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  • 2018 Public Comment
Seal of The State Bar of California The State Bar of California

Proposed Amendments to Standards for Attorney Sanctions for Professional Misconduct

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The State Bar seeks public comment regarding Proposed Amendments to the Standards for Attorney Sanctions for Professional Misconduct.

Deadline: November 16, 2018

Background

In 1985, the State Bar, through a collaborative effort between the State Bar Court and OCTC, developed proposed disciplinary standards which were adopted by the Board in November of 1985.

On October 12, 2013, the Board approved the first significant revisions to the Discipline Standards in over 27 years. These revisions included updates and stylistic changes, including rewriting the Discipline Standards in plain English, reorganizing them for better flow and comprehension, and substantively modifying them to better reflect current case law, rule, and statutory authority.

When the 2013 “clean-up” revisions to the Standards for Attorney Sanctions for Professional Misconduct were adopted, the Board also authorized the creation of a task force to study to study and recommend major structural changes to the Standards that were considered to be “major policy and philosophical shifts.” The 2014 Disciplinary Standards Task Force revision was a lengthy process. After selection of the members, the Task Force began its work in May 2014 and substantially concluded its work in October 2014. After two rounds of public comment, the recommendations of the Task Force were adopted by the Board in May 2015 and became effective in July 2015. The time from the creation of the Task Force to the effective date of the revised standards was 17 months.

The 2014 Disciplinary Standards Task Force recommended significant changes to the standards, including separation of public and private reprovals into separate levels of discipline, separation of several specific standards that were previously captured in the catch-all provisions, specification of additional aggravating factors, and removal of footnotes and citations throughout the standards.

Despite the relatively recent overhaul of the Standards for Attorney Sanctions for Professional Misconduct, the new Rules of Professional Conduct adopted by the Supreme Court require changes to the Standards. Some changes are not substantive, for example, changing citations to rule numbers or changing the term “member” to “lawyer.” Other changes are substantive in that they require the addition of language from the new rules to existing standards or the creation of new standards. In some Standards, we have proposed including language that would apply to violations of either the new or old rules. The changes proposed do not rise to the level of a major policy change or philosophical shift such that a new Disciplinary Standards Task Force should be required.

As a result of the limited nature of the proposed changes and the likelihood that creation of a new Disciplinary Standards Task Force would delay amendments to the Standards necessary to account for changes to the Rules of Professional Conduct, which go into effect on November 1, 2018, OCTC is requesting to circulate for public comment the attached proposed changes to the Standards for Attorney Sanctions for Professional Misconduct.

While this item is being submitted for public comment in an effort to expedite the implementation of new Standards for Attorney Sanctions for Professional Misconduct so that new Standards are in place when conduct in violation of the new rules comes before the State Bar Court, OCTC looks forward to engaging simultaneously with discipline system partners, including the State Bar Court, the Association of Discipline Defense Counsel, and the public, to attempt to reach consensus on the final version of the Standards to be submitted to the Board.

Discussion/Proposal

This item proposes numerous amendments to the Standards for Attorney Sanctions for Professional Misconduct as a result of the adoption of new Rules of Professional Conduct by the Supreme Court and to eliminate the use of the term “member” consistent with the purely regulatory nature of the State Bar.

This item proposes changes to eliminate the use of the term “member” and adopt the term “lawyer” or “licensee” in Standards 1.2, 1.4, 1.6, 1.7, 1.8, 2.5, 2.6, 2.8, 2.9, 2.10, 2.13, and 2.14.

Where the Standards set out discipline for violation of a specific rule we have substituted the new rule number, but the Standard should also apply to violations under the old rules. Where the Standards set out discipline for specific conduct we have used the language from both the new and old rules so that it too will apply to violations of the new and old rules.

In addition, the following changes are proposed:

1. Standard 1.2

The proposal would remove the definition of “Member” and insert a definition of “Lawyer.” The definition of “Lawyer” is adapted from Business and Professions Code section 6157(b).

The proposal would add the term “Tribunal” because the term is used in the proposed modified Standard 2.12. The definition is the same definition used by the new terminology rule (rule 1.0.1(m)).

2. Standard 2.2

There are two changes proposed to this Standard. One, a non-substantive change is only to reflect the new rule numbering system.

The second is more substantive. Unlike the prior rules, the new Rules of Professional Conduct require that attorneys place advanced fees in the client trust account. While case law for failure to deposit client funds or fiduciary funds into a client trust account has gone as low as a public reproval (See Dudugjian v. State Bar (1991) 52 Cal.3d 1092), the failure to deposit funds received for a client, including advanced fees, in the trust account, is essentially commingling, i.e. mixing client or other entrusted funds with personal funds. Further, if the attorney removed the funds from the trust account the court would consider it a misappropriation. Therefore, we believe that the failure to deposit funds into a client trust account deserves a discipline commensurate with, at least, commingling.

The new rule (rule 1.15 [Safekeeping Funds and Property of Clients and Other Persons]) has various other requirements the old rule did not have (e.g., the accounting must be in writing, etc.), but these appear to be adequately covered under the existing Standard 2.2(b).

3. Standard 2.3

In addition to unconscionable and illegal fees, new rule 1.5 [Fees for Legal Services] adds specific prohibitions on contingency fees in family law matters and when representing a criminal defendant. It also discusses when a true retainer is permitted and requires that the client consent in writing after disclosure that the client will not be entitled to a refund of all or part of the fee. OCTC believes that violations of this type belong in paragraph (b) of this Standard (i.e., suspension or reproval).

4. Standard 2.5

The terminology and methodology of the new conflicts rules suggests that we need new language in the Standards. The proposal would align Standard 2.5(a) with violations of rule 1.7(a) [represent a client directly adverse to a concurrent client in the same or separate matter]; rule 1.7(b) [represent a client when there is a significant risk the lawyer's representation of the client will be materially limited by the lawyer's representation or responsibilities to another client or a former client, a third person, or the lawyer's own interest] and 1.7(d). Rule 1.7(d) prohibits certain conflicts even if there are waivers, for example, when a lawyer does not believe the lawyer is able to provide competent and diligent representation to each client; the representation is prohibited by law; or the representation involves the assertion of a claim by one client against another in the same litigation or other proceeding before a tribunal. (See also rule 1.10 [applying rule 1.7 to lawyers in firm with conflicted attorney].)

Proposed Standard 2.5(a) is also consistent with the Supreme Court’s discussion of the most serious types of conflicts. (See People ex rel. Dept. of Corporations v. SpeeDee Oil Change Systems, Inc. (1999) 20 Cal.4th 1135, 1147 [“The most egregious conflict of interest is representation of clients whose interests are directly adverse in the same litigation.”].)

Proposed paragraph (b) of Standard 2.5 covers rule 1.9(a), 1.9(b) and other conflicts that are materially adverse to former clients and others, especially those where confidential information may be used. (See also rules 1.10 [Imputation of Conflicts of Interest: General Rule] and 1.11 applying rule 1.9 to lawyers in firm with conflicted attorney or with government conflicts.) Paragraph (b) would apply to:

  • New rule 1.9(a) - Representation of clients with interests that are materially adverse to the interests of former clients in the same or substantially related matters;
  • New rule 1.9(b) - Knowing representation of a client in the same or substantially related matters in which a firm with which the lawyer was formerly associated previously represented a client; and
  • The conflicts rules in effect prior to November 1, 2018 which apply to situations where the lawyer accepts or continues employment that is actually adverse to a client or former client, and the lawyer:
    • Fails to obtain informed written consent;
    • Breaches the duty of confidentiality; and
    • Causes significant harm to the client or former client.

Proposed new paragraph (c) of Standard 2.5 addresses all other conflicts and the breach of the common law duty of loyalty, e.g. aggregate settlements (rule 1.8.7), compensation from other than the client (rule 1.8.6); government conflicts not covered by rule 1.9(c), conflicts by former judges (1.8.12), conflicts involving prospective clients (1.18), and the common law duty of loyalty. (See Santa Clara County Counsel Attys Assn. v. Woodside (1994) 7 Cal.4th 525, 548.)

5. Standard 2.6

Substantive changes include altering paragraphs (a) and (b) to cover rules 1.8.2 [Use of Current Client’s Information] and 1.18(b) [Duties to Prospective Client]. Proposed new paragraph (c) would address new rule 4.4, which addresses an attorney's duties regarding inadvertently transmitted writings.

6. Standard 2.7

The proposed addition of paragraph (d) defines performance and communication, so that this Standard matches many new rules dealing with these issues.

7. Standard 2.8

The proposed standard incorporates language addressing improper partnerships and operating organizations involved in the practice of law with non-lawyers. The new rule (rule 5.4 [Financial and Similar Arrangements with Nonlawyers]) combines old rules 1-310 [forming or engaging in a partnership with non-lawyer] and 1-320 [financial arrangements with non-lawyers] into one rule. However, the prohibition on compensation for referrals is covered by rule 7.2 [Advertising] not by new rule 5.4.

8. Standard 2.9

The proposed modification to both paragraphs adds the delay of litigation language from the new rule 3.2.

9. Standard 2.10

Currently, a literal reading of Standard 2.10 makes it applicable only to unauthorized practice of law (UPL) in California. The proposed modification makes the Standard applicable to UPL in another jurisdiction as well as in California. This is consistent with rule 5.5 and In the Matter of Wittenberg (Review Dept. 2015) 5 Cal. State Bar Ct. Rptr. 418,424 [finding standard 2.10(a)) most apt for engaging in UPL in another jurisdiction].

10. Standard 2.12

The proposed modification of this rule adds rule 3.4(f) [knowingly disobey an obligation under the rules of a tribunal] to Standard 1.12(a). This violation was inserted in this standard because the conduct is analogues to, or includes, violating a court order.

11. Standard 2.13

Paragraph (a) parallels parts of Business and Professions Code sections 6106.9(a)(1), 6106.9(a)(2), and old rule 3-120 and involve outrageous and overreaching conduct. The conduct in paragraph (a) is particularly egregious and probably involves moral turpitude.

The new rule, rule 1.8.10 [Sexual Relations with Current Client], prohibits all sex with clients except for spouses and people already in a relationship prior to the representation. Violations of Business and Professions Code section 6106.9 that do not fall within paragraph (a) are not as egregious. As a result, Paragraph (b) should be for violations of rule 1.8.10 and Business and Professions Code section 6106.9 not covered by paragraph (a).

12. Standard 2.14

The new rule 8.1.1 [Compliance with Conditions of Discipline and Agreements in Lieu of Discipline] is broader than the old rule 1-110 and incorporates what was in the old rule and section 6068(k) of the State Bar Act.Thus, the proposed modified Standard is broader than the current Standard and incorporates section 6068(k) and agreements in lieu of discipline.

Additionally, there is no current Standard addressing a violation of rule 9.20 of the Rules of Court. The Supreme Court, however, has held that the presumed and usual sanction is disbarment. (See Bercovich v. State Bar (1990) 50 Cal.3d 116, 131 [disbarment is generally the appropriate sanction for a willful violation of former rule 9.55 [current rule 9.20].]; In the Matter of Babero (Review Dept. 1993) 2 Cal. State Bar Ct. Rptr. 322, 332.)

13. NEW Standard 2.20

Paragraph (a) of the proposed new Standard 2.20 is to address Business and Professions Code section 6131. A conviction is not required to discipline an attorney for a violation of Business and Professions Code section 6131.(Price v. State Bar (1982) 30 Cal.3d 537 [two-year actual suspension although no conviction].) Further, Business and Professions Code section 6131 states a violation is punishable by disbarment.

Proposed new paragraphs (b) and (c) are for violations of Rule 8.4(b) for acts that are criminal acts that are not being prosecuted as a conviction referral or in which there is no conviction.

14. NEW Standard 2.21

This proposed new Standard is to address violations of rule 8.4(d). As this rule is similar to Business and Professions Code section 6106, the proposed new Standard is similar. Nonetheless, the purpose of having a separate Standard was to allow the case law to develop separately and to minimize confusion.

Any known fiscal/personnel impact

None

Background material

  • Attachment A: Proposed Amended Standards for Attorney Sanctions for Professional Misconduct (Clean Version).
  • Attachment B: Proposed Amended Standards for Attorney Sanctions for Professional Misconduct (Redline Version).

Source

Regulation and Discipline Committee

Deadline

November 16, 2018

Direct comments to

Office of Chief Trial Counsel
State Bar of California
180 Howard St.
San Francisco, CA 94105
Email: OCTC_Rules@calbar.ca.gov

Please reference the specific rule number and title in your comments.

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