Business Law
The “Snitch Rule”
By Neil J Wertlieb
The California Supreme Court recently ordered the approval of new Rule 8.3 (Reporting Professional Misconduct), sometimes referred to (perhaps derogatorily) as the “snitch rule.” This new Rule of Professional Conduct became effective on August 1, 2023.
The Reporting Obligation
New Rule 8.3 obligates all California-licensed attorneys to inform the State Bar of California (or alternatively a tribunal with jurisdiction to investigate or act upon such misconduct[1]) when they know of credible evidence that another lawyer has engaged in any of the following misconduct “that raises a substantial question as to that lawyer’s honesty, trustworthiness, or fitness as a lawyer in other respects”: (a) committed a criminal act;[2] (b) engaged in conduct involving dishonesty, fraud, deceit, or reckless or intentional misrepresentation; or (c) misappropriated funds or property.[3]
Rule 8.3 imposes a duty to report such professional misconduct of another lawyer without “undue delay,” which means that the attorney must report the misconduct as soon as the attorney reasonably believes that reporting it “will not cause material prejudice or damage to the interests of a client” of the attorney or the attorney’s law firm.[4]
As noted above, the reporting obligation arises when the specified misconduct raises a “substantial question” as to a lawyer’s honesty, trustworthiness or fitness as a lawyer. A “measure of judgment” is therefore required: “The term ‘substantial question’ refers to the seriousness of the possible offense and not the quantum of evidence of which the lawyer is aware.”[5]
Exceptions
Rule 8.3 clarifies that certain types of information known by an attorney that would otherwise be subject to reporting are expressly excluded from the disclosure requirement[6] – i.e., information gained by the attorney while participating in a substance use or mental health program; confidential client information[7] and certain other confidential information[8]; and information subject to the lawyer-client privilege and other applicable privileges.
In addition, the rule clarifies that the duty to report is not intended to discourage lawyers from seeking legal advice from other lawyers: “This rule does not apply to a lawyer who is consulted about or retained to represent a lawyer whose conduct is in question, or to a lawyer consulted in a professional capacity by another lawyer on whether the inquiring lawyer has a duty to report a third-party lawyer under this rule.”[9]
Cautionary Notes
In evaluating whether to report professional misconduct to the State Bar as required by Rule 8.3, attorneys should keep in mind their obligations pursuant to Rule 3.10 of the California Rules of Professional Conduct (Threatening Criminal, Administrative, or Disciplinary Charges).[10] Rule 3.10 provides that an attorney may be subject to discipline for threatening “to present criminal, administrative, or disciplinary charges to obtain an advantage in a civil dispute.”[11]
Although Rule 3.10 does not prohibit an attorney from accusing a lawyer of engaging in professional misconduct that is reportable under Rule 8.3 and informing the lawyer that the attorney will report such misconduct to the State Bar, such statements cannot be made to obtain an advantage in a civil dispute.[12] Rule 3.10 does not apply to a threat to commence a civil action, nor does it prohibit presenting disciplinary charges, even if doing so creates an advantage in a civil dispute.[13] However, whether the attorney’s statement violates Rule 3.10 depends on the specific facts.[14] As a result, if an attorney believes reportable misconduct has occurred, it may be advisable for the attorney to report the misconduct required by Rule 8.3 and not make any statements to the reported lawyer if they might be construed as having been made to obtain an advantage in a civil dispute.
In addition, an attorney must not enter into any agreement, or even offer to enter into any agreement, to not report reportable misconduct under Rule 8.3. Rule 5.6 of the California Rules of Professional Conduct (Restrictions on a Lawyer’s Right to Practice) provides: “A lawyer shall not participate in offering or making an agreement which precludes the reporting of a violation of these rules.”[15] As a result, the attorney may be subject to discipline not only for failing to comply with Rule 8.3 (if the attorney knows of reportable misconduct that has occurred), but also for agreeing (or offering to agree) to not report such misconduct (whether or not reportable misconduct has occurred).[16]
Further, although communications to the State Bar relating to lawyer misconduct are privileged, and “no lawsuit predicated thereon may be instituted against any person,”[17] attorneys may be disciplined for filing false or malicious reports with the State Bar.[18] In fact, the filing of a false or malicious report may constitute a misdemeanor.[19] Attorneys may also be disciplined for making false statements of fact or law to a tribunal purportedly pursuant to Rule 8.3.[20]
Conclusion
The adoption of new Rule 8.3 appears to be (at least in part) yet another response to the scandals surrounding former attorney Tom Girardi,[21] despite the fact that the State Bar had in fact received hundreds of complaints regarding his conduct over several decades before he was ultimately disbarred.
Although the reporting obligation contained in Rule 8.3 is new to California, every other state in the country already has a mandatory reporting rule for attorney misconduct.[22] It appears that there have been relatively few instances where discipline was imposed against attorneys in other states for violation of such reporting obligations, and those few instances generally involve clear and blatant violations of the applicable reporting obligation, especially where there were other grounds for discipline in addition to the failure to report.
It will be interesting to see how aggressively the State Bar of California pursues disciplinary proceedings against attorneys for failing to comply with their new reporting obligations under Rule 8.3.
Neil J Wertlieb, the author of this article, is an Inaugural Co-Chair and Founding Member of the California Lawyers Association Ethics Committee, and a former Chair of the Business Law Section and its Corporations and Business Litigation Committees. Mr. Wertlieb is the General Counsel of Milbank LLP. The views expressed herein are his own.
[1] See Comment [6] to Rule 8.3 (“A determination whether to report to a tribunal, instead of the State Bar, will depend on whether the misconduct arises during pending litigation and whether the particular tribunal has the power to ‘investigate or act upon’ the alleged misconduct.”).
[2] Note that, for purposes of Rule 8.3, the term “criminal act” does not include “conduct that would be a criminal act in another state, United States territory, or foreign jurisdiction, but would not be a criminal act in California.” Rule 8.3, paragraph (c). This carveout presumably would apply to certain conduct involving cannabis or abortions, which might be legal in California but unlawful in other jurisdictions.
[3] Rule 8.3, paragraph (a).
[4] Rule 8.3, paragraph (a) and Comment [3].
[5] Rule 8.3, Comment [4] (“This rule limits the reporting obligation to those offenses that a self-regulating profession must vigorously endeavor to prevent.”).
[6] Rule 8.3, paragraph (d).
[7] See Business and Professions Code section 6068(e), and California Rules of Professional Conduct 1.6 and 1.8.2.
[8] See, e.g., Business and Professions Code section 6234 (“information provided to or obtained by the Attorney Diversion and Assistance Program”); Evidence Code section 1129 (mediation confidentiality); see, also, Comment [5] to Rule 8.3 (“Information about a lawyer’s misconduct or fitness may be received by a lawyer while participating in a substance use or mental health program …. In these circumstances, providing for an exception to the reporting requirement … encourages lawyers to seek treatment through such programs. Conversely, without such an exception, lawyers may hesitate to seek assistance from these programs, which may then result in additional harm to their professional careers and additional injury to the welfare of clients and the public.”).
[9] Rule 8.3, Comment [2] (the duty to report also does “not apply if the report would involve disclosure of information that is gained by a lawyer while participating as a member of a state or local bar association ethics hotline or similar service.”).
[10] See Rule 8.3, Comment [8].
[11] Rule 3.10, paragraph (a).
[12] See Rule 3.10, Comment [1] (“For example, if a lawyer believes in good faith that the conduct of the opposing lawyer or party violates criminal or other laws, the lawyer may state that if the conduct continues the lawyer will report it to criminal or administrative authorities. On the other hand, a lawyer could not state or imply that a criminal or administrative action will be pursued unless the opposing party agrees to settle the civil dispute.”).
[13] Rule 3.10, Comment [2] (“A statement that the lawyer will pursue ‘all available legal remedies,’ or words of similar import, does not by itself violate this rule.”).
[14] Rule 3.10, Comment [2]; see Crane v. State Bar (1981) 30 Cal.3d 117.
[15] Rule 5.6, paragraph (b). Note that such prohibition applies not only to the attorney who might have a reporting obligation pursuant to Rule 8.3, but to any other attorney pursuing such an agreement to suppress such reporting. See Rule 8.3, Comment [9] (“A lawyer may also be disciplined for participating in an agreement that precludes the reporting of a violation of the rules.”).
[16] See Rule 8.3, Comment [9]; Business and Professions Code section 6090.5(a)(1) (“It is cause for suspension, disbarment, or other discipline for any member, whether as a party or as an attorney for a party, to agree or seek agreement, that … [t]he professional misconduct or the terms of a settlement of a claim for professional misconduct shall not be reported to the disciplinary agency.”).
[17] Business and Professions Code section 6094(a) (“Communications to the State Bar relating to lawyer misconduct or disability or competence, or any communication related to an investigation or proceeding and testimony given in the proceeding are privileged, and no lawsuit predicated thereon may be instituted against any person.”).
[18] See Rule 8.3, Comment [10] (“lawyers may be subject to criminal penalties for false and malicious reports or complaints filed with the State Bar or be subject to discipline or other penalties by offering false statements or false evidence to a tribunal”).
[19] See Business and Professions Code section 6043.5(a) (“Every person who reports to the State Bar or causes a complaint to be filed with the State Bar that an attorney has engaged in professional misconduct, knowing the report or complaint to be false and malicious, is guilty of a misdemeanor.”).
[20] See Rule 3.3(a)(1) of the California Rules of Professional Conduct (Candor Toward the Tribunal) (“A lawyer shall not … knowingly make a false statement of fact or law to a tribunal or fail to correct a false statement of material fact or law previously made to the tribunal by the lawyer”); Business and Professions Code section 6068(d) (“It is the duty of an attorney to … employ, for the purpose of maintaining the causes confided to him or her those means only as are consistent with truth, and never to seek to mislead the judge or any judicial officer by an artifice or false statement of fact or law.”).
[21] See, e.g., the Client Trust Account Protection Program (which became effective on January 1, 2023), and California Senate Bill 42 (introduced by State Senator Tom Umberg, which has been put on hold).
[22] See, also, Model Rule 8.3 of the Model Rules of Professional Conduct adopted by the American Bar Association (“A lawyer who knows that another lawyer has committed a violation of the Rules of Professional Conduct that raises a substantial question as to that lawyer’s honesty, trustworthiness or fitness as a lawyer in other respects, shall inform the appropriate professional authority.”).