Small Rule Changes Can Have Large Effects on California Attorneys

April 2023

By David Majchrzak

Sometimes, I feel that the expression “less is more” is overused. Usually, I find that less is less and more is more. Circumstances rarely justify a juxtaposition of those words’ meanings. But perhaps we are in one of those unusual times, at least as it concerns the regulation of our profession.

In May 2018, the State Bar heralded the forthcoming implementation of 69 rules of professional conduct that would go into effect that November, while noting that the Supreme Court had rejected one. Following well-considered analysis and review by some of the finest legal ethicists in California, the rules that the Supreme Court largely adopted as proposed were all “new” in that they employed a numbering scheme similar to that in the Model Rules. While, in parts, these rules contained changed language or some details associated with compliance, an overwhelming majority of concepts in the rules did not differ from already existing requirements. 

Barely four years since those rules went into effect, there is no suggestion that another “overhaul” of them will take place anytime soon. But we appear to be in the midst of fewer changes that nonetheless may impact lawyers in an even more significant way than the 2018 rules revisions.

CLIENT TRUST ACCOUNT PROTECTION PROGRAM LAUNCHED

Hopefully, the lawyers reading this already know about new California Rules of Court rule 9.8.5, known as the State Bar Client Trust Account Protection Program, or for those fond of acronyms, CTAPP. Effective January 1, and requiring action by February 1, the program currently requires annual client trust account reporting, annual trust account registration, annual trust account self-assessment, and annual client trust account certification of compliance. 

Later phases are anticipated to bring education and outreach, and compliance audits. Whereas the process itself provides little new for lawyers to do, it has caused some professionals to revisit how they are handling funds held in trust and their accounting obligations.

CIVILITY AND LAWYER MISCONDUCT REPORTING RULES PROPOSED

There are also two new regulations that may be on an inexorable path to adoption. Proposed rule 8.4.2 would codify a prohibition on civility, defined as “significantly unprofessional conduct that is abusive or harassing and shall be determined on the basis of all the facts and circumstances surrounding the conduct.” Of course, there is already a mechanism to address uncivil conduct in litigated matters. Many courts adopt civility guidelines in their local rules and can enforce them through sanctions on the lawyers. In turn, should the amount of the sanction be $1,000 or more, the lawyer would be obliged to report to the State Bar, which presumptively would then investigate. 

But such a rule of professional conduct would extend beyond litigation and would provide a fairly broad definition that would uniformly apply in all courts, regardless of whether they have adopted any civility guidelines. This is not new to California but has not been required since the Ninth Circuit’s 1996 decision in United States v. Wunsch, which declared the former Business and Professions Code section 6068, subdivision (f), a mandate to “abstain from all offensive personality,” was unconstitutionally vague. 

California lawyers may also soon be required to report the misconduct of other lawyers. There are two pending proposals on the subject. The State Bar’s Standing Committee on Professional Responsibility and Conduct has recently proposed a new rule 8.3, something that the Rules Revision Commission did not recommend for adoption. In a bit of unusual procedure, and perhaps reflecting the board’s predilection to approve—something that should surprise nobody given the board’s request that the committee suggest a new rule—the proposal was sent out for only a 30-day comment period. The new rule would require lawyers to report to the State Bar when they acquire such information through their personal observations that another lawyer has committed a criminal act that reflects adversely on the lawyer’s honesty, trustworthiness, or fitness. Such reporting requirements would not be mandated, however, if the information is gained through a substance use or mental health program or is protected by “other rules or laws,” such as those that provide for confidentiality. 

At the same time, Senator Tom Umberg has introduced Senate Bill 42, which would provide for an even broader reporting requirement of lawyers. It would add new section 6090.8 to the State Bar Act, which would mandate reporting when one lawyer knows that another lawyer “ has engaged in professional misconduct that raises a substantial question as to that licensee’s honesty, trustworthiness, or fitness as an attorney in other respects.” That is, the new statute would not depend on whether the conduct was criminal and could be based on information obtained other than through personal observations. It may be worth noting that it could be conceivable that, notwithstanding the adoption of a rule similar to the currently proposed rule 8.3, the legislature could still enact a new statute with a different reporting standard.

ABA CONSIDERS CHANGES TO MULTIJURISDICTIONAL PRACTICE RULES 

In addition to these matters currently being addressed in California, the American Bar Association is currently studying whether to amend Model Rule 5.5. Following the issuance of a proposal by the Association of Professional Responsibility Lawyers, the ABA’s Standing Committee on Ethics and Professional Responsibility circulated a proposal with the Center for Professional Responsibility and, in the fall of 2022, formed a working group to study the proposal. Though any language is far from finalized, the proposed amendments could represent a sea change in multijurisdictional practice and permit far greater latitude for clients to select counsel.

While still requiring lawyers to abide by pro hac vice requirements, the new rule would permit lawyers to provide services in jurisdictions where the lawyer is not licensed so long as the lawyer is not suspended or disbarred, and the lawyer discloses in writing where the lawyer is licensed to practice. Presuming that such an amendment passes the ABA’s House of Delegates, its applicability would still be limited to which jurisdictions adopt that amendment. That is, each state or district would control whether this standard should apply to the practice of law “in” their jurisdiction.

STAY INFORMED ON THE CHANGES

What all of this means is that California lawyers may want to actively be watching for updates on their regulatory responsibilities. Stay informed. Attend conferences. Read those announcements you may receive in your inbox from the State Bar. Review your internal processes. And, if you feel strongly for or against any of these regulations, consider commenting to the State Bar or the legislature.

David Majchrzak is shareholder and deputy general counsel at Klinedinst in San Diego, where he focuses on counseling clients on how to achieve their professional goals in an ethical way. He is a member of CLA’s Ethics Committee, serving as inaugural co-chair from 2019 to 2021.