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Posts Tagged ‘California State Bar’

California Lawyers Cannot Churn Files

Posted on: November 7th, 2019

By: Greg Fayard

Under the Rules of Professional Conduct applicable to California lawyers, attorneys are not supposed to do things where the substantial purpose is to delay, prolong, or cause needless expense. Under Rule 3.2, lawyers can be disciplined for churning a file for the substantial purpose of increasing legal fees. Examples of needless work would be lawyers spending time researching irrelevant issues, working on a case just to increase the legal fees, and seeking to continue a case for no valid reason, such as to extend a billing opportunity or delay a case simply to aggravate the opposing party.

Of course, the California State Bar might have trouble proving a violation of Rule 3.2, as most legal work has a motivation that is not based substantially on delay or increasing expenses.

That said, the best practice for all lawyers is to do what is necessary but which potentially advances the client’s interests.

If you have any questions or would like more information, please contact Greg Fayard at [email protected], or any other member of our Lawyers Professional Liability Practice Group, a list of which can be found at www.fmglaw.com.

California Lawyers Now Have A Duty of Diligence

Posted on: September 13th, 2019

By: Greg Fayard

The prior rules of professional conduct for California lawyers required them to be competent but were silent on also being “diligent.” Under the latest version of the rules, California lawyers now have an express duty of diligence. (Rule 1.3) That is, California lawyers can now be disciplined by the State Bar for neglecting or disregarding a matter.

The State Bar, after all, is a consumer protection organization, and its focus is on protecting the public from unscrupulous or incompetent lawyers. It is not a trade association that promotes lawyer interests.

Hence, California lawyers now have a duty “to get the job done”—the new duty of diligence. Lawyers should therefore stay on top of their matters and not let them languish. Doing so could expose the lawyer to a State Bar complaint.

If you have any questions or would like more information, please contact Greg Fayard at [email protected], or any other member of our Lawyers Professional Liability Practice Group, a list of which can be found at www.fmglaw.com.

California Court Clarifies Grounds for Law Firm Disqualification

Posted on: January 30th, 2019

By: Brett Safford

In O’Gara Coach Company, LLC v. Joseph Ra, 2019 Cal.App. Lexis 12, the California Court of Appeal clarified the grounds on which a law firm can be disqualified. The Court reversed the decision of the trial court and disqualified Richie Litigation PC from representing Joseph Ra, a former executive of O’Gara Coach Company, LLC, in litigation involving Ra and O’Gara Coach. The Court held that disqualification is warranted because Darren Richie, the founder of Richie Litigation, formerly served as O’Gara Coach’s president and chief operating officer, and in those roles, he served a primary point of contact for the company’s outside counsel and possessed “confidential information, protected by O’Gara Coach’s attorney-client privilege, concerning Ra’s allegedly fraudulent activities at issue in this litigation.” The Court disqualified Richie Litigation even though Richie was not a licensed attorney when serving as O’Gara Coach’s president and chief operating officer and never had an attorney-client relationship with the company. The Court further held that vicarious disqualification of the entire firm, not only Richie, is warranted under the doctrine of imputed knowledge.

The litigation between O’Gara Coach and Ra arose from a lawsuit filed by Marcelo Caraveo, a former customer of O’Gara Coach, alleging wrongful conduct by O’Gara Coach, Ra, and others relating to Caraveo’s acquisition of luxury vehicles from O’Gara Coach. Ra filed a cross-complaint against O’Gara Coach for indemnity, and O’Gara Coach filed a cross-complaint against Ra, Caraveo, and others alleging that Ra and Caraveo “were the primary architects” of a fraudulent scheme involving the sale, leasing, and financing of vehicles.

Richie’s employment with O’Gara Coach terminated in 2016. In May 2017, Richie filed articles of incorporation for Richie Litigation which named Robert Lu as the sole officer and director.  In June 2017, Lu substituted as counsel of record for Ra. In August 2017, Richie was admitted to the California State Bar.

In October 2017, O’Gara Coach moved to disqualify Richie Litigation based on two reasons. First, O’Gara Coach argued that although Richie was not a licensed attorney when employed by the company, “the court should apply the rule requiring disqualification of attorneys representing adverse parties in successive representations when, as here, the matters are substantially related, as well as the rule that, when a former client’s confidential information is known to any attorney at a law firm, the entire firm must be disqualified.” Second, O’Gara Coach argued disqualification of Richie Litigation is warranted because Richie was privy to O’Gara Coach’s privileged information, and “Richie Litigation is not entitled to exploit that information in litigation adverse to the company.” The Court of Appeal rejected the first argument, but agreed with the second, holding that the trial court “erred in failing to consider O’Gara Coach’s alternate argument that disqualification of Richie and his law firm was required as a prophylactic measure because the firm was in possession of confidential information, protected by O’Gara Coach’s attorney-client privilege, concerning Ra’s allegedly fraudulent activities at issue in this litigation.”

The Court of Appeal explained that O’Gara Coach presented undisputed evidence that Richie participated in meetings and communications with outside counsel who were investigating Ra’s activities and “developing theories material to O’Gara Coach’s defense and forming the basis for its cross-claims in this litigation and that are protected by lawyer-client privilege.”  As the privilege belongs to O’Gara Coach, Richie cannot disclose privileged information without O’Gara Coach’s consent.  The Court further concluded, “[N]ow that Richie is a member of the California State Bar, O’Gara Coach is entitled to insist that he honor his ethical duty to maintain the integrity of the judicial process by refraining from representing former O’Gara Coach employees in this litigation against O’Gara Coach that involve matters as to which he possesses confidential information.”

The Court of Appeal further held that Richie Litigation is variously disqualified because “once a showing has been made that someone at the adverse party’s law firm possesses confidential attorney-client information materially related to the proceedings before the court, a rebuttable presumption arises that the information has been used or disclosed in the current employment,” and Ra did not present evidence that Richie had been screened from Lu or other lawyers at the firm working on the pending litigation. As such, the Court held that “the doctrine of imputed knowledge requires the vicarious disqualification of the entire Richie Litigation firm.”

O’Gara Coach emphasizes the paramount importance of protecting client confidences and the attorney-client privilege to ensure the “integrity of the judicial process.” An attorney must not only be mindful of his or her own prior relationships with an opposing party, but also of the prior relationships between other attorneys in his or her firm and an opposing party. Without thorough conflict checks, firms may subject themselves to disqualification and other costly repercussions from their clients.

If you have any questions or would like more information, please contact Brett Safford at [email protected].