When a California lawyer represents a mother as guardian and her minor child and discovers the mother has misappropriated trust funds for the child, may the lawyer disclose the misappropriation to the court?

Currency note

This opinion was issued in 1988, before the State Bar of California's adoption of the November 1, 2018 revisions to the Rules of Professional Conduct. The opinion interprets former California Rules 2-111(B), 5-102(B), 6-101(A)(2), and 7-105, the predecessors to current Rules 1.16, 1.7, 1.1, and 3.3 respectively. Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule, deadline, or requirement mentioned here.

Disclaimer: This is an advisory ethics opinion. Advisory opinions are not binding; they interpret the State Bar of California's rules of professional conduct and are persuasive authority. This summary is for research purposes only and is not legal advice. Verify current rules before acting on any specific guidance.

About this page: The plain-English summary and Q&A below were written by Ezel based on the official opinion. The opinion text is reproduced at the bottom; the official source (linked) controls.

View original opinion

Plain-English summary

The committee addressed a lawyer who had brought a personal-injury action on behalf of a mother individually and as guardian of her six-year-old son, had already settled the mother's individual claim, and continued to pursue a judgment for the child that was expected to be administered by the mother. The lawyer learned from an independent source that the mother, as trustee of a preexisting insurance trust for the son, had misappropriated proceeds.

The committee opined that Business & Professions Code section 6068(e), which requires the attorney "to maintain inviolate the confidence, and at every peril to himself or herself to preserve the secrets, of his or her client," forbade the lawyer from disclosing the misappropriation to the court without the mother's express consent. The committee cited Industrial Indemnity Co. v. Great American Ins. Co., 73 Cal.App.3d 529 (1977), for the fiduciary nature of the relationship, and Anderson v. Eaton, 211 Cal. 113 (1930), for the duty not to do anything to breach the trust the client reposed.

The committee opined that "secrets" extended beyond the attorney-client privilege to information the client requested be held inviolate or whose disclosure would embarrass or harm the client (citing ABA Code DR 4-101(A) for the definition), and that the prohibition extended to past crimes, including in circumstances where the past crime might be revealed by disclosure of a contemplated future crime (citing People v. Singh, 123 Cal.App. 375 (1932); LACBA Formal Op. No. 329 (1972); LACBA Formal Op. Nos. 417 (1983), 414 (1983)). The committee also opined that the mother's prior individual representation did not strip her of client status as to confidences acquired during the representation (citing Jacuzzi v. Jacuzzi Bros., Inc., 18 Cal.App.2d 24 (1963)).

The committee opined that the minor was also a client of the lawyer (Evidence Code section 951) and that the conflict between protecting the mother's confidence and protecting the minor's interests could not be cured by informed written consent, because a six-year-old minor could not give the requisite informed consent under Klemm v. Superior Court, 75 Cal.App.3d 893 (1977), and Lysick v. Walcom, 258 Cal.App.2d 136 (1968). Because the lawyer "knows or should know that his continued employment will result" in violations of former Rule 5-102(B) (conflicting interests) and former Rule 6-101(A)(2) (failure to perform competently), withdrawal was mandatory under former Rule 2-111(B). The committee opined that the lawyer should use every effort short of disclosure to cause the mother to rectify the misappropriation. The opinion expressly assumed that nondisclosure would not render the lawyer an accessory under Penal Code section 32, and emphasized that nothing in the analysis permitted the lawyer to prepare or file a false accounting (citing former Rule 7-105 and Business & Professions Code section 6068(d)).

Common questions

Q: Could the lawyer disclose the mother's misappropriation to the court?

A: Per the opinion, no, absent the mother's express consent. The committee opined that disclosure would breach the lawyer's duty under Business & Professions Code section 6068(e) to maintain the mother's confidence and preserve her secrets.

Q: Was the minor also the lawyer's client?

A: Per the opinion, yes. The committee opined that under Evidence Code section 951, a guardian who consults a lawyer on behalf of the minor makes the minor a client, and the dual representation required loyalty and competence to both.

Q: Why couldn't informed consent cure the conflict?

A: Per the opinion, a six-year-old minor cannot make a "fully informed decision" of the kind Klemm and Lysick required for valid conflict consent. Without that consent, the dual representation violated former Rule 5-102(B), and continued employment would also violate former Rule 6-101(A)(2) (failure to perform competently).

Q: What was the lawyer required to do?

A: Per the opinion, the lawyer was required to withdraw under former Rule 2-111(B)(2) (mandatory withdrawal when continued employment will result in a rule violation). The committee opined that the lawyer should use every effort short of disclosure to cause the mother to rectify the misappropriation before withdrawing.

Q: What about preparing an accounting that omits the misappropriation?

A: Per the opinion, the lawyer could not prepare or file an accounting that was false by positive misstatement or significant nondisclosure. The committee cited former Rule 7-105 and Business & Professions Code section 6068(d), which prohibit misleading the court by artifice or false statement of fact or law.

Background and rules framework

The opinion interprets former California Rules 2-111(B) (mandatory withdrawal where continued employment would result in a rule or State Bar Act violation), 5-102(B) (prohibition on representing conflicting interests except with written consent of all parties concerned), 6-101(A)(2) (prohibition on intentionally, recklessly, or repeatedly failing to perform competently), and 7-105 (candor to the tribunal), together with Business & Professions Code section 6068(d) (duty not to mislead the court) and section 6068(e) (duty to maintain confidences and preserve secrets).

Citations and references

Rules of Professional Conduct (former, in effect at time of opinion):

• Former California Rule 2-111(B) (mandatory withdrawal)
• Former California Rule 5-102(B) (conflicting interests)
• Former California Rule 6-101(A)(2) (competence)
• Former California Rule 7-105 (candor to tribunal)

Statutes:

• Bus. & Prof. Code § 6068(d) (candor to tribunal)
• Bus. & Prof. Code § 6068(e) (confidences and secrets)
• Evid. Code § 951 (client definition)
• Evid. Code § 956 (crime-fraud)
• Penal Code § 32 (accessories) (assumed not implicated)

Cases:

• Industrial Indemnity Co. v. Great American Ins. Co., 73 Cal.App.3d 529 (1977), fiduciary character of attorney-client relationship
• Anderson v. Eaton, 211 Cal. 113 (1930), duty not to breach client's reposed trust
• In re Boone, 83 F. 944 (1897); In re Soale, 31 Cal.App. 144 (1916), same
• Jacuzzi v. Jacuzzi Bros., Inc., 18 Cal.App.2d 24 (1963), duties owed to former clients
• Galbraith v. State Bar, 218 Cal. 329, same
• Watchumna Water Co. v. Bailey, 216 Cal. 564, same
• People v. Singh, 123 Cal.App. 375 (1932), past crimes within confidence rule
• American Mut. Liab. Ins. Co. v. Superior Court, 38 Cal.App.3d 579 (1974), full disclosure required for dual representation
• Abbott v. Superior Court, 78 Cal.App.2d 19 (1947)
• Betts v. Allstate Insurance Co., 154 Cal.App.3d 688 (1984), duties to insured
• Klemm v. Superior Court, 75 Cal.App.3d 893 (1977), conflict-consent standard
• Lysick v. Walcom, 258 Cal.App.2d 136 (1968), same
• Lucas v. Hamm, 56 Cal.2d 583 (1961), competence standard
• Ishmael v. Millington, 241 Cal.App.2d 520 (1966), loyalty divided between clients
• People v. Garnett, 129 Cal. 367 (1900), Penal Code § 32

Other opinions cited:

• COPRAC Op. 1933-71 (ABA Code persuasive only); COPRAC Op. 1986-87 (criminal conduct as "secret")
• LACBA Formal Op. No. 267 (1960), No. 329 (1972), No. 414 (1983), No. 417 (1983)
• ABA Code of Professional Responsibility DR 4-101(A) (definition of "secrets")

See also

• CA Ethics Op. 1993-131: Rule 2-100 Indirect Communication Through Client
• RI EAP Op. 2014-04: Rule 1.6 Bars Disclosing an Estate Administrator's Fund Diversion to the Probate Court Without Consent; the Lawyer Must Withdraw Instead

Source

• Landing page: https://www.calbar.ca.gov/legal-professionals/ethics-compliance-practice-resources/ethics/ethics-opinions
• Source HTML: https://www.calbar.org/ethics/Opinions/1988-96.htm

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

Ethics Opinions - FORMAL OPINION NO. 1988-96

Editor's Note:

State Bar Ethics Opinions cite the applicable California Rules of Professional Conduct in effect at the time of the writing of the opinion. Please refer to the California Rules of Professional Conduct Cross Reference Chart for a table indicating the corresponding current operative rule. There, you can also link to the text of the current rule.

THE STATE BAR OF CALIFORNIA

STANDING COMMITTEE ON

PROFESSIONAL RESPONSIBILITY AND CONDUCT
FORMAL OPINION NO. 1988-96

ISSUE:

May an attorney who, having initiated an action on behalf of a mother and her minor child for injuries sustained in an automobile accident, and having reached a final settlement for the mother, and while continuing to pursue a judgment in favor of the child which is expected to be administered by the mother, learns from an independent reliable source that the mother, as trustee of a preexisting insurance trust for the benefit of the child, had misappropriated a substantial portion of the trust proceeds, disclose such information to the court?

DIGEST:

The disclosure would breach the attorney's duty to maintain the confidence and to preserve the secrets of the client. Therefore, the attorney must seek to withdraw from employment.

AUTHORITIES INTERPRETED:

Rules 2-111(B), 5-102(B), and 6-101(A)(2) of the Rules of Professional Conduct of the State Bar of California.

ISSUE

We are advised that an attorney who brought an action on behalf of a mother individually and as guardian of her six-year old son for personal injuries, and negotiated a stipulated settlement for the mother, thereafter acquired reliable information from an independent source that she, as trustee of a preexisting trust consisting of the proceeds of a policy of insurance on the life of the father and designating the son as beneficiary, had misappropriated a substantial portion of the proceeds to her own use. It had been contemplated by the parties and by the court that any judgment in favor of the child would be administered by the mother.

We are asked whether the attorney may, in the event of such a recovery and in the absence of the mother's express consent, disclose the mother's misappropriation to the court.

DISCUSSION

It is the duty of an attorney to maintain inviolate the confidence, and at every peril to himself or herself to preserve the secrets, of his or her client. (Bus. & Prof. Code, 6068, subd.(e).) This duty recognizes the fiduciary nature of the attorney-client relationship, pursuant to which a client not only divulges confidential information, but reposes confidence in the attorney. (Industrial Indemnity Co. v. Great American Ins. Co. (1977) 73 Cal.App.3d 529, 536.) Thus, an attorney may not do anything to breach the trust reposed by the client in the attorney. (In re Boone (1897) 83 F. 944, 952-953; In re Soale (1916) 31 Cal.App. 144, 153; Anderson v. Eaton (1930) 211 Cal.App. 113.) In the situation presented, it is clear that the mother withheld the information in question precisely because of its manifestly prejudicial nature, and that its unconsented disclosure by her attorney would be utterly inconsistent with the relationship of trust protected by section 6068(e).

The latter section also requires an attorney to "preserve the secrets of his client." While the term "secrets" is not defined in the California Rules of Professional Conduct, it has been elsewhere described as including information, other than that protected by the attorney-client privilege, that the client has requested be held inviolate or the disclosure of which would be embarrassing or would be likely to be detrimental to the client. (ABA Code of Professional Responsibility DR 4-101(A).)1 This second aspect of section 6068(e) also forbids disclosure since criminal or fraudulent conduct is appropriately characterized as a "secret." (See State Bar of California Formal Opinion 1986-87.)

While the individual suit of the mother has been finally determined, the mother is entitled to the rights of a client. A party on whose behalf an action is brought as a guardian or an administrator is entitled to the same protection of the rule against disclosure of confidential communications as is a client who retains counsel purely in a personal capacity. (Los Angeles Formal Opinion No. 267 (1960); cf. Magee v. Brenneman (1922) 188 Cal. 562, 567.) In any event, certain rights of a client survive the dissolution of the relationship. In Jacuzzi v. Jacuzzi Bros, Inc. (1963) 18 Cal.App.2d 24, 28, the court observed:

An attorney is forbidden to do either of two things after severing his relationship with a former client. "He may not do anything which will injuriously affect his former client in any matter in which he formerly represented him nor may he at any time use against his former client knowledge or information acquired by virtue of the previous relationship." (Galbraith v. State Bar, supra, 218 Cal. 329, 333; Watchumna Water Co. v. Bailey, supra, 216 Cal. 564.)

Of course, the action which the attorney continues to prosecute on behalf of the child is the same matter in which he formerly represented the mother, both in her capacity as an individual and in her continued status as guardian.

Under the facts being considered, the mother's misappropriation constitutes a continuing injustice to the beneficiary, and conceivably might indicate that the mother would also misappropriate funds received for the child in connection with the structured settlement. (cf. American Mut. Liab. Ins. Co. v. Superior Court (1974) 38 Cal.App.3d 579, 595-596; Abbott v. Superior Court (1947) 78 Cal.App.2d 19, 21; Evid. Code, 956; Los Angeles County Bar Association Formal Opinion No. 329 (1972).)

The California courts have strictly applied the prohibition against disclosure of past crimes, even when the disclosure would expose an intended future crime. (People v. Singh (1932) 123 Cal.App. 375; Los Angeles Formal Opinion No. 329 (1972).) Thus, the contemplation of a future crime may not be disclosed where such disclosure would reveal the commission of a past crime. (See Los Angeles County Bar Association Formal Opinion Nos. 417 (1983) and 414 (1983).)2 In the situation presented, such a result would, in our view, be inevitable.

It is expressly assumed for purposes of this analysis that the nondisclosure by an attorney of the client's misconduct would not render the attorney an accessory within the meaning of Penal Code section 32. (See People v. Garnett (1900) 129 Cal. 367; but see Los Angeles County Bar Association Formal Opinion No. 329 (1972).) Further, nothing in this analysis is intended to suggest that an attorney may prepare or file an accounting which is false, either by reason of positive misstatement or significant nondisclosure (cf. Los Angeles County Bar Association Formal Opinion No. 267 (1960)) because it is the duty of an attorney to employ such 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. (Bus. & Prof. Code, 6068, subd.(d); Rule of Professional Conduct 7-105.)

It is the opinion of the Committee that the minor is also a client of the member. Evidence Code section 951 defines "client" for purposes of the lawyer-client privilege as:

. . . a person who, directly or through an authorized representative, consults a lawyer for the purpose of retaining the lawyer or securing legal service or advice from him in his professional capacity, and includes an incompetent (a) who himself so consults the lawyer or (b) whose guardian or conservator so consults the lawyer on behalf of the incompetent.

For purposes of the following discussion, two rules are relevant as they apply to the minor. Rule 6-101(A)(2) provides:

A member of the State Bar shall not intentionally or with reckless disregard or repeatedly fail to perform legal services competently.

Rule 5-102(B) provides:

A member of the State Bar shall not represent conflicting interests, except with the written consent of all parties concerned.

The dual representation of the mother and the minor under the circumstances presented raises an issue of mandatory withdrawal. In this regard, rule 2-111(B) of the Rules of Professional Conduct provides in part:

A member of the State Bar representing a client before a tribunal, with its permission if required by its rule, shall withdraw from employment and a member of the State Bar representing a client in other matters shall withdraw from employment, if:

. . .

(2) He knows or should know that his continued employment will result in violation of these Rules of Professional Conduct or of the State Bar Act;...

As stated by the court in another context in Betts v. Allstate Insurance Co. (1984) 154 Cal.App.3d 688, 715-716:

In accepting employment to render legal services an attorney impliedly agrees to use such skill, prudence, and diligence as lawyers of ordinary skill and capacity commonly possess, and he is subject to liability for damage resulting from failure so to perform. (Lucas v. Hamm (1961) 56 Cal.2d 583, 591.)

Furthermore, it is an attorney's duty to "protect his client in every possible way" and it is a violation of that duty for the attorney to "assume a position adverse or antagonistic to his client without the latter's free and intelligent consent given after full knowledge of all the facts and circumstances." The attorney is "precluded from assuming any relation which would prevent him from devoting his entire energies to his client's interest." (Anderson v. Eaton (1931) 211 Cal. 113; Klemm v. Superior Court (1977) 75 Cal.App.3d 893, 901-902.)

These traditional obligations of an attorney are in no way abridged by the fact that an insurer employs him to represent an insured. Typically, in such a situation, the attorney in effect has two clients to each of whom is owed a "high duty of care." To the insured, the attorney owes "the same obligations of good faith and fidelity as if he had retained the attorney personally." (Lysick v. Walcom (1968) 258 Cal.App.2d 136, 146.)

Provided there is a full disclosure and consent, an attorney may undertake to represent dual interests. However, whether in the insurer/insured context or otherwise, the attorney who undertakes to represent parties with divergent interests owes the "highest duty" to each to make a "full disclosure of all facts and circumstances which are necessary to enable the parties to make a fully informed decision regarding the subject matter of litigation, including the areas of potential conflict and the possibility and desirability of seeking independent legal advice." (Klemm v. Superior Court, supra, 75 Cal. App.3d at p. 901; American Mut. Liab. Ins. Co. v. Superior Court, supra, 38 Cal.App.3d 579, 590; Lysick v. Walcom, supra, 258 Cal.App.2d at pp. 147-149.)

The loyalty owed to one client by an attorney "cannot consume that owed to the other." (Ishmael v. Millington (1966) 241 Cal.App.2d 520, 526.)

In our views the attorney's duty to the mother to maintain inviolate her confidence and at every peril to preserve her secrets (Bus. & Prof. Code, 6068 subd.(e)) conflicts with the duty to "protect his [minor] client in every possible way" and to secure "the same obligations of good faith and fidelity as if [the minor] had retained the attorney personally." (Betts v. Allstate Ins. Co., supra, 154 Cal.App.3d 688.) Nor do we deem the requisite full consent and full disclosure of "all facts and circumstances which, in the judgment of a lawyer of ordinary skill and capacity, are necessary to enable his client to make free and intelligent decisions regarding the subject matter of the representation" (Lysick v. Walcom, supra, 258 Cal.App.2d at p. 147) when the client is a six-year old minor. Hence, the member in such circumstances "knows or should know that his continued employment will result" in the representation of conflicting interests and the consequent failure to perform legal services competently, in violation of rules 5-102(B) and 6-101(A)(2) respectively. Under such circumstances, withdrawal is mandatory under rule 2-111(B).

The attorney should use every effort short of disclosure to cause the mother to rectify the misappropriation. The attorney may not, in the absence of the mother's express consent, disclose such information to the court and is therefore forced to withdraw from employment.

This opinion is issued by the Standing Committee on Professional Responsibility and Conduct of the State Bar of California. It is advisory only. It is not binding upon the courts, the State Bar of California, its Board of Governors any persons or tribunals charged with regulatory responsibility or any member of the State Bar.

1 In opinion 1933-71, this Committee opined that ABA Model Code of Professional Responsibility, like sister state rules and court opinions, is not binding in California, although it may be persuasive in those instances where there is no controlling Rule of Professional Conduct, statute or court ruling in California.

2 The prohibition against violation of a client's confidence extends as well to instances of civil fraud perpetrated by the client. (Los Angeles County Bar Association Formal Opinion No. 417 (1983).)