Editor's Note:
State Bar Ethics Opinions cite the applicable California Rules of Professional Conduct in effect at the time of the writing of the opinion. Please refer to the California Rules of Professional Conduct Cross Reference Chart for a table indicating the corresponding current operative rule. There, you can also link to the text of the current rule.
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May the law firm of a member of a city council ethically represent tort plaintiffs in actions against the city when the city has given informed consent?
The law firm of a member of a city council may not represent tort plaintiffs in actions against the city, even with the informed consent of the city council.
Rules 4-101, 5-101 anti 5-102 of the Rules of Professional Conduct of the State Bar.
A member of a city council is also a member of a law firm. The city council has consented to the law firm representing tort claimants in actions against the city. The Committee has been asked whether such representation is unethical. The Committee concludes that it is.
The city is a party to a joint powers agreement wherein a number of cities have formed a self-insurance pool system. The system is administered by an independent authority. Each city has direct liability up to a certain level. In the case of the particular city involved here, it is $25,000. The system is self-insured beyond that up to a stated maximum, beyond which excess insurance is carried. The adjuster has authority to settle claims below $1,000 without approval, but settlements of $1,000 or more must be recommended by the adjuster and approved by the defendant city. The authority retains private counsel to provide legal defense.
The city council has passed a resolution consenting to representation of tort claimants in actions against the city by one of its member's law firm. The approval is subject to three conditions:
1. The council member will disqualify himself or herself from voting on any matter relating to the claim;
2. The council member will not influence the council or its staff in disposition of the claim; and
3. The council member will not personally litigate any tort actions against the city.
The Committee's analysis has considered the following Rules of Professional Conduct in determining whether the representation described above is ethical.
"RULE 4-101. ACCEPTING EMPLOYMENT ADVERSE TO A CLIENT.
"A member of the State Bar shall not accept employment adverse to a client or former client, without the informed and written consent of the client or former client, relating to a matter in reference to which he has obtained confidential information by reason of or in the course of his employment by such client or former client."
"RULE 5-101. AVOIDING ADVERSE INTERESTS.
"A member of the State Bar shall not enter into a business transaction with a client or knowingly acquire an ownership, possessory, security or other pecuniary interest adverse to a client unless (1) the transaction and terms in which the member of the State Bar acquires the interest are fair and reasonable to the client and are fully disclosed and transmitted in writing to the client in manner and terms which should have reasonably been understood by the client, (2) the client is given a reasonable opportunity to seek the advice of independent counsel of the client's choice on the transaction, and (3) the client consents in writing thereto."
"RULE 5-102. AVOIDING THE REPRESENTATION OF ADVERSE INTERESTS.
"(A) A member of the State Bar shall not accept professional employment without first disclosing his relation, if any, with the adverse party, and his interest, if any, in the subject matter of the employment. A member of the State Bar who accepts employment under the rule shall first obtain the client's written consent to such employment.
"(B) A member of the State Bar shall not represent conflicting interests, except with the written consent of all parties concerned."
Generally a conflict of interest arises when clients with conflicting interests seek representation by the same lawyer. Rule 4-101 of the Rules of Professional Conduct permits such representations with the informed written consent of the clients. Here, however, we have something entirely different from the normal one-attorney, multiple-client conflict. While the attorney-council member here might be considered to represent the tort claimant indirectly through the law firm, the city is not the attorney's client. At the outset, therefore, it is necessary to determine whether the Rules of Professional Conduct regulate conflicts of interest which arise outside of the attorney-client relationship. Rule 4-101 of the Rules of Professional Conduct does not apply. Rule 4-101 prevents an attorney from accepting employment adverse to a client. Since the city is neither the attorney-council member's client, nor the firm's client, representation of the tort claimant would not be adverse to a client under the provisions of this rule. (Pepper v. Superior Court of Los Angeles County (1977) 76 Cal.App.3d 252 [142 Cal. Rptr. 759].)
Rule 5-101 of the Rules of Professional Conduct also does not apply here. Rule 5-101 prohibits an attorney from acquiring a pecuniary interest adverse to a client unless the client consents. The city council member's representation of a tort claimant in a claim against the city, presumably under a contingent fee arrangement, might be considered an acquisition of a pecuniary interest. However, such representation would not be adverse to a client under rule 5-101 because the attorney-council member is not the city's attorney.
Rule 5-102(A) of the Rules of Professional Conduct requires the council member's firm to disclose its relationship with the city before undertaking to represent a tort claimant in a claim against the city, but the claimant is unlikely to object. Rule 5-102(B) of the Rules of Professional Conduct might arguably apply. It prohibits an attorney from representing conflicting interests of multiple parties and is not limited to conflicting interests among clients.
The question, then, is whether the provisions of rule 5-102(B) of the Rules of Professional Conduct apply when a member's duties of representation arising out of an attorney-client relationship conflict with a member's duties of representation arising out of some other relationship (e.g., as a public official, as an executor of an estate, or as an officer of a private organization). In Pepper v. Superior Court of Los Angeles County, 76 Cal.App.3d 252 at pages 256-258, the Court of Appeal for the Second Appellate District said that an attorney's membership in a club does not prevent him or her from representing parties in an action against that club, absent the potential for breach of confidences.
In a matter involving a member of a city council, Los Angeles County Bar Association Committee on Legal Ethics, opinion No. 273 (1962) stated, at page 399:
"When a lawyer is elected to the legislature, his duty as the holder of such office requires him to represent the public with undivided fidelity. His obligation as a lawyer continues. It is improper for him, as for any other lawyer, to represent conflicting interests...' [Quoting from Persig, "Cases on the Legal Profession," p. 44.]"
Opinion No. 273, supra, concluded that a city council member-attorney could not represent a client charged with violation of a city ordinance in a matter prosecuted by the city attorney and in which a police officer was a material witness.
For the purpose of rule 5-102(B) of the Rules of Professional Conduct, a conflict of interest may arise from an attorney's relationship with a nonclient. Such a conflict of interest may arise where an attorney's relationship with a person or entity creates an expectation that the attorney owes a duty of fidelity. It may also arise where the attorney has acquired confidential information in the course of such a relationship which will be, or may appear to the person or entity to be, useful in the attorney's representation in an action on behalf of a client.
In the case of a member of a city council, both of these elements are present. The public expects its elected representatives to represent them "with undivided fidelity." The public also expects that its representatives will have access to confidential information which may be useful in lawsuits against the city. (For example, information concerning settlement parameters and weaknesses in the city's litigation cases would be helpful in a claim.) For these reasons, a city council member-attorney may not undertake representation of a client where there is a conflict of interest with his or her council position.
Furthermore, any conflict of interest which exists as to the council member-attorney would apply as well to his or her office partners and associates, precluding them from undertaking representation of claimants against the city. (64 Ops. Cal.Atty.Gen. 282 (April 19, 1981) CV 80-1204; ABA Committee on Prof. Ethics, opn. No. 16 (1929); ABA Committee on Prof. Ethics, informal decisions Nos. 691 (1963) and 1003 (1967); L. A. Co. Bar Assn. Committee on Legal Ethics, opn. No. 242.)
Rule 5-102(B) of the Rules of Professional Conduct permits conflicting representation with the parties' consent. There have been suggestions that there can be no consent where the public is involved. (See, e.g., ABA Committee on Prof. Ethics, opns. Nos. 16, supra, and 34 (1931).) Los Angeles County Bar Association Committee on Legal Ethics, opinion No. 273, supra, stated, at page 399:
"If the interests of the public and the client conflict, the exceptions contained in [ABA Code of Prof. Responsibility] Canon 6 is inapplicable because the public is a party and cannot consent."
In contrast, California Attorney General's Opinion 77118 (61 Ops. Cal.Atty.Gen. 18 (1978)) concluded that, pursuant to rules 4-101 and 5-102 of the Rules of Professional Conduct, a county may consent to permit legal counsel retained by it for litigation purposes to represent other parties in unrelated actions against the county.
The Committee believes that the Attorney General's conclusion is more compelling than the conclusions of the American Bar Association. Consent is a discretionary decision no different in kind or effect from numerous other discretionary decisions made by public officials, such as the decisions concerning whom to hire as attorney for the public and whom to sue. The public entrusts such decisions to their officials. There is nothing in the Rules of Professional Conduct or in case law which would prohibit officials from providing the consent required by rule 4-101 or 5-102(B) of the Rules of Professional Conduct.
The city's consent to representation of a claimant by the council member-attorney's law firm may waive the conflict of interest. There remains, however, another problem, this one incurable. A lawsuit brought against the city by a law firm whose member is on the city council creates such an appearance of improper conduct that it cannot ethically be permitted.
The concept of "appearance of impropriety" is an ethical consideration, even though it is not included in the Rules of Professional Conduct. American Bar Association Model Code of Professional Responsibility, canon 9, provides that, "[a] lawyer should avoid even the appearance of impropriety." This concept has also been recognized by California courts. For example, in People v. Rhodes (1974) 12 Cal.3d 180 [115 Cal. Rptr. 235], the Supreme Court of California held that a city attorney with prosecutorial responsibilities may not defend a person accused of a crime. After citing the conflicting loyalties of defense counsel and prosecutor, the Court said, at page 185:
"[T]here are other compelling public policy considerations which render it inappropriate for a city attorney with prosecutorial responsibilities to represent criminal defendants. It is essential that the public have absolute confidence in the integrity and impartiality of our system of criminal justice. This requires that public officials not only in fact properly discharge their responsibilities, but also that such officials avoid, as much as is possible, the 'appearance' of impropriety."
In People v. Municipal Court (Wolfe) (1977) 69 Cal. App.3d 714, [138 Cal. Rptr. 235] the Court of Appeal for the Fourth Appellate District held that it is better practice for members of city councils to avoid representing defendants in criminal actions which are prosecuted by the city attorney or which involve police officers as witnesses. The right of an accused to counsel of his or her choice is not absolute and it is subject to other values of substantial importance.
"One such value is the preservation of public confidence in the integrity and impartiality of our criminal justice system, and here it should prevail. While the California Rules of Professional Conduct do not expressly prohibit members of the bar in general from accepting employment which in fact involves no conflict of interest but which might, to the layman, appear to be improper, an ethics committee of the American Bar Association has stated: 'If the [legal] profession is to occupy that position in public esteem which will enable it to be of the greatest usefulness, it must avoid not only all evil but likewise avoid the appearance of evil.' (ABA Opinion 49 [Dec. 12, 1931].)" (Wolfe, supra, 69 Cal. App.3d at pp. 719-720.)
(See also People v. Superior Court (Greer) (1977) 19 Cal. 3d 255, 269 [137 Cal. Rptr. 476]; Love v. Superior Court (1980) 111 Cal. App.3d 367, 374 [168 Cal. Rptr. 577]; In re Airport Car Rental Antitrust Litigation (N.D. Cal. 1979) 470 F.Supp. 495, 507; L.A. Co. Bar Assn. Committee on Legal Ethics, opn. No. 273 (1962);, cf. Graham v. Municipal Court (1981) 123 Cal. App.3d 1018 [177 Cal. Rptr. 172].)
Members of an attorney-city council member's law firm may not ethically represent clients in their dealings with the city (64 Ops. Cal.Atty.Gen. 282 (Ap. 1981) CV 80-1204). This opinion is grounded upon the need to promote public confidence in our legal system and in the legal profession (ABA Code of Prof. Responsibility, EC 9-1) and upon the need to avoid the appearance of professional impropriety.
This Committee concluded in its opinion No. 1977-46 that neither an attorney nor his or her partner or office associate may represent a criminal defendant being prosecuted by a city in which the attorney serves as a council member. The opinion also held that the attorney and his or her partners and associates may not represent a client in contract negotiations with the city. The opinion cited American Bar Association Code of Professional Responsibility, Disciplinary Rule 8-101(A), which provides that a lawyer who holds public office must not use his or her position to gain advantage for the lawyer or his or her client. The opinion then stated:
"Although there may be no actual conflict of interest in the representation of a client in the negotiations of a contract with the city, the potential of such conflict and the danger of an appearance of impropriety are of such magnitude and public concern as to require that such representation be declined. In the eyes of the public, it is highly possible that representation in such cases would be viewed with a suspicion that the attorney was using his or her position and influence with the city for the purpose of extracting favorable special treatment for his or her clients in furtherance of their interests and his or her own."
There is much potential for the appearance of conflict and for actual conflict in the representation proposed here. Even if the council member-attorney abstains and if the council approves settlement, there would still appear to be an attorney council member approving a settlement, and probably also a fee, in his or her own firm's case. Assuming the public appreciates that the attorney-council member has not voted, it will nonetheless appear that the other council members have approved a settlement to the benefit of the attorney-council member. Fellow council members might also be reluctant to oppose a settlement for this reason. City employees could be witnesses at trial and might appear to shade testimony to benefit the attorney-council member's case presentation. A case might require the attorney-council member's firm to criticize prior city council action as contributing to the tort. It could appear that the attorney-council member has influenced other members of the council or city employees and officials.
The Committee is aware that California decisions which rely upon the appearance of impropriety standard generally concern the administration of the criminal justice system. The Committee is also aware that disqualification of counsel on the sole ground of the appearance of impropriety has come under much criticism.
The February 6, 1981 draft of the Model Rules of Professional Conduct prepared by the American Bar Association's Commission on Evaluation of Professional Standards, for example, eliminated the appearance of impropriety standard now present in canon 9 because 'literal application of such a test would logically result in a per se prohibition on all representations adverse to a former client without regard to subject matter..." (Notes, Rule 1.9.) The Commission points out that:
"Concern with adverse appearances apparently originated in cases involving lawyers who were concurrently employed by the government and engaged in representation of private clients in unrelated matters. [Citations.] Preservation of public confidence in governmental affairs was held to preclude representation even in unrelated matters and despite any consent by the parties [citations], an approach that seems appropriate to government employees as such rather than lawyers as such."
At least with respect to attorneys who are also public officials, the legal profession's interest in maintaining public confidence in lawyers and the judicial system is sufficient to render representation of the type proposed here unethical. It is the public official's visibility to the public which places his or her conduct, as an official and as a lawyer, before the public. The greater the public scrutiny to which an attorney's conduct is subject, the greater the legal profession's interest in ensuring that the attorney's conduct appear to be proper.
An attorney must exercise the highest degree of care to avoid giving the public the impression that he or she has improperly used the influence of public office. It is therefore our conclusion that the city council member's firm may not represent tort claimants in suits against the city.
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.
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