19 CAEO, ETH 2019-198

Docket Nº:ETH 2019-198
Case Date:January 01, 2019
ETH 2019-198
Formal Opinion No. 2019-198
California Ethics Opinion
The State Bar of California Standing Committee On Professional Responsibility and Conduct
         ISSUE: May an attorney who is required to withdraw from representing a client under rule 1.16(a), because the client’s claim lacks merit, ethically settle the action before withdrawing from the representation?          DIGEST: An attorney who has concluded that a client’s claim lacks merit and cannot be pursued without violating the Rules of Professional Conduct or the State Bar Act is required to withdraw from the representation. Before withdrawing, the attorney must take reasonable steps to avoid reasonably foreseeable prejudice to the rights of the client. Such reasonable steps may include settling the claim if the attorney can do so consistent with the attorney’s duty of truthfulness.          AUTHORITIES INTERPRETED: Rules 1.16, 3.1, 3.4, and 4.1 of the Rules of Professional Conduct of the State Bar of California.1          Business and Professions Code sections 6068(c), 6068(d), 6106, and 6128(a).          STATEMENT OF FACTS          Attorney commences a legal action for Client based on alleged false statements made to Client by the Client’s former business partner. During the course of protracted discovery in the case, Attorney learns that the uncontroverted evidence refutes the Client’s claims. Attorney has therefore concluded that Client’s case lacks merit and Attorney must withdraw under rule 1.16(a).2 Attorney advises Client of his conclusion and that he is ethically obligated to withdraw from representing her. Attorney requests from Client consent to dismiss the case or, alternatively, offers to delay his withdrawal to allow Client time to attempt to retain other counsel. Client does not consent to outright dismissal of the case, but instead asks Attorney to attempt to settle the case before withdrawing because Client is concerned that finding replacement counsel will be difficult and that dismissing the case outright may expose her to liability to the defendant. Notwithstanding Attorney’s ethical prohibition against proceeding to trial, may Attorney nonetheless attempt to settle the case with the defendant before withdrawing?3          DISCUSSION          1. When is an Attorney Ethically Prohibited from Proceeding to Trial on a Claim?          An attorney is ethically prohibited by rule 1.16(a) from proceeding to trial in certain limited circumstances.          Withdrawal is mandatory if (1) the lawyer knows or reasonably should know that the action is being taken without probable cause and for the purpose of harassing or maliciously injuring any person; (2) the lawyer knows or reasonably should know that continued employment will result in a violation of the Rules of Professional Conduct or the State Bar Act; (3) the lawyer’s mental or physical state renders it unreasonably difficult to effectively carry out the representation; or (4) the lawyer is discharged by the client. Rule 1.16(a)(1)-(4).          Similar to the language in rule 1.16(a)(1), rule 3.1 (Meritorious Claims and Contentions) prohibits a lawyer from bringing or continuing an action “without probable cause and for the purpose of harassing or maliciously injuring any person.” Rule 3.1(a)(1) (emphasis added). Here, Attorney has concluded that the evidence refutes Client’s claims, but there is no indication that Client has pursued the case for the purpose of harassing or maliciously injuring a person. In fact, Client may still believe the facts Client presented to Attorney even though Attorney has concluded that those facts are not true. Under these circumstances, rule 3.1(a)(1) is not implicated and withdrawal is not mandated under rule 1.16(a)(1).4          Rule 3.1(a)(2) prohibits an attorney from presenting a claim in litigation “that is not warranted under existing law, unless it can be supported by a good faith argument for an extension, modification, or reversal of the existing law.” The phrase “warranted under existing law” is not defined in the rule or the cases applying the predecessor to rule 3.1, former rule 3-200. Statutes using the same language apply only to “claims, defenses, and other legal contentions,” not to “factual contentions,” which are treated separately. (See Cal. Civ. Proc. Code § 128.7(b)(2) and (3); Fed. R. Civ. P. 11(b)(2)-(4).)          Under the State Bar Act, an attorney has a duty to “counsel or maintain those actions, proceedings, or defenses only as appear to him or her legal or just.” (Bus. & Prof. Code § 6068(c).) Thus, an attorney’s continued employment in a case that the attorney knows is not “legal or just” will violate the State Bar Act. The terms “legal or just” are not defined in the statute, but subsection (c) has been interpreted as ensuring that attorneys only bring complaints and maintain arguments that “are supported by law or facts.”...

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