Santa Clara Law



Regulation of Lawyers - The Ethics Regulators

Courts and Legislatures

• The Doctrine of Federal Preemption

• Regulation of attorney's is generally a matter of state law.

• Federal law preempts state laws regulating the conduct of attorney's in two situations:

▪ When constitutional rights are involved, or

▪ When matters of exclusive federal jurisdiction are involved.

• The Doctrine of State Preemption

• Baron v. City of Los Angeles

▪ Los Angeles, as a chartered city, has the power to pass laws and regulations with regard to municipal matters, which are valid even if in conflict with general state laws. For matters of statewide concern, however, state laws govern, if it is the intent of such laws to occupy the field to the exclusion of municipal regulation.

• This is the doctrine of state preemption.

▪ Also set forth 5 definitions of the "practice of law":

• Encompasses all of the activities engaged in by attorneys in a representative capacity;

• The doing or performing services in a court of justice in any matter depending therein, throughout its various stages, and in conformity to the adopted rules of procedure. But in a larger sense it includes legal advice and counsel and the preparation of legal instruments and contracts by which legal rights are secured although such matter may or may not be depending in court. People v. Merchants;

• The resolution of legal questions for another by advice and action by a trained legal mind;

• Performing services in a representative capacity in a manner which would constitute the unauthorized practice of law if performed by a lawyman.

▪ To the extent that the ordinance purports to govern lawyers' activities which constitute the "practice of law" within the State Bar Act, it invades a field of regulation preempted by state law, and lawyers whose services for clients in proceedings before city agencies fall within the definition need not register as "municipal legislative advocates."

• Notes:

▪ ABA MR 3.9 Comment 2 - states that even when lawyers are engaged in activities that lay persons are permitted to perform, lawyers must still adhere to the rules of professional conduct.

• This is the reverse issue in Baron - Baron considered the question of whether a lawyer may be exempt from laws that otherwise are binding on non-lawyers.

• Separation of Powers

• Ultimate Authority

▪ In every state, the ultimate power to regulate the legal system (especially with regard to lawyer admission, ethical regulation, and discipline) resides in the highest court of the state because an attorney is an officer of the court.

▪ In California, the California Supreme Court has practiced a doctrine of shared powers, rather than strictly separation of powers.

• Inherent Authority: The Doctrine of Negative Inherent Powers

▪ The judiciary has express powers given to it by the federal and state constitutions, and also by federal and state legislation.

▪ In addition to these powers specifically granted to it, the judiciary also exercises a loosely defined power generated from its own rulings.

▪ Where the power to regulate attorneys is not expressly granted in the state constitution, it is assumed by courts under the negative inherent powers doctrine, which is part of the constitutional separation of powers.

• This includes the power of equity, supervisory and administrative powers that enable courts to carry out their duties, and the power to protect the sanctity of the judicial process.

▪ Potter v. Eli Lilly Co.

• The trial court has a duty and a right to determine that its judgments are correct and accurately reflect the truth.

• Common law courts from the earliest times have exercised the prerogative of correcting their own judgments by their own records so as to make them conform to the original fact.

• Once the trial judge had reason to believe that there was some absence of accuracy in its judgment so that the judgment did not properly conform to the true facts of the case, the trial judge had a duty, as well as a right, to investigate by means of a hearing to determine that the judgment accurately reflected the truth.

• The trial judge has inherent power to execute this responsibility.

• This inherent power goes beyond actual fraud - it encompasses bad faith, abuse of judicial process, deception of the court and lack of candor to the court.

▪ Notes:

• The obligation of counsel to exercise candor with the court supersedes their obligation to their client.

• Three different aspects of the inherent power doctrine:

• "irreducible inherent authority" - powers fundamental to the essence of the court as a constitutional tribunal;

• "necessary to the exercise of all others" - powers permitting the court to conduct its business (Regulation of lawyers appears in this category); and

• "necessary in the pursuit of a just result" - powers which arise from notions of equity, neutrality, and fairness.

• In California, the inherent power of the judiciary to govern admission to the practice of law is based on the California Constitution article VI, section 1.

The California State Bar

• The Status of the State Bar

• In the exercise of its ultimate authority to regulate lawyers, the California Supreme Court may delegate responsibilities to the State Bar. B&P Code 6087.

• The State Bar was created by the State Bar Act of 1927, better known as the Business and Professions Code. B&P Code 6000-6238.

• Thus, the State Bar is an interesting hybrid: it has been legislated into existence to serve as an agent for the Supreme Court.

• The State Bar Act was held constitutional in In re Shattuck.

• The Legislature, in B&P Code 6087, has expressly recognized the Supreme Court's final authority "to disbar or discipline members of the bar."

• The Mandatory Bar

• The Constitution of California, Article VI, Section 9 provides that every person admitted and licensed to practice in law in California must be a member of the State Bar, except while holding office as a judge of a court of record. (See also B&P Code 6001).

▪ This requirement of State Bar membership for all lawyers is known as an integrated, mandatory, or unified bar.

• Compelled Membership

▪ The first round of legal challenges involved a claim that the mandatory bar was unconstitutional.

▪ The US Supreme Court disagreed, and in Lathrop v. Donahue, upheld the authority of a state to require membership in the bar as a pre-condition to practicing law.

• Compelled Dues

▪ The second round challenged the use of compulsory dues for non-essential bar purposes.

▪ In Keller v. State Bar of California, the US Supreme Court first re-upheld the mandatory bar by noting that "the compelled association and integrated bar is justified by the State's interest in regulating the legal profession and improving the quality of legal services." The State Bar may fund from mandatory dues all activities germane to these goals.

• The guiding standard must be whether the challenged expenditures are necessarily or reasonable incurred for the purpose of regulating the legal profession or improving the quality of the legal service available to the people of the State.

• What Keller finds objectionable was not political activity but partisan political activity as well as ideological campaigns unrelated to the Bar's purpose.

▪ In California, as a result of Keller, the State Bar permits lawyers to deduct $5.00 from their dues.

• State Bar's Name

▪ A third round of litigation challenged the right of the mandatory bar to take political and ideological positions in the name of its membership.

• This is a broader First Amendment claim because it goes beyond the simple return of fees and argues that the State Bar cannot compel membership in an organization which lends its name to activities outside of its constitutionally permitted expenditures.

• Because this issue had not been addressed by the California courts, the Supreme Court in Keller declined to discuss or decide it.

• The State Bar and Rules of Ethics

• One of the most important functions of the State Bar is to inaugurate the process of passing new rules of professional conduct, and to monitor the existing rules for the possibility of revision or replacement.

• The State Bar does not have the power to make ethics rules that are binding on California lawyers. Instead, it generates proposed rules, and then, when approved by the Board of Governors, the proposal is sent to the California Supreme Court. B&P Code 6076. The court may choose to adopt the proposed rule in whole or in part, or to reject it, or to send it back for further commentary and revision. The proposed rule becomes binding only when it is officially adopted by the Supreme Court. B&P 6077.

• Because California has its own ethics rules, the conduct of California attorneys is not governed by the ABA Model Rules, which have no legal force on their own. However, California State Bar Formal Opinion 1983-71 states that "the ABA rules are not authoritative in California but can be looked to for guidance or support for conduct."

▪ May be of particular assistance in those areas where the California courts have not spoken and may be considered as a collateral source, particularly in areas where there is no direct authority in California and there is no conflict with the public policy of California.

• The State Bar Courts

• The State Bar court is in charge of administering the Board's disciplinary function.

• The State Bar court is divided into the Hearing Department and the Review Department:

▪ The Hearing Department conducts full evidentiary hearings before a judge who renders a written decision recommending the discipline, if any, to be imposed;

▪ The Review Department acts as an appellate division of the State Bar Court overseeing the rulings and orders of the hearing judge.

• A State Bar Court decision recommending that an attorney be suspended or disbarred is transmitted to the Supreme Court. Because the State Bar Court's discipline recommendations are advisory, they may be implemented only by order of the Supreme Court after an independent review on the merits.

The American Bar Association

The Scope of Ethical Regulation

• Violation of a Rule of Professional Responsibility

• ABA MR Scope Comment 20 states that a violation of a Model Rule should not itself create a cause of action or a presumption that a legal duty has been breached. However, a violation of a Rule "may be evidence of breach of the applicable standard of care."

▪ Violations of the ethics rules are admissible evidence relevant to the standard of care if the Rule was intended to protect the class of which the plaintiff is a member and if the Rule was intended to guard against the harm that occurred.

• CRPC Rule 1-100(A) states: "These rules are not intended to create new civil causes of action. Nothing in these rules shall be deemed to create, augment, diminish, or eliminate any substantive legal duty of lawyers or the non-disciplinary consequences of violating such a duty."

▪ However, the CRPC do "help define the duty component of the fiduciary duty which an attorney owes to his client."

• Geographic Scope of the Ethics Rules

▪ ABA MR 8.5(a) provides that a lawyer admitted in one jurisdiction may be disciplined in that jurisdiction for conduct occurring in that, or any other jurisdiction. Similarly, a lawyer may be disciplined in any jurisdiction where the lawyer "provides or offers to provide any legal services…"

▪ CRPC Rule 1-100(D)(1) agrees that a California lawyer may be disciplined for "activities…in and outside" California, except when the lawyer is lawfully practicing in another state and is required by that state to obey its own ethics rules. Rule 1-100(D)(2) requires lawyers not licensed in California to obey California's ethics rules when lawfully practicing in California.

• Conduct Not Expressly Prohibited

▪ Bar applicants may be excluded, or members of the bar disciplined, for conduct that is not the basis of a specific rule or regulation in the codes of ethics. ABA MR Scope Comment 16; CRPC Rule 1-100(A) - some of the other sources of ethical regulation include the State Bar Act, California court opinions, ethics opinions from California bar associations, and ethics opinions and rules from other jurisdictions.

▪ Any conduct engaged in by an applicant for admission to the bar may be evaluated by State Bar personnel, even after the applicant is admitted.

• Thus, private, non-professionally related behavior may be the basis for ethical censure, including exclusion.

▪ After an applicant has been admitted to the bar, pre-admission conduct that had not been expressly prohibited, which the bar had not been informed about, may be used as the basis for discipline.

▪ When a member of the Bar is alleged to have committed misconduct prior to admission to practice law, the decision law offers two alternatives:

• The State Bar may undertake an original disciplinary proceeding…and seek the attorney's discipline; or

• It may seek to recommend that the Supreme Court cancel or revoke the law license previously issued.

• Even though these two alternative exist, the Supreme Court considers cancellation, rather than discipline, the appropriate step when an applicant has wrongfully obtained the benefits of admission such as by intentional misrepresentation which prevents the Bar Examiner from adequately considering the applicant's fitness to practice.

• The cases involving license cancellation have involved intentional failure to disclose material facts that could have adversely affected an evaluation of the applicant's moral fitness to practice if the facts were known.

• The cases imposing discipline have generally involved less serious disclosure failures.

▪ After admission, an attorney's public, professional, and private lives are subject to scrutiny by the State Bar.

• Basically anything that falls under the rubric "fitness to practice" (ABA Model Rule 8.4) is subject to scrutiny.

• Reporting Violations

▪ California prohibits lawyers from participating in settlement arrangements that attempt to hide unethical, incompetent, negligent or willful misconduct. CRPC Rule 1-500(B) states that "a member shall not be a party to or participate in offering or making an agreement which precludes the reporting of a violation of these rules."

▪ B&P Code 6090.5 subjects an attorney to discipline if that attorney, either as a party in a case or as an attorney, agrees to the suppression of information from the disciplinary authorities.

▪ While it is clear that lawyers have an ethical obligation not to suppress information from the disciplinary authorities, do they have an affirmative duty to report other lawyers or judges?

• In California, there is no affirmative ethical duty to report professional misconduct.

• By contrast, ABA MR 8.3(a) mandates reporting other lawyers who have violated the rules of professional conduct in a manner that raises "a substantial question as to that lawyer's honesty, trustworthiness or fitness as a lawyer in other respects."

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