Those outside the community of legal professional liability litigators might read a headnote on the 9th Circuit's recent opinion in Koi--a lawsuit involving claims of legal malpractice, breach of fiduciary duty, and negligent supervision--and give the opinion no further thought. But the opinion is worth a closer look. Most malpractice and fiduciary duty claims are premised on violations of the California Rules of Professional Conduct ("the Rules"), which apply to all California attorneys. The opinion therefore offers useful guidance regarding the professional and ethical obligations that attorneys owe their clients.
After providing some background on the factual and procedural history that led to the appeal, I will explain how the opinion clarifies the ethical duties of disclosure and supervision and the causation standard applicable to many claims of legal malpractice and breach of fiduciary duty.
Factual background
Before I summarize the relevant factual and procedural history, an important caveat: my firm, Makarem & Associates, is representing Koi in pending litigation against Marron Lawyers after the 9th Circuit's reversal of the district court's order granting Marron Lawyers summary judgment. The factual background in this article comes from the 9th Circuit's opinion in Koi Design LLC v. Marron Lawyers, APC (9th Cir. 2026) 184 F.4th 1132. Because the appeal arose from summary judgment, the court made no findings of fact; it recited the record in the light most favorable to Koi as the non-moving party, and the claims described here remain unadjudicated on remand.
Koi, a manufacturer of medical apparel, retained Marron Lawyers ("Marron") to defend it in a trademark suit brought by SPI, a competitor. An experienced associate attorney ("Attorney") at Marron represented Koi in the trademark litigation.
According to the opinion, Attorney's representation of Koi "immediately ran into problems." He missed the deadline to file an answer on behalf of Koi, which led the court to issue an order to show cause giving SPI several options, one of which was seeking entry of default. Attorney failed to participate in the required Rule 26(f) conference, and SPI responded by filing a Rule 26(f) report that argued default judgment against Koi was appropriate. He then filed an ex parte application to continue the scheduling conference, referencing his frequent absences from the office "due to treatment for an on-going medical condition," along with and calendaring and delegation issues.
Marron failed to notify Koi of these developments and also failed to disclose greater concerns it had regarding Attorney's job performance. Marron's managing attorney sent numerous emails regarding Attorney's incompetence, the malpractice risk it posed, and the need to terminate his employment. After Marron terminated Attorney because he was a malpractice liability, Marron never informed Koi of these issues, despite a specific question from Koi's CEO regarding whether she had any reason to be concerned about Attorney's handling of the trademark litigation.
Attorney continued to represent Koi after he left Marron. Unbeknownst to Koi, the SPI Litigation ended in terminating sanctions, entry of default, and a nearly $5.3 million default judgment with treble damages--the absolute worst possible outcome for a defendant in trademark litigation under the Lanham Act. When Koi finally learned of the default judgment, Koi terminated Attorney and eventually filed for bankruptcy.
Koi filed a lawsuit against Marron and Attorney. Koi sued Marron for legal malpractice and breach of fiduciary duty. The claims were premised on violations of the Rules--specifically, the duties of communication and supervision. Koi also sued Marron for negligent supervision. Koi alleged that default judgment never would have been entered against it if Marron had disclosed Attorney's mishandling of the trademark litigation and the reasons for his termination, and if Marron had adequately supervised Attorney.
Marron moved for summary judgment, arguing that it had not breached the duties of communication or supervision and that, regardless, Koi failed to show Marron caused Koi harm because Attorney's misconduct leading to the default judgment occurred after he left Marron. The district court granted summary judgment in Marron's favor on the ground that Koi had failed to create a genuine dispute of material fact about whether Marron caused Koi harm. Specifically, the district court concluded Koi had failed to introduce evidence to show it could have obtained a better final outcome in the SPI Litigation.
Koi appealed and, on August 6, 2026, the 9th Circuit reversed the district court's order granting Marron summary judgment. The 9th Circuit held Koi had created triable issues of fact regarding whether Marron had breached its duties to communicate with Koi and adequately supervise Attorney, and whether those breaches caused Koi harm.
Liability for breaches of the Rules of Professional Conduct?
Before we review how the opinion in Koi elucidates the ethical duties of communication and supervision, you might be asking why those duties are at the center of civil litigation in the first place. Aren't these duties the stuff of State Bar complaints, investigations, and ethics opinions? Can I really be sued for damages for violating these duties?
Many lawyers do not know it, but breaches of the Rules can lead to liability for breach of fiduciary duty and legal malpractice. Although the Rules provide that "[a] violation of a rule does not itself give rise to a cause of action for damages caused by failure to comply with the rule[,]" courts have long held that a breach of the Rules may be used to prove an attorney has breached a fiduciary duty and/or the applicable standard of care. (Rules Prof. Conduct, rule 1.0(b)(3); Stanley v. Richmond (1995) 41 Cal.Rptr.2d 768, 776 ["The scope of an attorney's fiduciary duty may be determined as a matter of law based on the Rules of Professional Conduct [] together with statutes and general principles relating to other fiduciary relationships . . . ."] [internal quotation marks and citation omitted]; Mirabito v. Liccardo (1992) 5 Cal.Rptr.2d 571, 573 ["[A]n attorney's duties to his client are conclusively established by the rules of professional conduct" for legal malpractice claims.].)
Koi's clarification of the duty to disclose
On appeal, the parties agreed that former California Rule of Professional Conduct 3-500 applied to Marron. Rule 3-500 provided: "A member shall keep a client reasonably informed about significant developments relating to the employment or representation, including promptly complying with reasonable requests for information and copies of significant documents when necessary to keep the client so informed." (See also Rules Prof. Conduct, rule 1.4(a)(3).) The question on appeal was whether a reasonable jury could conclude Marron had breached its duty to keep Koi reasonably informed about significant developments relating to the representation.
The 9th Circuit answered that question in the affirmative. Before Koi, it was settled that the duty to disclose extends to acts of malpractice. (See Beal Bank, SSB v. Arter & Hadden, LLP (2007) 42 Cal.4th 503, 514 ["[A]ttorneys have a fiduciary obligation to disclose material facts to their clients, an obligation that includes disclosure of acts of malpractice"]; see also Cal. State Bar Formal Opn. No. 2009-178.) Koi held that the duty to disclose may require an attorney to communicate a risk of malpractice to a client as well.
Marron terminated Attorney because he was a malpractice liability, but Marron never revealed that to Koi. Further, Marron never disclosed how Attorney had mismanaged the trademark litigation while at Marron--missing the deadline to file an answer, failing to participate in the required Rule 26(f) conference, and filing an ex parte application to continue the scheduling conference. The 9th Circuit held that a reasonable jury could find Marron breached the duty to disclose because "[Attorney's] incompetence and malpractice risks were material information that Marron needed to disclose to Koi for Koi to 'make an informed decision' about whether to continue retaining [Attorney] as lead counsel in the SPI Litigation."
Thus, the obligation to disclose significant developments is not limited to mistakes that obviously rise to malpractice; it may extend to information a client needs to make an informed decision about whether to continue retaining the lawyer responsible for the matter.
Koi's clarification of the duty of supervision
The parties also agreed that Marron had "an obligation to adequately supervise [its] employees." This obligation has long been treated as a component of competent representation. (See Layton v. State Bar (1990) 50 Cal. 3d 889, 900; former Rules Prof. Conduct, rule 3-110, Discussion [describing "the duty to supervise the work of subordinate attorney[s]"]; see also Rules Prof. Conduct, rules 5.1 and 5.3 [imposing express duties to supervise subordinate lawyers and nonlawyer assistants].) Koi provides guidance about what the duty to supervise requires of a firm that knows--or has reason to know--that one of its lawyers is failing to meet expectations.
The 9th Circuit rejected Marron's argument that Attorney, whom Marron described as an experienced litigator, required no supervision at all. Paul Marron's emails described Attorney as "pretty clearly doing things repeatedly that are malpractice risks," complained of "repeated problems on cases [Attorney] was responsible for," and recorded that Attorney's lapses were "chewing up as much as 2 to 3 hours in a day, routinely, and for approx. 6 weeks." There is no experienced-subordinate-lawyer exception to the duty to supervise, and a firm that ignores clear signs an attorney requires additional supervision may face liability for the subordinate lawyer's incompetence.
The 9th Circuit also rejected the suggestion that Marron did not need to supervise Attorney's handling of the SPI Litigation because Marron viewed Koi as Attorney's client. Marron appointed a paralegal to serve as his "minder" in at least one case and instructed Attorney to work with another associate to prevent further "missed deadlines[.]" But the court found no evidence in the record that Marron supervised Attorney's handling of the SPI Litigation. The 9th Circuit held that a reasonable jury could conclude "the decision to let [Attorney] handle the SPI Litigation without any supervision constituted a breach" of the duty to supervise.
Finally, and perhaps most relevant for firm management, the 9th Circuit held that a reasonable jury could find Marron breached the duty to supervise by failing to ensure that Attorney complied with the firm's policy requiring each lawyer to add a paralegal to the lawyer's CM/ECF account. That failure meant Marron did not receive court filings that could have signaled that Attorney was mishandling the SPI Litigation. This is a reminder that what might seem like a mundane "lapse[] in office procedure" may constitute a breach of the duty to supervise.
One evidentiary point applies to both the duty to disclose and the duty to supervise. "Breach of duty is usually a fact issue for the jury." (Lysick v. Walcom (1968) 258 Cal.App.2d 136, 150.) In support of its opposition to Marron's motion for summary judgment, Koi submitted expert testimony that a failure to inform a client that its lead counsel "was generally mishandling other client matters and was considered to be a malpractice liability" breaches the duty to disclose, and that allowing an associate to handle a lawsuit "without any supervision" and failing to ensure that ECF filings are received and processed breach the duty to supervise.
Marron's expert disagreed. Because the district court never excluded Koi's expert, the 9th Circuit held that a reasonable jury could agree with Koi's expert, and that fact alone precluded summary judgment in Marron's favor on the breach element of Koi's legal malpractice and breach of fiduciary duty claims. In a practice area where the standard of care is usually contested through experts, this holding is a reminder that an unexcluded competing expert opinion will often defeat summary judgment.
Koi's clarification of the causation standard
The district court granted Marron summary judgment because it concluded that Koi had failed to introduce evidence showing it would have obtained a better final outcome in the SPI Litigation. In other words, Koi had failed to establish that Marron's misconduct had caused Koi harm.
In reversing, the 9th Circuit agreed that Koi ultimately would have to show it "'would have obtained a more favorable judgment or settlement in the' SPI Litigation but for Marron's conduct." At summary judgment, however, Koi's burden was only to "introduce evidence which affords a reasonable basis for the conclusion that it is more likely than not that the conduct of [Marron] was a cause in fact of the result." The 9th Circuit further held that "[e]ven 'a very minor force that does cause harm' suffices" and cautioned that causation should be resolved at summary judgment only if there is no room for a reasonable difference of opinion on undisputed facts.
The 9th Circuit held Koi had introduced sufficient evidence to create a genuine dispute of material fact regarding whether Marron's conduct caused Koi's harm. In awarding SPI a default judgment with treble damages, the district court had cited Attorney's misconduct while he was employed by Marron, including his failure to participate in the required Rule 26(f) meet and confer. The 9th Circuit found that alone sufficient to create a triable issue of fact regarding causation.
Further, because Attorney failed to introduce evidence of Koi's costs in selling the allegedly infringing goods, the court in the SPI Litigation calculated SPI's damages based solely on Koi's alleged revenue. The 9th Circuit held that a reasonable jury could conclude that a competent lawyer would have introduced evidence of Koi's costs to reduce the judgment. A reasonable jury also could conclude Koi would have replaced Attorney with competent counsel had Marron notified Koi of Attorney's incompetence and malpractice risk.
The majority rejected the dissent's contrary conclusion. Quoting the California Supreme Court's decision in Viner v. Sweet (2003) 30 Cal.4th 1232, 1240, fn. 4, the majority clarified that the phrases "trial within a trial" and "case within a case" are "methods of proving causation, not the causation requirement itself or the test for determining whether causation has been established." Proving that the plaintiff would have succeeded on the merits of the underlying case is therefore one method of proving causation, not the only one.
The majority also concluded that the dissent improperly drew inferences in favor of Marron rather than Koi, the non-moving party. At summary judgment, Koi did not need "to disprove every other hypothetical possible cause of Koi's injury." It needed only to create a genuine dispute of fact about whether Marron's actions were "a cause in fact of" Koi's injury.
Takeaways
Koi provides practical guidance for lawyers and law firms on disclosure, supervision and causation. A lawyer's obligation to disclose is not necessarily limited to completed acts of malpractice; it may encompass information a client needs to make an informed decision about continued representation. Likewise, the duty to supervise depends on what a firm knows about a lawyer's performance, not simply the lawyer's experience or seniority, and seemingly routine office procedures such as ECF notification and calendaring may have significant consequences.
On causation, Koi confirms that a trial within a trial is a method of proof, not the causation element itself. At summary judgment, a plaintiff may create a genuine dispute of material fact through evidence supporting a reasonable inference that the lawyer's misconduct was a cause in fact of the harm, even if other causes may exist. More fundamentally, Koi reminds lawyers that violations of professional and ethical obligations can have consequences beyond attorney discipline: When a failure to meet those standards causes client harm, the result can be liability for legal malpractice and breach of fiduciary duty.