much need for expensive lawyers.  It falls into place a little more neatly when you learn that “sandbox” is a software development jargon:  “A sandbox is a testing environment that isolates untested code changes and outright experimentation from the production environment or repository, in the context of software development including Web development and revision control” as defined by Wikipedia.  The ATILS proposals are being pushed by the tech industry and software developers are very clearly in touch with their inner children.

Which is part of why they are going nowhere, for now. Certainly, the intervention of Covid 19 pandemic played a part in putting the “sandbox” on hold.  But the backdrop is a growing disillusion with technology and its alleged benefits, growing skepticism that the tech industry really has society’s best interests at heart.  Disruptive technologies have made people fearful, not more secure.

At some point, the “sandbox” is probably inevitable and a good thing.  There is no path backwards for lawyers, only forward, and that path is not going to be easy. Technology products may help to bring down the costs of some legal services (see Sally and Johnny, above.) Limited license practitioners could bring down the costs of routine services as well.  Legal education may transform itself into practical training without the academic excesses that make it needlessly expensive.  Lawyering is not going to be the same; it will be smaller, more focused, less independent. It’s been moving that way for some time now. The challenge is preserving some shreds of humanity amid the economic pressure to commodify and tech-up.  For that reason alone, tapping the brakes on dramatic restructuring of the profession is a good thing.

Unicorn Sighting: Discipline for Conflict of Interest

It is has been an item of conventional wisdom that conflicts of interests, while presenting many interesting ethical issues, are mostly dealt with through civil remedies, such as disqualification and actions for breach of duty, not discipline.  This is evidenced by a relative paucity of discipline case law dealing with conflict of interest, at least with types of conflict of interest addressed by Rule of Professional Conduct 1.7 and its forbearer, former Rule 3-310. A recent unpublished case from the Review Department runs against the conventional wisdom;  unicorns, it seems, do exist.

In the Matter of Foster, filed 3/16/20, is not a precedential decision, being public but not “published” under State Bar Rule of Procedure 1.159  but follows in the wake of a published Court of Appeal decision Knutson v. Foster (2018) 25 Cal.App.5th 1075.  The Review Department succinctly summarized the underlying facts.

Respondent Richard James Foster is charged with multiple counts of professional misconduct involving conflicts of interest arising from his representation of a professional swimmer and his failure to provide her with written disclosure of his relationships in the professional swimming world. Foster’s client was in a contract dispute with USA Swimming, an organization within which Foster maintained close professional relationships. He also previously represented the USA Swimming coach who tendered the contract offer to his client.

The Court of Appeal reversed the trial court’s granting of Foster’s motion for a new trial, finding ample evidence that Foster’s conflicts of interest in led to young swimmer Knutson’s damages, including emotional distress damages suffered when she learned that he lawyer had betrayed her in negotiating a settlement with a party that Foster’s had formerly represented, including revealing her confidential information and taking actions to actively assist the other party to the settlement.  A rather long list of the bad stuff can be found in the slip opinion at pages 18-19.  The Court of Appeal found Knutson entered into the settlement based on her lawyer’s concealment of these materials facts.  It did not find that Knutson had to prove that she would have achieved a “better result” but for Foster’s actions.  The Court of Appeals referred the matter to the State Bar as provided in Business and Professions Code section 6086.1.

The State Bar Court hearing judge found Foster culpable of five counts of misconduct : (1) former rule 3-310(B)(1) for failing to disclose a relationship with a party or witness; (2) former rule 3-310(B)(3) for failing to disclose a relationship with an interested person or entity); (3) former Rule 3-310(E) for representation adverse to a former client) and (4) and (5) two counts of revealing client confidences in violation of Business and Professions Code section 6068(e), subdivision (e).  The hearing judge did not find culpability on a moral turpitude charge (Bus.& Prof. Code section 6106) for concealing documents. She recommended 60 days actual suspension.

Both Foster and the Office of Chief Trial Counsel (OCTC) appealed.  OCTC sought the moral turpitude violation and one year of actual suspension.  Foster sought an admonition, a non-disciplinary disposition that itself has just about unicorn status.  The Review Department noted that “few published California disciplinary opinions deal with disclosure, client conflicts, and client confidences under rule 3-310.” It supported the hearing judge’s analytic approach of looking to the rather more established disciplinary case law dealing the business transaction rule -former Rule 3-300, current Rule 1.8.1 – in support of the discipline recommendation.

Given the paucity of discipline case law dealing with conflicts of interests in the discipline context, should In the Matter of Foster been a published decision.  Rule of Procedure 1.159(d) sets forth publication criteria:

Criteria for Publication. By majority vote, the Review Department may designate for publication an opinion which:
(1) Establishes a new rule, applies an existing rule to a set of facts significantly different from those stated in published opinions, or modifies, or criticizes with reasons given, an existing rule;
(2) Resolves or creates an apparent conflict in the law;
(3) Involves a legal issue of continuing interest to the public generally and/or to attorneys of the State Bar, or one which is likely to recur;
(4) Makes a significant contribution to legal literature by collecting and analyzing the existing case law on a particular point or by reviewing and interpreting a statute or rule; or
(5) Makes a significant contribution to the body of disciplinary case law by discussing the appropriate degree of discipline based on a set of facts and circumstances materially different from those stated in published opinions.

It seems to me that Rule 1.159(d)(4) and (d)(5) should apply.  It wouldn’t be a surprise if OCTC moves to publish this case.  It is possible that a petition to the California Supreme Court will be made.  Unfortunately, the Court’s own criteria for accepting review under California Rule of Court 9.16 are rather limited.  It is stretch to say that the review is necessary to resolve important questions of law and the facts would make it unlikely that this recommendation would be deemed unsupported by the weight of  the evidence.

So it seems likely that this unicorn will remain a rarity.


Failure to Disclose Lack of Insurance Makes Fee Agreement Unenforceable – Fifth DCA

Hance v. Super Store Industries, Fifth Appellate Dist, case no. F075852, filed 1/23/20.

Lawyers in a class action case agree to divide fees.  They have the class representatives sign fee agreements.   One of the lawyers does not disclose in the fee agreement that he does not have legal malpractice insurance, as required by former Rule 3-410 (current Rule 1.4.2.)  The class representatives approved the fee division agreement, although one class representative later retracted consent.

Needless to say, the lawyers later dispute the fee division agreement.  The trial court approves the class action settlement and the division of fees, awarding 30% ($1.29 million) to the lawyer with the non-compliant fee agreement.  The other lawyer appealed.

The Court of Appeal reversed and remanded. It found it unnecessary to reach arguments that there had been inadequate compliance with former Rule 2-200 (now 1.5.1) and went straight to the heart of the failure to disclose the lack of malpractice insurance.

Noting that the duty disclose was mandatory and a Rule of Professional Conduct, the Court acknowledged the public policy purpose of allowing the client to make an informed choice of counsel, aware of that counsel’s insurance status.  Finding no cases directly addressing the failure to disclose insurance under Rule 3-410, the decision cited a number of cases where the failure to comply with Rules of Professional Conduct resulted in an unenforceable fee agreement, including the California Supreme Court’s recent decision in Shepard Mullin v. J-M Manufacturing (2018) 6 Cal.5th 59.  It found the in pari delicto exception ( v. Mills (2004) 121 Cal.App.4th 333, 347) inapplicable; because this was an absolute duty under the Rules, the offending lawyer could not be “less morally blameworthy” than his opponent, the one seeking enforcement, despite the opponent’s actions.  Finally, the Court noted that important public purpose of the Rule, overcoming the incentive the uninsured attorneys would have to avoid disclosure.  The agreement was held to be unenforceable.

But all was not lost for the non-compliant lawyer.  Violations of the Rules of Professional Conduct don’t always result in loss of all right to compensation, despite the uncompromising language of some of the earlier cases (see Clark v. Millsap (1926) 197 Cal. 765.) Citing Sheppard, the Court of Appeal found the factors to be addressed in deciding whether the offending lawyer might recover in quantum meruit, for the reasonable value of the lawyer’s services, as “the egregiousness of the attorney’s conduct, its potential and actual effect on the client and the attorney-client relationship, and the existence of alternative remedies” (Sheppard at 89.)  The trial court never considered recovery in quantum meruit.  The Court remanded the case back to the trial court for consideration of possible quantum meruit recovery, giving the lawyer another bite at the apple but almost certainly less than a $1.9 million bite; while the offending lawyer was counsel of record, most of the work on the case was apparently done by his opponent.

Reversal Reversed: Bradshaw Case Heads Back to State Bar Court


The Drexel Bradshaw case was examined in an earlier post on this blog, Reversal of Fortune. Now, fickle Fortune reverses itself again, the California Supreme Court granting a petition from the Office of Chief Trial Counsel by remanding the case back to the Review Department for reconsideration of its July 2019 decision that dismissed the case after a disbarment recommendation from the Hearing Department.  A unanimous Supreme Court asked the Review Department to reconsider the dismissal ‘in light of the June 14, 2019, Amended Statement of Decision on Petition After Trial And Order in San Francisco Superior Court Case No. PTR-17-301118.” It also directed the Review Department to consider whether to return Bradshaw to inactive enrollment under Business and Professions Code section 6007, subdivision (c)(4), pending its reconsideration of the underlying disciplinary matter.  That section provides for automatic inactive enrollment whenever a disbarment recommendation is made in the State Bar Court.

While the State Bar functions as the California Supreme Court’s administrative arm in the area of discipline, the high court seldom grants petitions for review by either respondents or the Office of Chief Trial Counsel, although it reviews all the disciplinary recommendations made by the State Bar Court.

Can the Discipline System Address Extreme Incivility?


For every wrong, there is a remedy

Civil Code section 3523 Maxims of Jurisprudence

This is a little more than the average “lawyer does bad thing” story that is a staple of the legal press.  A Culver City lawyer who abused opposing counsel with a number of highly offensive email messages, the content of some you can read about here.  A Federal District Court Judge was so incensed (and rightfully so) by this bizarre and over top parade of offensiveness that he has vowed to remove this lawyer from the profession.

Can he do that?

The local rules of the Central District of California provide that “An attorney in practice before this court will… a. Be courteous and civil in all communications, oral and written, and in all proceedings conduct herself/himself with dignity and respect.” (Local Rule 83.4 av1)(a).)  Telling opposing counsel to “eat a bowl of dicks” certainly violates the rule.

But how is it to be enforced?  The preamble to the Code of Conduct in Rule 83.4 is equivocal in its approach

Compliance with high standards of professionalism depends primarily upon understanding the value of clients, the legal system, the public, and lawyers of adhering to the voluntary standards. Secondarily, compliance depends upon reinforcement by peer pressure and public opinion, and finally, when necessary, by enforcement by the courts through their powers and rules already in existence. This code of conduct is not intended to be a set of rules that lawyers can use to incite ancillary litigation on the question of whether the standards have been observed by an adversary, but the court may take any appropriate measures to address violations of the rules.

Emphasis added. Casting even more uncertainty on the process is Local Rule 83.4(b)

Standards of Professional Conduct. Every member of the bar of this court and any attorney permitted to practice in this court must be familiar with and comply with the standards of professional conduct required of members of the State Bar of California, which are now adopted as standards of professional conduct of this court. No attorney permitted to practice before this court will engage in any conduct which degrades or impugns the integrity of the court or in any manner interferes with the administration of justice within the Court.

Before 1996, the answer might have been more clear.  Former California Business and Professions Code section 6068(f) provided that “it is the duty of an attorney to… avoid all offensive personality.”  Mr. Culver City has almost certainly established a new upper bound to the concept of offensive personality.  Prior to 1997, the State Bar of California regularly prosecuted lawyers for violating the offensive personality statue, albeit with mixed results.  But in 1995, the Ninth Circuit rules that the offensive personality stature was unconstitutionally vague in United States v. Wunsch 84 F.3d 1110 (9th Cir. 1995).  Section 6068(f) was amended to omit the prohibition on offensive personality.

Since then, many civility codes have been promulgated in well-intentioned attempts to address the perceived increase in incivility in the legal profession.  But enforcement has largely been a matter of voluntary adherence or peer pressure, consistent with the preamble of Rule 83.4(a).

The nasty sexist note at issue in Wunsch pales compared to the insane over-the-top rantings in Mr. Culver City’s case. Some attempt will be made by someone to sanction this conduct, to deter others from committing similar conduct.  The State Bar has other tools it can bring to bear, including the prohibition of conduct involving moral turpitude contained in Business & Professions Code section 6106In the Matter of Elkins (Review Dept. 2009) 5 Cal. State Bar Ct. Rptr. 160, involved discipline based on section 6106, among other rules, imposed on a California lawyer who, after being removed as co-executor of his father’s estate sent 53 threatening and abusive voicemail messages to the successor administrator of the estate, the attorney for the administrator, and the ex officio judge of the Forsyth County Superior Court of North Carolina.  The Review Department bottomed its analysis on the threatening nature of these voicemail messages, which caused the recipients to fear for their personal safety.  Review Department also dismissed Elkins’s First Amendment argument.

Another possibility is new Rule of Professional Conduct 8.4(d), which states that it is professional misconduct to “engage in conduct that is prejudicial to the administration of justice.”  Long present in the ABA Model Rules of Professional Conduct, the import of this new section is not yet clear.  But other states have used it to impose discipline and the Supreme Court, which approved this rule, has reminded this that these are intended to be discipline rules, not just statements of aspiration. Not every instance of discourtesy or incivility would prejudice the administration of justice but a prolonged campaign of abuse with the purpose of beating a settlement out of the other side just might.

Those who labored long and hard to bring civility codes into existence may not have labored in vain. Clearly, discipline is an extreme remedy, as Rule 83.4 indicates, but it just might be available in extreme cases.


Court of Appeal Finds an Unauthorized Legal Referral Service

A very significant new decision from the First Appellate District, Division 4 has found LegalMatch to be an unauthorized legal referral service (Jackson v., case no. A152442, filed 11/26/19.)  The decision reverses a trial court decision after trial that was not engaged in referral service activity within the meaning of Business and Professions Code section 6155 and remands the case back to the trial court on the issue of whether LegalMatch is culpable of “unclean hands” that bar its ability to recover unpaid subscription fees from attorney Dorian Jackson.

The Court of Appeal bottomed its analysis on the plain language of section 6155.  The section says that “[a]n individual, partnership, corporation, association, or any other entity shall not operate for the direct or indirect purpose, in whole or in part, of referring potential clients to attorneys, and no attorney shall accept a referral of such potential clients,” unless “[t]he service is registered with the State Bar of California and . . . is operated in conformity with minimum standards for a lawyer referral serviceestablished by the State Bar” or “is operated in conformity with” standards set by the Supreme Court.  The Court of Appeal noted that section 6155(h)(1) provides that “[p]ermissible joint advertising,among other things, identifies by name the advertising attorneys or law firms whom the consumer of legal services may select and initiate contact with,” while subdivision (h)(2) statesthat “[c]ertifiable referral activity involves, among other things, some person or entity other than the consumer and advertising attorney or law firms which, in person, electronically, or otherwise, refers the consumer to an attorney or law firm not identified in the advertising.”

The appellate court agreed with Jackson the trial court  erred when it found that LegalMatch did not engage in referral activity because it did not exercise judgment on a client’s legal issues. It also found that the term “referral” was not ambiguous and that the “plain and commonsense” meaning of “referral” was clearly applicable to the services that LegalMatch provided, referring clients to lawyers who paid a fee to be matched to clients

Section 6155 provides no definition of “referring” or “referral.” Instead, the statutory text appears to focus on the actof connecting potential clients with attorneys, with the additional requirement that the covered individual or entity operate for the direct or indirect purpose of doing so. (§ 6155, subd. (a).) Read in the context of the statute, the plain meaning of the term “referral” means no more than the “act or an instance of sending or directing to another for information, service, consideration, or decision.” (Black’s Law Dict. (11th ed.Westlaw2019).) is only one of many similar services that have proliffered in the last two decades.  One can wonder that it took the civil courts so long to interpret the very broad and very clear language of the statute.

Moreover, as paying for referrals from an uncertified legal referral service is a cause for discipline under Rule of Professional Conduct 7.2(b)(2), lawyers who are paying subscription fees to services like LegalMatch are subject to potential State Bar action.  The Office of Chief Trial Counsel (OCTC) has shown no interest in prosecuting such cases since 1996 when it initiated several such cases against lawyers participating in uncertified legal referral service.  Those cases were settled for low-level discipline, private and public reprovals.  This opinion, assuming it survives the inevitable appeal, may push OCTC to prosecute these types of cases again.

On the other side of the equation, the LegalMatch opinion comes at a time when the various groups are pushing for a relaxation of the rules regarding non-lawyer participation in the marketing and delivery of legal services., under the rubric of increasing access to legal services.  It can be expected that those forces will meet this opinion with calls for the amendment or repeal of section 6155, The certification process for legal referral services is cumbersome and only a few legal referral services operating on a for-profit basis have been certified.  I have counseled many lawyers interested in establishing referral services who have abandoned the idea after an exploration of just what is required.

The LegalMatch opinion is certainly timely and any lawyer utilizing such services should be aware of its implications.


Court of Appeal Test Drives New Candor Rule



The First District Court of Appeal, Div. 2, issued a Halloween-eve decision that surely qualifies as some lawyers’ horror story. The decision Davis v. TWC Dealership Group, Inc., case no. A155030, filed 10/30/19, involved arbitration clauses in employment contracts, but it was published to “also affirm—and remind the profession of—the importance of candor toward the court.”

The underlying thicket is a series of employment agreements signed by the Plaintiffs when they began their ultimately unhappy relationship with their employer.  Those agreements purported to bind Plaintiffs to arbitrate their claims in language the Court described as a “paragon of prolixity,” whose substance is “opaque,” and which has sentences that are “complex, filled with statutory references, and legal jargon.” But the Court of Appeal had some help in reaching its description because the same paragraph had been the subject of a California Supreme Court opinion OTO, L.L.C.v. Kho (2019) 8Cal.5th 111, 128) (Kho).  In fact, the same law firm had argued the Kho case before the Supreme Court. The TWC Court noted no complete version of any of the three fee agreements appeared in the record, and that extensive use of ellipsis was made in the briefing to omit large parts of the contracts.

The Kho decision was filed shortly after the close of briefing in the TWC case but it was not brought to the appellate court’s attention.  In its order, the Court asked the parties to address the impact of Kho but the associate attorney dispatched to argue the case was unprepared.  Neither of the attorneys who signed briefs appeared, having left the firm.

The Court of Appeal found the failure to inform the Court of the Kho decision was an “obvious” violation of Rule of Professional Conduct 3.3(a)(2), given that the same law firm had appeared in Kho:

A lawyer shall not …fail to disclose to the tribunal legal authority in the controlling jurisdiction known to the lawyer to be directly adverse to the position of the client and not disclosed by opposing counsel. or knowingly misquote to a tribunal the language of a book, statute, decision or other authority. . . .’ ” ..”

This rule is new in California.  Prior Rule of Professional Conduct 5-200 contained a similar prohibition against “intentionally” misquoting to a tribunal the language of a book, statute, or decision but no positive duty to disclose known adverse authority. It also contained the same general prohibition against using means inconsistent with truth or seeking to mislead a judicial officer with ” by an artifice or false statement of fact or law” contained in Business & Professions Code section 6068(d).  The origin of the new rule is Model Rule 3.3.

“Known” is a defined term in the new Rules; Rule 1.0.1(f): “Knowingly,”“known,” or “knows” means actual knowledge of the fact in question. A person’s knowledge may be inferred from circumstances.”

Since the same law firm argued Kho and the Court of Appeal specifically asked counsel to address Kho (as well as counsel’s failure to bring Kho to the court’s attention) finding knowledge isn’t much of a stretch.  One feels for the firm associate who appeared at the oral argument.

The Court of Appeal finding of lack of candor wasn’t necessary to decide TWC; the law of unconscionability, exemplified by Kho, supplied the necessary rule of decision.  The Court of Appeal also did not refer the matter to the Office of Chief Trial Counsel (OCTC), despite the “obvious” rule violation.  No sanction was sought or imposed and the conduct does not otherwise meet the statutory reporting requirements of Bus. & Prof. Code section 6086.7.  OCTC will surely see this decision and has the power to open its own investigation.

Whether or not discipline results, the Court of Appeal has given us a significant test drive of one of the new rules, meant to send a message that the duty of candor has some new teeth in California.