XAVIER BECERRA Attorney General
LAWRENCE M. DANIELS Deputy Attorney General
AGO 14-301
No. 14-301
California Attorney General Opinion
Office of the Attorney General State of California
April 3, 2018
THE
HONORABLE MARK STONE, MEMBER OF THE STATE ASSEMBLY, has
requested an opinion on the following questions:
1. May
a city council member who is also an attorney advocate on
behalf of a client’s interests when those interests are
adverse to the city?
2. May
a city council member who is also an attorney participate in
a governmental decision concerning a client’s interests
when those interests are adverse to the city?
CONCLUSIONS
1. A
city council member who is also an attorney may not advocate
on behalf of a client’s interests when those interests
are adverse to the city.
2. A
city council member who is also a practicing attorney may not
participate in a governmental decision concerning a
client’s interests when those interests are adverse to
the city.
ANALYSIS
We are
told of an elected city council member who, during his term
on the council but in his separate capacity as a private
attorney, represented clients in a dispute with the city over
its ban of newspaper racks on city property. In the course of
the representation, the council member wrote a letter to the
city on behalf of his private clients, in which he argued
that the city attorney’s position supporting the ban
was legally untenable. The dispute ultimately resulted in
litigation, though the council member ceased his
representation of the clients before a case was filed against
the city.
This
episode prompted the questions presented here: whether a city
council member who is also an attorney may advocate on behalf
of a client’s interests, or participate in making
official decisions affecting a client’s interests, when
the client’s interests are adverse to those of the
city. We conclude that a city council member may not advocate
on behalf of a private client’s interests under such
circumstances, because to do so would violate his or her
fiduciary duties to both the client and the city, and would
undermine respect and confidence in the legal profession.
Moreover, a council member’s participation in an
official decision involving a private client’s adverse
interests would in most cases run afoul of one or more
statutory or common law conflict-of-interest rules.
We are
also asked whether our conclusions would differ if the
attorney received no compensation, if the representation were
limited to pre-litigation, or if the matter did not involve
litigation. These circumstances do not change our
conclusions.
1.
A city council member who is also an attorney may not
advocate on behalf of a client’s interests when those
interests are adverse to the city.
The
Rules of Professional Conduct of the State Bar of California
regulate the professional conduct of attorneys licensed to
practice law in this state, and serve as the basis for
disciplinary action against attorneys.1 Having been adopted
by the Board of Trustees of the State Bar of California, and
approved by the California Supreme Court, these rules are
binding.2
Rule
1-100 provides that the overarching purposes of the rules are
“to protect the public and to promote respect and
confidence in the legal profession.”[3] Rule 3-310
addresses an attorney’s representation of adverse
interests.4 Rule 3-310(C) forbids an attorney,
without the clients’ informed written consent, to
accept representation of more than one client when the
interests of the clients actually or potentially
conflict.5 Moreover, in cases of actual conflict
a client’s consent may be inoperative.[6]
As a
threshold issue, we must determine whether rule 3-310(C)
applies in the circumstances contemplated here. We believe
that it does not, because the rule speaks to conflicting
attorney-client relationships,7 and a council member
does not have an attorney-client relationship with the city
by virtue of his or her office alone.8
Our
inquiry does not end there, however. As Rule 1-100
admonishes, “The prohibition of certain conduct in
these rules is not exclusive,” and “[m]embers are
also bound by applicable law,” including the
“opinions of California courts.”[9] Further, the
rules do not “create, augment, diminish, or eliminate
any substantive legal duty of lawyers or the non-disciplinary
consequences of violating such a duty.”[10]
Specifically, the rules do not “supercede existing law
relating to members in non-disciplinary contexts” such
as judicial authority regarding attorney disqualification
from representing a client.11
Where
an attorney or his or her law firm simultaneously represents
clients with adverse interests, “disqualification
follows automatically regardless of whether the simultaneous
representations have anything in common or present any risk
that confidences obtained in one matter would be used in the
other.”12 This is because “[a]ttorneys
have a duty to maintain undivided loyalty to their clients to
avoid undermining public confidence in the legal profession
and the judicial process.”13
Based
on the duty of loyalty, courts have held that an attorney is
disqualified when a client’s interest is adverse to the
interest of non-clients with whom the attorney has a
fiduciary relationship.14 In Raley v. Superior
Court, a partner in a law firm suing a corporation was
also the director of the bank that was trustee of 100 percent
of the common stock of the corporation.15 The Court of
Appeal noted that, “Professional responsibilities do
not turn on whether a member of the State Bar acts as a
lawyer.”16 The court observed that a conflict
of interest might result from a non-client relationship
“‘where an attorney’s relationship with a
person or entity creates an expectation that the attorney
owes a duty of fidelity.’”17 The court further
found that the attorney, “acting for the Bank as
trustee, has fiduciary duties to the Trust beneficiaries to
manage [the corporation] with reasonable skill, prudence and
diligence.”18 The attorney’s fiduciary
relationship with the corporation, and his partnership with
the law firm, therefore placed him on both sides of the
litigation.19 The court held that, despite the
attorney’s attempt to isolate himself from the case,
the trial court abused its discretion in not disqualifying
the attorney’s firm.20
Later,
in Allen v. Academic Games Leagues of America, the
United States District Court for the Central District of
California relied on Raley to conclude that one Mr.
Wright, a California attorney, had a conflict of
interest.21 Wright represented the defendants in
a copyright and trademark infringement case brought by the
National Academic Games Project.22 The court found that
Wright had a fiduciary relationship with the business that
was “similar to that of corporate director and raise[d]
many of the same concerns.”23 The court noted that
former rule 5-102, on which Raley relied, had been
replaced by current rule 3-310, which does not require
disqualification of an attorney representing interests
adverse to a non-client.24 But the court concluded that rule
1-100 compelled the same result, stating that
“Wright's actions would undermine the integrity of
the legal profession if he is able to utilize a loophole in
Rule 3-310 to avoid disqualification.”[25] The court
ruled that “Wright’s conflict of interest and the
clear suggestion of impropriety” required
disqualification, and must be “imputed to his entire
firm.”26
To
determine whether this ethical prohibition applies here, we
must examine whether an attorney’s fiduciary duty as a
council member disqualifies him from representing a client
with interests adverse to the city.27 The State Bar
Committee on Professional Responsibility and Conduct has
twice addressed this issue,28 concluding that the
adverse representation would be an ethical violation, both in
contractual matters and in litigation.29
In the
first of these opinions, issued 40 years ago, the
Professional Responsibility and Conduct Committee concluded
that an attorney may not represent a client in a contract
negotiation with a city if the attorney is a council member
of the same city.30 The opinion reasoned that,
otherwise, “the attorney may be tempted to use his
influence of public office to gain advantages and concessions
in contract terms for the benefit of his
client.”31 Further, “[t]he city employees
representing the city in a contract negotiation, who are
subject to the council’s jurisdiction, may be reluctant
to oppose the attorney in his contract demands; or they may...