California Supreme Court Adopts New Rules of Professional Conduct

Rules of Professional Conduct
Judge Dan Hinde

On May 10, 2018, the California Supreme Court approved 69 rules of professional conduct, marking the first major overhaul of State ethics rules in 30 years. These new rules and amended or modified rules, went into effect Nov. 1, 2018. While some changes are more cosmetic than anything, some are substantive.

Format Change.

One significant (though non-substantive) change is that California has joined the rest of the country by adopting a numbering and organizational system based on the ABA Model Rules. The new rules are organized under uniform headings numbered with periods rather than dashes.

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Substantive Changes.

Fee Splitting. Rule 1.5.1 implements two material changes to the previous rule (Rule 2-200) regarding fee splitting between lawyers. First, the agreement between the lawyers to divide a fee must now be in writing. Second, the client must consent to the division after full disclosure at or near the time that the lawyers enter into the agreement to divide the fee. Under the previous rule, there was no express requirement that the agreement between the lawyers be in writing and case law has held that client consent to the fee division need not be obtained until the fee is actually divided, which might not occur until years after the lawyers have entered into their agreement.

Sexual Relations with Client. Rule 1.8.10 strictly forbids sexual relations with a current client who is not a spouse or registered domestic partner, unless a consensual sexual relationship exists between them when the attorney-client relationship commences.

Safekeeping of Funds and Property of Clients and other Persons. Rule 1.15 requires that advance fee deposits be deposited in a client trust account. Under the previous rule (Rule 4-100), only advances for costs and expenses were required to be held in a trust account. The new Rule makes an exception for “flat fee” advances, which may be held in a lawyer’s operating account if certain disclosures are made and the client consents in writing. The Rule and related comments also help distinguish between ordinary fee advances, flat fee advances, and “retainers” (wherein a non-refundable deposit is made to secure the lawyer’s availability rather than for compensating work).

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Delay Tactics. Rule 3.2 prohibits a lawyer from engaging in tactics that have “no substantial purpose other than to delay or prolong the proceeding or to cause needless expense.”

Supervision. Rules 5.1 (Responsibilities of Managerial and Supervisory Attorneys), 5.2 (Responsibilities of a Subordinate Lawyer) and 5.3 (Responsibilities Regarding Non-Lawyer Assistants) have been added in place of a comment paragraph under previous rule 3-100 (competence) to clarify the duties and obligations of supervisory and subordinate legal personnel.

Prohibited Discrimination, Harassment and Retaliation. Rule 8.4.1 expands the prior rule (2-400) by prohibiting unlawful discriminatory or harassing conduct generally in the course of representing a client, prohibiting unlawful discriminatory or harassing conduct on the basis of protected characteristics beyond those referenced in the prior rule, prohibiting unlawful retaliation, and eliminating the requirement that there be a final civil determination of wrongful discrimination before a disciplinary investigation can commence or discipline can be imposed.

What Stayed the Same?

The duty to act competently, which is violated only with intentional, reckless, grossly negligent, or repeated conduct (See Rule 1.1). The duty to act diligently, which no longer falls under “competence” but now has its own stand-alone rule (See Rule 1.3). The rules protecting client confidentiality, which are among the strongest in the country (See Rule 1.6 and Business and Profession Code §6068). The Bar’s regulation of attorney advertisements and solicitation, which have been reorganized under Rules 7.1-7.5.

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With the recent adoption of comprehensive rules of professional conduct, the California Supreme Court has ushered in a new era of attorney regulation. The rules continue to become more complex while also becoming more uniform with other jurisdictions. Given the breadth of the changes, there are likely some new rules that directly impact your practice. Take the time to review the recent changes to make sure you are in full compliance with your ethical obligations. Your license and your livelihood are just too important not to. Lars Johnson 

Lars C. Johnson

Lars Johnson is a neutral for Signature Resolution, mediating a wide range of civil cases including those related to personal injury, property damage and insurance disputes. A graduate of Georgetown University and Loyola Law School in Los Angeles, he has served in the United States Navy Judge Advocate General’s Corps as both trial and appellate counsel and later worked in private practice representing plaintiffs in high-profile and high-stakes trials. Johnson was a three-time finalist for CAALA’s Trial Lawyer of the Year award. He was also one of the youngest members ever admitted to the American Board of Trial Advocates.

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