Four Ethical Obligations for California Lawyers to Remember as COVID-19 Changes the Legal Industry
- Trust Accounts Remain Sacred. The shutdown of the economy has financially hurt virtually every law firm. Those financial hardships are not likely to go away any time soon and may get worse before they get better. Given this, there may be temptation to dip into client trust accounts to cover payroll and other immediate obligations, with the expectation funds held in these trust accounts will eventually be earned or can be replenished once collections pick up. Resist this temptation at all costs. Rule of Professional Conduct 1.15 governs an attorney’s ethical obligations to safeguard client’s money and property. Violating this rule can be a career‑ending mistake.
- Be Careful Before Changing Lanes. The economic shutdown has hit some practice areas harder than others. With court closures, litigation has slowed down significantly. With bars closed and parties outlawed, less people are getting DUI’s, resulting in less work for criminal lawyers. Attorneys whose practices are substantially impacted by the economic shutdown may be tempted to take on cases outside of their area of expertise. This should be done with extreme caution. Rule of Professional Conduct 1.1 addresses an attorney’s duty of competency. Attorneys should not represent clients on any matter without the proper knowledge and experience. Dabbling in areas where an attorney lacks competency is one of the quickest ways get on the wrong end of a legal malpractice lawsuit.
- Don’t Keep Secrets From Your Clients. It is natural for law firms to want to hide the impact of economic hardships from their clients. There is a well-founded concern that clients may lose confidence in financially struggling firms and move their business to another firm that projects greater strength and stability. But, Rule of Professional Conduct 1.4(a)(3) requires attorneys keep clients reasonably informed about significant developments relating to the representation. So, if staff or attorney layoffs or partner defections will materially impact a firm’s ability to represent its clients, attorneys have an ethical obligation to disclose this information. Similarly, if a law firm lacks the financial resources or available cash flow to effectively prosecute a contingency case, the law firm must disclose these facts to its client, so the client can make an informed decision whether to continue with current representation or seek new counsel.
- Keep Cases Moving. With court closures, travel restrictions, and stay-at-home orders, delay in litigation is unavoidable. But, attorneys should be cautious about using COVID‑19 as an excuse to delay litigation longer than necessary. Rule of Professional Conduct 3.2 prohibits lawyers from using means which have no substantial purpose other than to delay or prolong the proceeding or to cause needless expense. Rule of Professional Conduct 1.3 also sets forth an attorney’s duty of diligence. Accordingly, even with court closures, litigators should keep litigation moving as much as possible. This includes responding to discovery, serving document productions, taking remote depositions where appropriate, and advancing settlement discussions.
As attorneys continue to navigate these uncharted waters, adhering to our ethical obligations has never been more important.
By Michael S. LeBoff. Michael practices at Klein & Wilson in Newport Beach, California, focusing on business litigation, legal malpractice and attorney fee disputes.