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In the Matter of Ethics

By Brian Slome Ben Armistead | Dec. 29, 2017

self-study / Legal Ethics

In the Matter of Ethics

Slome brian web

Brian Slome

Partner, Lewis Brisbois Bisgaard & Smith LLP


Brian's practice focuses on the defense of professionals, which includes defending attorneys in legal malpractice and discipline proceedings.


The State Bar Court Review Department issued a range of attorney discipline opinions this year. As usual, the most common complaint involved attorneys misappropriating client money. The court also considered cases involving misrepresentations to judicial officers. The review court had no tolerance for attorney dishonesty, whether before courts, administrative agencies, or in dealing with the Office of Chief Trial Counsel.

Commingling and Misappropriation of Client Funds

The review court considered several cases where attorneys claimed honest mistakes with accounting. In In the Matter of Albert Miklos Kun, 14-O-05418 (April 24, 2017), a member was found culpable of failing to maintain $459 of client funds (among other offenses), for which he was disciplined with a two-year actual suspension. The review court rejected the member's argument that he was unaware of his accounting obligations. The review court held that all members of the State Bar should know the rules set forth in the State Bar's Handbook of Client Trust Accounting for California Attorneys. It also rejected the member's argument that the amount misappropriated was too small to warrant discipline (although it took the amount into consideration for discipline).

The review court was presented with a similar argument in In the Matter of David Doe-Ook Kim, 14-O-3483 (April 25, 2017). There, the member was found culpable of misappropriating settlement funds paid on an installment basis. The member was contractually obligated to take only a portion of each installment. Nevertheless, he cashed the first installments, advising his clients that he had not received payment and they would need to sue to enforce the settlement agreement. The member defended the charges arguing he was concerned his clients would not pay taxes on the settlement proceeds because they were undocumented. He planned to take his money from the first installments, and then ask opposing counsel to issue all remaining payments directly to his clients.

The review court upheld all the culpability findings and was particularly troubled that the member's disciplinary hearing came on the heels of a prior case in which the member had been issued a private reproval for negotiating a fee agreement that was neither reasonable nor fair to his client's interest. As a result, the review court recommended the member be disbarred.

In In the Matter of Steven Mark Klugman, 13-O-17015 (Jan. 12, 2017), the review court found a six-month actual suspension appropriate for an attorney who breached his ethical obligation to hold money in his client trust account. The attorney was holding money for both spouses in a legal proceeding involving unpaid child support. He followed instructions from one spouse to disburse the funds, without approval of the other spouse.

The review court agreed with the hearing court and held the attorney violated his ethical obligation to the second spouse. The review court was not convinced the attorney honestly believed a court order was entered consistent with his actions. The attorney's belief was unreasonable, as it was based on oral tentative ruling, which did not become effective until after he had already disbursed the money.

Cases Involving an Attorney's Duty of Honesty and Candor

In April, the review court considered whether California Business and Professions Code Section 6103, which prohibits an attorney from disobeying a court order, applies to administrative law proceedings. In In the Matter of Leo Joseph Moriarty, Jr., 15-O-10406 (April 20, 2017), a member was found culpable of making misrepresentations to the Office of Administrative Hearings regarding his health and need for a continuance. The hearing court found Section 6103 does not apply to proceedings before the office, as it is not a court, but rather a division of the Department of General Services.

The review court disagreed. It likened the Office of Administrative Hearings to a constitutional administrative agency similar to the Workers' Compensation Appeals Board, whose orders are given judicial significance for purposes of Business and Professions Code Section 6103. See In the Matter of Lantz (Review Dept. 200) 4 Cal. State Bar Ct. Rptr 126. For the same reason, the court found sanctions issued by the Office of Administrative Hearings must be reported to the State Bar if they exceed $1,000. Bus. and Prof. Code Section 6068(o)(3). The review court emphasized how seriously it takes attorneys' duties of honesty. "We emphasize that attorneys are sworn officers of the courts, and '[i]t is, of course, an extremely serious breach of an attorney's duty to lie in statements made to the court.' (In re Aguilar (2004) 34 Cal. 4th 386, 394.) Practically speaking, courts simply cannot function unless they can trust that attorneys appearing before them are telling the truth. Honesty is absolutely fundamental in the practice of law; without it, 'the profession is worse than valueless in the place it holds in the administration of justice.' (Tatlow v. State Bar (1936) 5 Cal. 2d 520, 524.)"

In In the Matter of Tina Amouei Nia, 14-O-05291 (Feb. 24, 2017), the review court increased discipline findings issued to a member who had stipulated to culpability. The review court emphasized that the member acted fraudulently and in bad faith during the State Bar's investigation. The member exerted pressure on the complaining witness to withdraw her complaint. When she refused, the member tried passing off a different person as the complaining witness to the State Bar investigator to secure a withdrawal of the complaint.

In In the Matter of Robert Howard Sack, 13-O-14697 (Jan. 23, 2017), the review court overturned the hearing court's recommendation that a member be disbarred for making false statements on a personal application for unemployment mortgage assistance benefits. The court found the Office of Chief Trial Counsel failed to prove its case with clear and convincing evidence. The review court found the representations on the application could have been made by the member's wife, for whom the information was largely accurate.

The review court rejected office's attempt to expand the charges at trial without amending its notice of disciplinary charges. "The Supreme Court has made it clear that 'the State Bar cannot impose discipline for any violation not alleged in the original notice to show cause. ... In fact, '[i]f the evidence produced before the hearing [judge] shows the attorney has committed an ethical violation that was not charged in the original notice, the State Bar must amend the notice to conform to the evidence adduced at the hearing.'"

Reinstatement Cases Decided This Year

In the reinstatement context, the review court provided procedural guidance. In March, it overturned the dismissal of a reinstatement petition, which the hearing court had found to be untimely. In the Matter of Steven Howard Unger, 16-R-13205 (March 17, 2017). The member applied for reinstatement within three years of being notified of having passed the attorney exam. However, more than three years passed since he sat for the attorney exam.

The hearing court dismissed his petition for reinstatement finding it untimely. It interpreted Rule 9.10(f) of the California Rules of Court to require a petition for reinstatement to be filed within three years of both taking and passing the exam. The review court disagreed. It held the rules language "having taken and passed the [Attorney Exam]" as a single requirement.

In In the Matter of Timothy John MacKenzie, 16-R-17485 (Nov, 6, 2017), the review court affirmed the dismissal of a reinstatement petition that had been filed without evidence that the member had reimbursed to the Client Security Fund payments made on his behalf along with interest and costs. The review held that "reimbursement is a mandatory prefiling requirement. Were as here, a petitioner has not reimbursed CSF prior to filing a petition for reinstatement dismissal is mandatory, not discretionary."

Notable Advisory Opinions from Bar Associations

In September, the San Francisco Bar Association issued an advisory opinion explaining the pitfalls an attorney faces when ethically representing a large group of plaintiffs in a tort action. The bar association found the practice permissible, but it highlighted obstacles involved in advertising and soliciting clients. It described the types of conflict waivers necessary, and how to address the duties of confidentiality and loyalty that arise when representing multiple clients.

In Opinion 528, the Los Angeles County Bar Association considered whether an attorney engaged by an insurance carrier to defend the interests of an insured must withdraw if he obtains information that could provide a basis for the insurance carrier to deny coverage. The bar association found the attorney is obligated to withdraw rather than reveal the information to the insurer, to whom the attorney also owes ethical obligations.

In Opinion 529, the Los Angeles County Bar Association considered the perils of attorney activity on social media. It concluded that a lawyer's inadvertent disclosure of client information or trial techniques can be a violation of an attorney's ethical duties to a client. It cautioned attorneys to be sensitive to the interplay of advancing technology and the lawyer's professional responsibilities. "A lawyer's failure to recognize the risks inherent in the use of on-line social media could result in client injury and the possibility of professional discipline under Business and Professions Code § 6068(e)(1) and Rules of Professional Conduct 3-100 and 3-110."

2018 promises to be another busy year for the State Bar Court, which will in turn lead to some interesting opinions from the review court. Additionally, county bar associations continue to solicit interesting issues for consideration, which help clarify attorneys' ethical obligations.


Ben Armistead

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