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THE STATE BAR OF CALIFORNIA
STANDING COMMITTEE ON
PROFESSIONAL RESPONSIBILITY AND CONDUCT

FORMAL OPINION NO. 1981-64

ISSUE:

What are the ethical responsibilities of attorneys employed by legal services programs whose funding from the Legal Services Corporation may be substantially reduced or terminated?

AUTHORITIES INTERPRETED:

Rules 2-111 and 6-101 of the Rules of Professional Conduct of the State Bar of California.

Business and Professions Code section 6068, subdivision (h).

DISCUSSION

This Committee has received a request which poses a number of questions related to the prospect of termination or substantial reduction of funding of the Legal Services Corporation. The questions which the Committee believes are within its jurisdiction are addressed seriatim.

A. BACKGROUND

The provision of legal services to the poor has a history in common law tradition as early as the Magna Carta. The assignment of free counsel for indigents dates from at least 1495, when the statute 11 Henry XII was adopted. The Legal Services Corporation, a private, nonmembership, nonprofit corporation, was established in 1974 to provide "financial support for legal assistance in noncriminal proceedings or matters to persons financially unable to afford legal assistance." (42 U.S.C. 2996b(a).)

Under the Legal Services Corporation Act, the Legal Services Corporation is authorized to make grants to, or contract with, "recipients" who provide legal advice and representation to eligible clients. (42 U.S.C. 2996a(6), 2996e(a)(l)(A).) In establishing the corporation, Congress recognized the need for equal access to the system of justice and the need for high quality legal assistance to be extended to those unable to afford it. The act also expressly recognized the need for attorneys to be able to serve the interests of their clients in accordance with the American Bar Association Code of Professional Responsibility, the Canons of Ethics, and high standards of the legal profession. (42 U.S.C. 2996(1), (2) & (6).) Although the act has been amended since 1974, in this respect it has not changed.1

We are informed that the authorization for appropriation of funds for the Legal Services Corporation expired on September 30, 1980, and now requires reauthorization of funds for the Legal Services Corporation.

We are informed that the Legal Services Corporation budget for fiscal year 1982-1983 has been reduced to approximately 241 million dollars (roughly a 25% reduction from the previous year's funding). Because the remaining funds must be allocated equally among the states, the total funding allocated to California legal services programs will be reduced by more than 25% from funds received in the previous year. We also understand that funds allocated to California may not be disbursed among individual programs equally. Thus, some programs will experience a more severe reduction in funding than other programs. Finally, we have received reports that it is expected that funding for the Legal Services Corporation may be further reduced or even terminated in future years.

We are informed that this reduction or cutoff of funds will radically reduce or eliminate funding for California providers of legal services to the indigent. Including their national support centers, the California programs employ 490 attorneys in most counties of this state. We are informed that during the year 1980 these attorneys handled approximately 145,000 cases, of which only approximately 15 percent involved litigated matters. Landlord-tenant, welfare, unemployment compensation, Aid to Families with Dependent Children, Social Security, collection, debtor relief, wage claims, immigration problems, and automobile licensing problems are but a few of the types of cases handled by these entities. Some legal services programs also handle complex litigation matters which involve unique legal issues, years of legal work, extensive costs for discovery and experts, and appeals. The Legal Services Corporation also maintains the Western Center on Law and Poverty and other backup programs that provide technical assistance to programs with direct client contact. We are informed that all but one of the recipients of funds from the Legal Services Corporation in California are private, nonmembership, nonprofit corporations. Their boards of directors are two-thirds attorneys and one-third representatives of users. The other recipient, we understand, is a "judicare" program of individual attorneys who are not part of a corporate entity.

We are informed that most, if not all, legal services programs in the State of California provide legal assistance at no charge to indigent or otherwise qualified clients. Eligible clients are restricted to those who are financially unable to afford legal assistance. (42 U.S.C. 2996a(3).) As of May 4, 1981, unless a local office adopts more restrictive standards, for a family of four total income eligibility is not more than $203.13 per week.

We are informed that the legal services programs (rather than individual attorneys employed by such programs) enter into implied or express retainer agreements with clients for legal representation. These agreements do not usually address the issue of attorneys fees. if litigation ensues, either the program assists the client in applying for a waiver of costs, or the client is expected to reimburse the program for those litigation costs. In addition to staff attorneys, the programs provide legal assistants, secretaries, bookkeeping personnel, and administrative staff. The salaries of all of the local programs are covered by public fund grants, primarily from the Legal Services Corporation.

We assume, for the purposes of this opinion, that the decrease or cutoff of funding by the Legal Services Corporation will not be replaced by funding provided by the State of California or by local entities.

This unprecedented situation, involving massive reductions of funding for the delivery of legal services to indigent persons, is not expressly addressed by the State Bar Act or the Rules of Professional Conduct and was presumably not envisioned by the bodies promulgating such standards. Nevertheless, the statutes and rules, and their interpretation in cases and other ethics opinions, provide guidance for the conduct of California attorneys when they seek to withdraw from representation of their clients. Accordingly, we now undertake the difficult task of applying these principles to this unusual situation.

B. WHO OR WHAT ENTITY REPRESENTS THE CLIENT?

Our discussion here is limited to the situation where the individual client intends to engage the legal services program, rather than one of its employed attorneys, to provide legal representation. In this respect such retention is analogous to the client who engages a law partnership to obtain legal representation. (Cf. Redman v. Walters (1979) 88 Cal. App.3d 448, 453-454 [152 Cal. Rptr. 42] [holding that, unless a client had either impliedly or expressly consented to nonrepresentation by one partner (or was estopped from claiming otherwise), all partners are responsible for the acts of the partnership or of one or more of the partners]; Blackmon v. Hale (1970) 1 Cal.3d 548, 558 [83 Cal. Rptr. 194] [holding that a reasonable person would be justified in believing that he or she was being represented by a law partnership in the absence of other evidence and on these facts: (1) Although the partnership's records indicated that an individual partner represented the client, there was no evidence that the partnership informed the client that one partner, rather than the firm, represented the client, and (2) the partnership held itself out to the public and the client as a law partnership].)

Attorneys who are employed by legal services programs share responsibilities with the program for representation of their clients, just as do attorneys of a private law firm. (See ABA Committee on Ethics and Prof. Responsibility, informal opn. No. 1428 (1981).) This is because only individual members of the bar are licensed to practice law, whereas the entity is not.2 (Bus. & Prof. Code, 6125, 6126, 6002-6004.) The degree of responsibility shared by each is discussed in Part C, below.

C. MAY THE ATTORNEYS AND LEGAL SERVICES PROGRAMS WITHDRAW FROM REPRESENTATION WHEN FUNDING IS REDUCED OF CUT OFF?

Just as an attorney in private practice may not merely retire (see N.Y. State Bar Association Committee on Prof. Ethics, opn. No. 178 (1971)), legal services attorneys and their programs may not discontinue representation of existing clients merely because funding is impaired or cut off entirely. Regardless of whether the attorneys in the legal services organizations are being paid, once having undertaken to represent a given client, they must continue to serve the client unless withdrawal is permitted by the provisions of rule 2-111 of the Rules of Professional Conduct.

Rule 2-111(B) and (c) of the Rules of Professional Conduct set forth the only reasons for mandatory or permissive withdrawal approved by the Supreme Court. While the Committee is sympathetic to the extraordinary dilemma faced by the nearly 500 legal services lawyers in California who may be forced to continue representation of clients if they are not permitted by the rules to withdraw from representation, we are not at liberty to interpret the rules in a manner contrary to the plain meaning of the words.3 Rule 2-111 provides, as pertinent here:

"RULE 2-111. WITHDRAWAL FROM EMPLOYMENT.

(A) In general.

"(1) If permission for withdrawal from employment is required by the rules of a tribunal, a member of the State Bar shall not withdraw from employment in a proceeding before that tribunal without its permission.

"(2) In any event, a member of the State Bar shall not withdraw from employment until he has taken reasonable steps to avoid forseeable prejudice to the rights of his client, including giving due notice to his client, allowing time for employment of other counsel, delivering to the client all papers and property to which the client is entitled, and complying with applicable laws and rules.

"(3) A member of the State Bar who withdraws from employment shall refund promptly any part of a fee paid in advance that has not been earned. However, this rule shall not be applicable to a true retainer fee which is paid solely for the purpose of insuring the availability of the attorney for the matter.

"(B) Mandatory Withdrawal.

"A member of the State Bar representing a client before a tribunal, with its permission if required by its rules, shall withdraw from employment, and a member of the State Bar representing a client in other matters shall withdraw from employment, if:

"(1) He knows or should know that his client is bringing a legal action, conducting a defense, asserting a position in litigation, or otherwise having steps taken for him solely for the purpose of harrassing or maliciously injuring any person or solely out of spite, or is taking or prosecuting an appeal merely for delay, or for any other reason not in good faith; or

"(2) He knows or should know that his continued employment will result in violation of these Rules of Professional Conduct or of the State Bar Act; or

"(3) His mental or physical condition renders it unreasonably difficult for him to carry out the employment effectively.

"(C) Permissive Withdrawal.

"If Rule 2-111(B) is not applicable, a member of the State Bar may not request permission to withdraw in matters pending before a tribunal and may not withdraw in other matters, unless such request or such withdrawal is because:

"(1) His client:

"(a) Insists upon presenting a claim or defense that is not warranted under existing law and cannot he supported by good faith argument for an extension, modification, or reversal of existing law; or

"(b) Personally seeks to pursue an illegal course of conduct; or

"(c) Insists that the member of the State Bar pursue a course of conduct that is illegal or that is prohibited under these Rules of Professional Conduct or the State Bar Act; or

"(d) By other conduct renders it unreasonably difficult for the member of the State Bar to carry out his employment effectively; or

"(e) Insists, in a matter not pending before a tribunal, that the member of the State Bar engage in conduct that is contrary to the judgment and advice of the member of the State Bar but not prohibited under these Rules of Professional Conduct or the State Bar Act; or

"(f) Deliberately disregards an agreement or obligation to the member of the State Bar as to expenses or fees; or

"(2) His continued employment is likely to result in a violation of these Rules of Professional Conduct or of the State Bar Act; or

"(3) His inability to work with co-counsel indicates that the best interests of the client likely will be served by withdrawal; or

"(4) His mental or physical condition renders it difficult for him to carry out the employment effectively; or

"(5) His client knowingly and freely assents to termination of his employment; or

"(6) He believes in good faith, in a proceeding pending before a tribunal, that the tribunal will find the existence of other good cause for withdrawal."

When it becomes apparent that a decrease or cut-off of funding will impair the ability of the program to provide competent representation for present clients, withdrawal should be permitted or mandated pursuant to rule 2-111 of the Rules of Professional Conduct, provided that reasonable steps are taken to avoid foreseeable prejudice to the clients. (See Bar Association of San Francisco Legal Ethics Committee, opn. No. 1973-5; State Bar Committee on Prof. Responsibility and Conduct, formal opn. No. 1979-51.) Both the individual staff attorneys and their employers are obliged to comply with this standard. (ABA Committee on Ethics and Prof. Responsibility, informal opn. No. 1428 (1979).)

The steps which are reasonable pursuant to rule 2-111(A)(2) of the Rules of Professional Conduct will vary according to the circumstances of the individual matter and the individual attorney's responsibilities within the legal services organization. They will include, but not be limited to:

1. Advising the client that funding may be reduced or terminated and that the program may be unable to accomplish the purposes of the representation. The client may be warned to seek other counsel or asked whether the client would be able to obtain funds to pay for the future representation on a quantum meruit basis. In the latter event, the attorney should ensure that the client has the opportunity for separate representation in renegotiating the engagement and has a full explanation of all relevant facts.

2. Exploring whether competent representation may be arranged by other lawyers and whether other lawyers would join in the representation of the client with the legal services attorneys. Both the individual staff attorneys and the entities employing them should take such steps as contacting private attorneys and local bar associations to seek volunteer successor attorneys in both nonlitigation and litigation cases. Alternatively, legal services attorneys may retain cases and associate with private practitioners who are competent to assist them in the representation. As available funds diminish, otherwise competent legal services attorneys may want to continue working on their cases but find themselves without adequate time or resources. If the clients consent, and if legally permissible, departing legal services attorneys may contract with the organization they leave to undertake responsibility for the cases. As funding diminishes, the competence of the attorneys to handle their case loads will likely diminish, so association with other attorneys should be considered. (Rule 6-101(A)(1), Rules Prof. Conduct; cf. Lewis v. State Bar (1981) 28 Cal.3d 683 [170 Cal. Rptr. 634].)

3. Exploring the possibility of representation in propria persona.

4. In matters pending before tribunals which do not require representation by a member of the State Bar, exploring the possibility of representation by a nonlawyer.

5. Withdrawing from representation because the program doesnot have adequate resources to provide competent representation. (Rules 2-111(B)(2) and (c)(2) and 6-101, Rules Prof. Conduct.) In the event that legal services attorneys are unable to find private attorneys who will volunteer to assume individual cases, they willnot necessarily be allowed to withdraw. While a tribunal may conclude that the fact of nonpayment of salaries to attorneys is a ground for withdrawal, that conclusion is not assured, for it will not be the clients who fail to compensate the attorneys. An attorney has a duty "never to reject, for any consideration personal to himself, the cause of the defenseless or the oppressed." (Bus. & Prof. Code, 6068, subd. (h).) Neither the individual attorneys nor the legal services organizations should desert any of their clients. (Cf. People v. Massey (1955) 137 Cal. App.2d 623, 626; ABA Code of Prof. Responsibility, EC 2-31; Kriegsman v. Kriegsman (1977) 150 N.J. Super. 474, 375 Atlantic 2d 1253, 1255; Dayton Bar Assn. v. Weiner (1974) 40 Ohio St. 2d 7, 317 N.E.2d 783.) Thus, unless departing legal services attorneys make other arrangements, or are permitted to withdraw pursuant to the provisions of rule 2-111 of the Rules of Professional Conduct, they must fulfill their professional responsibilities for the cases they have undertaken.

6. Advising the board of directors of the legal services program that the ability of the existing programs to provide competent representation is about to be impaired and suggesting that the board authorize the filing of applications with the State Bar of California, or with courts of competent jurisdiction, to protect the interests of the clients of the program pursuant to the provisions of Business and Professions Code section 6190 et seq.

D. WITHDRAWAL FROM REPRESENTATION IN MATTERS NOT PENDING BEFORE A COURT OR TRIBUNAL.

Many of the cases being handled by attorneys employed by legal services programs are not presently before, nor will they result in matters pending before, a court or other tribunal. Thus, permission of a tribunal will not be required in order to effect withdrawal from representation in such matters.

Rule 2-1ll(A)(2) of the Rules of Professional Conduct specifies the minimum steps required to effect withdrawal, including giving due notice to the client, allowing time for the employment of other counsel, and delivering to the client all papers and property to which the client is entitled. In many instances more will be required to avoid foreseeable prejudice to a client. For example, the client should be given (1) notice of the running of any applicable statute of limitations, (2) information on the possibility of carrying the matter forward in propria persona or through lay assistants, if appropriate, and (3) information on the potential availability of other legal services in the community which might be able to assist the client. Some situations may even require that the attorney or the program secure the assistance of local attorneys, bar associations, the State Bar or local courts in obtaining representation or relief from representation.

E. IF OTHER ARRANGEMENTS CAN NOT BE MADE, ARE THERE ALTERNATIVES TO THE RETENTION OF RESPONSIBILITY BY THE STAFF ATTORNEYS?

We will not here address the potential legal rights, if any, of the remaining legal services attorneys against those who abandon their positions or their clients or programs, or against the sources of funding which reduced the available resources. Those are questions of law, as are potential questions of the legal liabilities of departed attorneys to the abandoned clients. All attorneys seeking to depart from employment with a legal services program should understand their continuing ethical duty to represent their clients until withdrawal may be effected without prejudice to the clients.

However, it would be unfair and unrealistic to expect the remaining legal services attorneys to continue to represent all clients whose cases have been undertaken by legal services offices in the event of a cutoff of funds, a radical reduction in funding, or the departure of a substantial number of attorneys.

To the extent that legal services attorneys find that the remaining case load per attorney cannot adequately be handled, so that the interests of the clients may adversely be affected, the lawyers have an ethical obligation to take steps to assure adequate representation. Ordinarily an overburdened attorney is not excused from neglecting cases. Neglect or inadequate preparation which results from the acceptance or retention of an excessive case load would be in violation of rule 6-101 of the Rules of Professional Conduct. A California attorney who wilfully or habitually fails to use reasonable diligence in the representation of a client is acting unethically and may be subject to discipline. (Spindell v. State Bar (1975) 13 Cal. 3d 253, 260 [118 Cal. Rptr. 480].) This concept applies to legal services offices and not merely to private practitioners. (ABA Committee on Ethics and Prof. Responsibility, informal opn. No. 1359 (1976).)

If remaining staff attorneys perceive that they are physically, emotionally, financially, or otherwise unable adequately to represent the clients of their respective legal services offices, they have an ethical duty to take affirmative steps to rectify the situation. Continued representation of all clients under such circumstances would cause the remaining attorneys to violate their ethical duties to their clients. (See discussion in part C, above.)

Withdrawal of legal services attorneys from some actions, to enable them to prepare adequately for representation in other actions, should be attempted as funds run out. (See ABA Committee on Ethics and Prof. Responsibility, informal opn. No. 1359 (1976), opining that legal services offices have an ethical obligation to institute systems of priorities or waiting lists in order to avoid unmanageable case loads.)

F. MAY THE LEGAL SERVICES ATTORNEYS ACCEPT NEW CASES?

Once the legal services attorneys are aware that it is likely that their funding will be substantially reduced or terminated, they should decline to accept new cases unless they perceive that the purposes of the new retention can be accomplished with existing or foreseeable resources, or there is a special or emergency situation which, in the interests of justice, compels representation, or they are willing to work gratuitously. For example, a case which involves only finite correspondence or a few court appearances might be accepted if it is likely it will be completed before funding is exhausted.

However, legal services programs and their employed attorneys should exercise caution in undertaking cases which will foreseeably involve protracted litigation and which are not likely to be completed prior to the reduction or termination of funding. Taking on more work than one can handle is improper. (Martin v. State Bar (1978) 20 Cal.3d 717 [144 Cal. Rptr. 214]; rule 6-101(A)(2), Rules Prof. Conduct.) The acceptance of cases without having sufficient time, energy, or resources to handle new matters may result in delays or failures to prosecute client matters. Under these circumstances, new cases should not be accepted. (See State v. Alvey (1974) 215 Kan. 460 [524 P.2d 747]; People v. Good (Colo. 1978) 576 P.2d 1020.)

In the present context, legal services programs and attorneys who are employed by them should ensure that prospective clients are advised, know, and understand (a) that funding may be cut off before the purposes of the retention are accomplished, and (b) that the program may be forced to withdraw from the representation.

G. IF FUNDING IS SUBSTANTIALLY REDUCED OR CUT OFF, SHOULD THE STATE BAR OR A LOCAL BAR ASSOCIATION INTERVENE TO PROTECT CIENTS OF LEGAL SERVICES OFFICES?

Lawyers who have no income and no money for paying the expenses of managing a law practice are incapable of handling client affairs. Thus, as a practical matter, apart from the considerations discussed above, legal services program clients may not be served if there is a complete termination of funding of the Legal Services Corporation. There is authority for suggesting that our profession should share responsibility for assuring that the existing clients of those offices are not abandoned. (Bus. & Prof. Code, 6068, subd. (h);, ABA Code of Prof. Responsibility, canon 2, EC 2-1, 2-16, 2-25.) That the legal profession has not, in the past, adequately attended to perceived needs of the indigent for legal services is so well known as to require little discussion. Proposals that attorneys be required under penalty of discipline to devote specified amounts of time to providing legal services pro bono publico have fared poorly in recent years. (See, e.g., rule 8.1, Proposed Model Rules of Prof. Conduct, ABA Commission on Evaluation of Prof. Standards [Kutak Commission], rule 8.1, January 30, 1980 Discussion Draft, rule 6-1, February 6, 1981 Working Draft, rule 6.1, May 30, 1981 Proposed Final Draft; DR 8-101 Alternative Draft May 30, 1981; see also Hazard, Ethics in the Practice of Law, at pp. 87-89.) The standard of professional responsibility that encourages each lawyer to provide legal services to those who cannot afford it is one of long standing. This standard has been enforced in cases in which an indigent had a constitutional or statutory right to court-appointed counsel. (County of Los Angeles v. Superior Court (1980) 102 Cal.App.3d 926, 931 [162 Cal.Rptr. 636]; County of Fresno v. Superior Court (1978) 82 Cal.App.3d 191, 194-196 [146 Cal. Rptr. 880]; State ex rel. Wolff v. Ruddy (Mo. 1981) 617 S.W.2d 64.) However, we find no recorded precedent in California for enforcing that standard in other cases.

On November 20, 1981, the Board of Governors of the State Bar of California adopted the following resolution addressed to this issue:

"RESOLVED that the Board of Governors hereby approves the following policy:

"The rendition of free legal services to those unable to pay reasonable fees continues to be consistent with the highest ethical ideals of our profession, but the efforts of individual lawyers have not been sufficient to meet this need. Members of the bar, either individually or collectively through bar associations and regardless of professional prominence or professional workload, are encouraged to set aside time to participate in serving the disadvantaged. The Board of Governors encourages increased funding to legal aid offices, lawyer referral services, and other related programs, and encourages the participation of law schools and others to assist in the continued development and improvement of these programs to provide legal services to the disadvantaged. The Board of Governors encourages every lawyer to support all efforts to meet the need for legal services to the disadvantaged."

This opinion is issued by the Standing Committee on Professional Responsibility and Conduct of The State Bar of California. It is advisory only. It is not binding upon the courts, The State Bar of California, its Board of Governors, any persons or tribunals charged with regulatory responsibilities, or any member of the State Bar.


1 The Committee's opinion discusses the standards binding upon members of the California bar which are found in the California Business and Professions Code, the Rules of Professional Conduct of the State Bar, and case authority pursuant to the Supreme Court's inherent power to regulate attorneys admitted to practice in California. (See, e.g., In re Rohan (1978) 21 Cal. 3d 195, 202 [145 Cal. Rptr. 855].) Although the Committee may refer to American Bar Association authority, such authority is not binding in California absent California case authority incorporating such standards into the body of California's law on professional responsibility.

2 Although section 6160 of the Business and Professions Code provides that a law corporation may practice law, a law corporation provides professional services only through individuals who are active members of the State Bar.

We are informed, however, that legal services entities within California are organized as nonprofit corporations pursuant to provisions other than those of the Law Corporations Act. Such statutory provisions do not purport to permit a nonprofit corporation to practice law. Challenges that such corporations are engaged in the unauthorized practice of law seem answered by case law that holds that entities providing legal aid to indigents through programs similar in nature to California legal services programs are not engaged in the unauthorized practice of law. (See Azzarello v. Legal Aid Society of Cleveland (1962 Ohio) 185 N.E.2d 566 and In re Opinion of the Justices (1935 Mass.) 194 N.E. 313, 317. See also N.A.A.C.P.v. Button (1963) 371 U.S. 415, 443-444 [83 S.Ct.328]; Brotherhood of Railroad Trainmen v. Virginia (1964) 377 U.S. 1 [84 S.Ct. 1113]; United Mine Workers of America v. Illinois State Bar Association (1967) 389 U.S. 217 [88 S.Ct. 353]; United Transportation Union v. State Bar of Michigan (1971) 401 U.S. 576, 585 [91 S.Ct. 1076].)

3 We have found no reported case law or other authority suggesting what duties a lawyer has concerning a client, when retained by a third party to represent that client, if the third party withdraws funding. The rules do not expressly address this problem. Because of this silence, we are uncertain whether (1) the intent was that failure of a third party to continue to pay for legal representation does not constitute good cause for withdrawal or (2) the problem was simply never addressed. As noted at the end of Part A, the problem considered in this opinion is magnified because of the failure of a third party to continue funding for legal representation on a mass scale.

Resolution of whether rule 2-111(C)(1)(f) of the Rules of Professional Conduct could be applied in this situation is not necessary to this opinion since the Committee has concluded that, in the situation of massive defunding, a program and its employed attorneys are permitted to withdraw on the basis that continued representation without resources to provide adequate representation could eventually result in a violation of rule 6-101 of the Rules of Professional Conduct. Moreover, acknowledging the physical and mental stress which may be felt by the dedicated programs and employed attorneys, due to both the uncertainty of their future livelihood and of the programs to which they have dedicated their energies and professional efforts, we suggest that withdrawal pursuant to rule 2-111(B)(3) and (C)(4) of the Rules of Professional Conduct may also be appropriate.

.