In a transactional negotiation, does a California lawyer have a duty to alert opposing counsel to (A) an apparent material error opposing counsel made or (B) a material change the lawyer made in revised contract language?

State Bar of California COPRAC Formal Opinion 2013-189: Duty to Alert Opposing Counsel of Apparent Errors and Material Changes in Contract Drafting

Short answer: The opinion concludes that where the attorney has done nothing to induce opposing counsel's apparent material error, the attorney has no duty to alert opposing counsel; but where the attorney has made a material change in contract language in a manner that amounts to deceit, active concealment, or fraud, failure to alert opposing counsel violates the attorney's ethical obligations.

Currency note

This opinion was issued in 2013, before the State Bar of California's adoption of the November 1, 2018 revisions to the Rules of Professional Conduct. The opinion interprets former Rules 3-210 (now Rule 1.2.1), 3-500 (now Rule 1.4), 3-700 (now Rule 1.16), and 5-200 (now Rule 3.3), together with Business and Professions Code sections 6068, 6106, and 6128(a). Subsequent rule amendments or later opinions may have changed parts of the analysis. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule reference.

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 opinion analyzes a $5 million purchase-and-sale transaction. The initial draft, prepared by Buyer's Attorney, contains a covenant not to compete whose sole and exclusive remedy is return of $2 million allocated to that covenant. After Seller's Attorney passes along Seller's tax-advisor concern that consideration tied to a noncompete is less favorable than purchase-price consideration, two later versions appear with the noncompete allocation cut to $1 (and $4,999,999 reallocated to the purchase price), which functionally guts the covenant.

In Scenario A, Buyer's Attorney made the change apparently in response to Seller's Attorney's comments. Seller's Attorney spots that the $1 remedy renders the covenant meaningless, informs Seller, and Seller instructs Seller's Attorney not to tell Buyer's Attorney. Seller's Attorney stays silent and the parties sign.

In Scenario B, Seller's Attorney is the one who reallocated the consideration to $1, intending to make the covenant meaningless but not intending to hide the change. Seller's Attorney's redline unintentionally failed to highlight the change. Seller's Attorney later discovers the defective redline, tells Seller, and Seller instructs Seller's Attorney not to alert Buyer's Attorney. Seller's Attorney again stays silent and the parties sign.

The opinion notes a threshold framework: an attorney must generally follow the client's instructions under ABA Model Rule 1.2(a), and the duty of confidentiality under Business and Professions Code section 6068(e) protects the client's instruction to remain silent; but if continued representation would itself violate the rules, former Rule 3-700(B)(2) requires withdrawal. The committee declines to address the lawyer's candor-to-tribunal duty because the matter is transactional, citing former Rule 5-200 and Business and Professions Code section 6068(d). The committee also flags that under former Rule 3-500 and section 6068(m), Seller's Attorney must keep Seller informed of significant developments, which both scenarios involve.

On Scenario A, the opinion concludes there is no duty to alert. The committee reasons that attorneys owe no general duty to opposing counsel and no obligation to correct opposing counsel's mistakes, citing Goodman v. Kennedy (1976), Fox v. Pollack (1986), and Skarbrevik v. Cohen, England & Whitfield (1991); the Goodman line establishes that there is no liability for conscious nondisclosure absent a duty of disclosure. The committee also cites ABA Formal Opinion 94-387 (no duty to disclose a run statute of limitations) and the ABA Section of Litigation's 2002 Ethical Guidelines for Settlement Negotiations. The committee notes that because Seller's Attorney did nothing to induce the error and the parties had not agreed on the allocation, no deceit, active concealment, or fraud has occurred. The committee explicitly does not opine on whether such conduct is "offensive or unprofessional," only on whether it violates ethical obligations.

On Scenario B, the opinion concludes the analysis is different because Seller's Attorney made the material change. The committee reasons that Business and Professions Code section 6106 (moral turpitude, dishonesty, or corruption) and section 6128(a) (deceit or collusion with intent to deceive any party) prohibit deceit, active concealment, or false statements of material fact, and that under Cicone v. URS Corp. (1986) and Vega v. Jones, Day, Reavis & Pogue (2004), a half-truth calculated to deceive is fraud, and active concealment of a material fact is the equivalent of a false representation. The committee concludes that once Seller's Attorney discovered the defective redline, failing to correct it and disclose the change "might" constitute deceit, active concealment, or fraud, with the determination depending on the facts and circumstances (including whether the changed provision is later negotiated and revised). If Seller refuses to allow disclosure and silence would violate Seller's Attorney's obligations, Seller's Attorney must consider withdrawal under former Rule 3-700.

The committee also notes the opinion does not address a scrivener's error, citing ABA Informal Opinion 86-1518 (in which the receiving lawyer in a transcription error must contact opposing counsel to correct the error) and In re Conduct of Gallagher (Or. 2001).

In practice

Under California's rules as they stood at the time of the opinion, conduct consistent with the opinion is conduct in which (i) a lawyer who detects opposing counsel's apparent material error in transactional drafting, having done nothing to induce that error and having not agreed on the relevant point, has no duty under former Rule 3-700(B)(2), section 6106, or section 6128(a) to alert opposing counsel; (ii) a lawyer who has made a material change in revised contract language and discovers that an unintentional redline defect has hidden that change from opposing counsel must reckon with the possibility that leaving the change undisclosed could be deceit, active concealment, or fraud; (iii) where the client instructs silence and disclosure is required by the lawyer's ethical obligations, the lawyer must consider withdrawal under former Rule 3-700; and (iv) the lawyer's duty to keep the client informed of significant developments under former Rule 3-500 and section 6068(m) attaches in both scenarios. Verify against current Rules 1.2.1, 1.4, 1.16, and 3.3, and the current state of Business and Professions Code sections 6068, 6106, and 6128, before relying on this framework.

Common questions

Q: Do California lawyers have to alert opposing counsel when opposing counsel makes a mistake in a contract draft?

A: Per the opinion, generally no. The committee, citing Goodman v. Kennedy and Fox v. Pollack, holds that attorneys owe no duty to nonclients to correct opposing counsel's mistakes and that there is no liability for conscious nondisclosure absent a duty of disclosure. The committee also cites ABA Formal Opinion 94-387 for the same point in the settlement context.

Q: Does that change when the lawyer made the change to the contract themself?

A: Per the opinion, yes. The committee holds that if a lawyer makes a material change to revised contract language and a defective redline causes opposing counsel not to notice the change, leaving the change undisclosed once the lawyer realizes the defect "might be conduct that constitutes deceit, active concealment and/or fraud" under Business and Professions Code sections 6106 and 6128(a), with the determination tied to the specific facts.

Q: Can the client just order the lawyer to keep quiet?

A: Per the opinion, the lawyer must generally abide by the client's instruction and section 6068(e)'s duty of confidentiality, but if remaining silent would itself be an ethical violation, former Rule 3-700(B)(2) requires withdrawal. The committee cites California State Bar Formal Opinion 1996-146 and Los Angeles County Bar Formal Opinion No. 520 for the same framework.

Q: Does the opinion say it is unethical to drive a hard bargain by exploiting an opposing counsel's error?

A: Per the opinion, in Scenario A no, but the committee notes it is not opining on whether such conduct is "offensive or unprofessional," only on whether it violates ethical obligations. The committee draws a line between general professionalism, which is not the rule it is interpreting, and the deceit/fraud limit in sections 6106 and 6128(a).

Q: Does this analysis apply to a scrivener's error?

A: Per the opinion, no. The committee expressly excludes scrivener's errors and cites ABA Informal Opinion 86-1518 (lawyer receiving a final transcription with an inadvertently omitted material provision must contact opposing counsel) and In re Conduct of Gallagher (Or. 2001) for the contrary rule on such errors.

Q: Does this analysis apply when the matter is in litigation?

A: Per the opinion, no. The committee notes the opinion addresses a transactional setting only and does not reach the lawyer's duty of candor to a tribunal under former Rule 5-200 and Business and Professions Code section 6068(d).

Background and rules framework

The opinion interprets former California Rule 3-700(B)(2) (mandatory withdrawal where continued employment will result in a rules or State Bar Act violation) and Business and Professions Code sections 6106 (moral turpitude, dishonesty, or corruption) and 6128(a) (deceit or collusion to deceive a party). It cross-references former Rule 3-500 (client communication), former Rule 3-210 (advising violation of law), section 6068(a), section 6068(e) (confidentiality), section 6068(m) (client communication), and former Rule 1-100(A). For interpretive guidance under former Rule 1-100(A) the opinion looks to ABA Model Rules 1.2, 3.4, 4.1, and 8.4(c), and to ABA opinions, while noting that the Model Rules are not binding in California.

Citations and references

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

• Former California Rule 1-100, including 1-100(A) (interpretive use of other authorities)
• Former California Rule 3-210 (advising violation of law)
• Former California Rule 3-500 (client communication)
• Former California Rule 3-700, particularly 3-700(B)(2) (mandatory withdrawal)
• Former California Rule 5-200 (candor to tribunal; referenced but not applied)

ABA Model Rules (referenced for guidance):

• ABA Model Rule 1.2(a) and 1.2(d)
• ABA Model Rule 3.4
• ABA Model Rule 4.1 (truthfulness in statements to others)
• ABA Model Rule 8.4(c)

Statutes:

• California Business and Professions Code section 6068(a), 6068(d), 6068(e), 6068(m)
• California Business and Professions Code section 6106
• California Business and Professions Code section 6128(a)
• California Civil Code sections 1689 and 3399

Cases:

• Goodman v. Kennedy (1976) 18 Cal.3d 335, no liability for conscious nondisclosure absent a duty of disclosure
• Fox v. Pollack (1986) 181 Cal.App.3d 954, no attorney duty to adverse party
• Skarbrevik v. Cohen, England & Whitfield (1991) 231 Cal.App.3d 692, no duty to third party at arm's length
• Kirsch v. Duryea (1978) 21 Cal.3d 303, professionalism duty to opposing counsel
• Vega v. Jones, Day, Reavis & Pogue (2004) 121 Cal.App.4th 282, active concealment is the equivalent of a false representation
• Cicone v. URS Corp. (1986) 183 Cal.App.3d 194, half-truth calculated to deceive is fraud
• Shafer v. Berger, Kahn, Shafton (2003) 107 Cal.App.4th 54, attorney fraud to nonclient
• Datig v. Dove Books, Inc. (1999) 73 Cal.App.4th 964, scrivener-error candor
• Lovejoy v. AT&T Corp. (2001) 92 Cal.App.4th 85, intentional concealment as deceit
• Stevens v. Superior Court (1986) 180 Cal.App.3d 605, fraud equivalents
• In re Conduct of Gallagher (Or. 2001) 332 Or. 173, settlement-check mistake

Other opinions cited:

• ABA Formal Opinion 94-387: no duty to disclose statute of limitations in settlement
• ABA Informal Opinion 86-1518: scrivener-error notification
• Maryland State Bar Ass'n Opinion 89-44 (1989): no obligation to disclose omission of a material term
• Los Angeles County Bar Formal Opinion No. 520: overpayment in settlement, attorney duties
• California State Bar Formal Opinion 1996-146: assisting client fraud
• California State Bar Formal Opinion 1967-11: candor and fairness with opposing counsel

See also

• CA COPRAC Op. 2015-194: Puffing in Negotiations
• CA COPRAC Op. 2015-192: Withdrawal and Client Confidences
• CA COPRAC Op. 2019-200: Perjured Testimony
• CA COPRAC Op. 2019-198: Settling Before Withdrawal

Source

• Landing page: https://www.calbar.ca.gov/legal-professionals/ethics-compliance-practice-resources/ethics/ethics-opinions
• Original PDF: https://www.calbar.ca.gov/sites/default/files/2025-11/CAL%202013-189%20%5B11-0002%5D%20v.1.pdf

Original opinion text

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

THE STATE BAR OF CALIFORNIA
STANDING COMMITTEE ON
PROFESSIONAL RESPONSIBILITY AND CONDUCT
FORMAL OPINION NO. 2013-189

ISSUE: Has an attorney engaged in deceitful conduct by not alerting opposing counsel of: (A) an apparent material error made by opposing counsel in contract language; or (B) a material change made by the attorney in contract language?

DIGEST: Where an attorney has engaged in no conduct or activity that induced an apparent material error by opposing counsel, the attorney has no obligation to alert the opposing counsel of the apparent error. However, where the attorney has made a material change in contract language in such a manner that his conduct constitutes deceit, active concealment or fraud, the failure of the attorney to alert opposing counsel of the change would be a violation of his ethical obligations.

AUTHORITIES INTERPRETED: Rule 3-700(B)(2) of the Rules of Professional Conduct of the State Bar of California. Business and Professions Code section 6106. Business and Professions Code section 6128(a).

STATEMENT OF FACTS

Buyer and Seller have been in discussions regarding the sale of the Company from Seller to Buyer, and have agreed in concept to some of the material terms, including total consideration of $5 million to be paid by Buyer and Buyer's requirement that Seller enter into a covenant not to compete with the Company following the sale. Buyer's Attorney and Seller's Attorney are tasked with preparing a Purchase and Sale Agreement to reflect the agreement of the parties.

Buyer's Attorney prepares an initial draft of the Purchase and Sale Agreement. One section towards the back of the 50-page draft agreement contains the terms of an enforceable covenant not to compete, and includes a provision that Buyer's sole and exclusive remedy for a breach by Seller of its covenant not to compete is the return of that portion of the total consideration which has been allocated in the Purchase and Sale Agreement for the covenant not to compete. Another section in the front of the draft agreement provides that, of the $5 million to be paid by Buyer, $3 million is to be allocated to the purchase price for the Company and $2 million is to be allocated as consideration for the covenant not to compete.

Scenario A

After soliciting input on the initial draft from Seller and Seller's tax advisor, Seller's Attorney provides Buyer's Attorney with comments on the initial draft, including the observation from Seller's tax advisor that payments received by Seller with respect to the covenant not to compete are not as favorable, from a tax perspective, as payments with respect to the purchase price for the Company.

Buyer's Attorney then prepares a revised version of the Purchase and Sale Agreement which, apparently in response to the comments of Seller's Attorney, provides for an allocation of only $1 as consideration for the covenant not to compete with $4,999,999 allocated to the purchase price for the Company. In reviewing the changes made in the revised version, Seller's Attorney recognizes that the allocation of only $1 as consideration for the covenant not to compete essentially renders the covenant meaningless, because Buyer's sole and exclusive remedy for breach by Seller of the covenant would be the return by Seller of $1 of the total consideration. Seller's Attorney notifies Seller about the apparent error with respect to the consequences of the change made by Buyer's Attorney. Seller instructs Seller's Attorney to not inform Buyer's Attorney of this apparent error. Seller's Attorney says nothing to Buyer's Attorney and allows the Purchase and Sale Agreement to be entered into by the parties in that form.

Scenario B

After receiving the initial draft from Buyer's Attorney, Seller's Attorney prepares a revised version of the Purchase and Sale Agreement which provides for an allocation of only $1 as consideration for the covenant not to compete, with the intent of essentially rendering the covenant not to compete meaningless. Although Seller's Attorney had no intention of keeping this change secret from Buyer's Attorney, Seller's Attorney generates a "redline" of the draft that unintentionally failed to highlight the change, and then tenders the revised version to Buyer's Attorney. Subsequently, Seller's Attorney discovers the unintended defect in the "redline" and notifies Seller about the change, including the failure to highlight the change, in the revised version. Seller instructs Seller's Attorney to not inform Buyer's Attorney of the change. Seller's Attorney says nothing to Buyer's Attorney and allows the Purchase and Sale Agreement to be entered into by the parties in that form.

Under either Scenario, has Seller's Attorney violated any ethical duties?

DISCUSSION

Following Client's Instruction to Not Disclose

Attorneys generally must follow the instructions of their clients. See ABA Model Rule 1.2(a) ("a lawyer shall abide by a client's decisions concerning the objectives of representation and, as required by [ABA Model] Rule 1.4, shall consult with the client as to the means by which they are to be pursued. A lawyer may take such action on behalf of the client as is impliedly authorized to carry out the representation …"). However, if the client insists on certain unethical conduct, the attorney may have an obligation to withdraw from the representation. Rule 3-700(B)(2) provides "[a] member representing a client . . . shall withdraw from employment, if: . . . [t]he member knows or should know that continued employment will result in violation of these rules or of the State Bar Act." Such an obligation, for example, may arise if the unethical conduct in question involves a fraudulent failure to make a disclosure. As the Los Angeles County Bar Association has opined, upon discovering that an adverse party made an overpayment under a settlement agreement, "[c]ounsel is obligated to inform his/her client of the overpayment under [rule] 3-500. Under [Bus. & Prof. Code,] § 6068(e) . . ., where the client has requested the information be held in confidence, the attorney is obligated to preserve the secret. The attorney should counsel the client to disclose and return the overpayment. If the client refuses, however, the attorney must consider whether the failure to disclose constitutes fraud. The attorney must then determine whether he/she may or must withdraw from the representation pursuant to [rule] 3-700." Los Angeles County Bar Assn. Formal Opn. No. 520.

Under either Scenario A or Scenario B of our Statement of Facts, once Seller's Attorney has informed Seller of the development, Seller's Attorney must abide by the instruction of Seller to not disclose. If, however, failure to make such disclosure constitutes an ethical violation by Seller's Attorney, then Seller's Attorney may have an obligation to withdraw from the representation under such circumstances. See Cal. State Bar Formal Opn. No. 1996-146.

Failure to Alert Opposing Counsel

Attorneys are held to a high standard, and may be subject to general obligations of professionalism. For example, attorneys have been held to have a duty to respect the legitimate interests of opposing counsel. "An attorney has an obligation not only to protect his client's interests but also to respect the legitimate interests of fellow members of the bar, the judiciary, and the administration of justice." Kirsch v. Duryea (1978) 21 Cal.3d 303, 309 (overturning a malpractice judgment against an attorney for withdrawing from a case he believed lacked merit). Further, this Committee has previously concluded that attorneys should treat opposing counsel with candor and fairness. (See Cal. State Bar Formal Opn. No. 1967-11.) See also ABA Model Rule 3.4.

Any duty of professionalism, however, is secondary to the duties owed by attorneys to their own clients. There is no general duty to protect the interests of nonclients. Fox v. Pollack (1986) 181 Cal.App.3d 954, 961 ("an attorney has no duty to protect the interests of an adverse party [citations] for the obvious reasons that the adverse party is not the intended beneficiary of the attorney's services, and that the attorney's undivided loyalty belongs to the client."). See also Skarbrevik v. Cohen, England & Whitfield (1991) 231 Cal.App.3d 692, 702 ("no [attorney] duty has been found when the third party is someone with whom the client is dealing at arm's length, rather than someone intended to be benefited by the attorney-client transaction."). Furthermore, a duty to nonclients would damage the attorney-client relationship.

Attorneys generally owe no duties to opposing counsel nor do they have any obligation to correct the mistakes of opposing counsel. There is no liability for conscious nondisclosure absent a duty of disclosure. Goodman v. Kennedy (1976) 18 Cal.3d 335, 342, 346. There is also no duty to correct erroneous assumptions of opposing counsel. See ABA Formal Opn. No. 94-387 (no duty to disclose to opposing party that statute of limitations has run). See also Ethical Guidelines for Settlement Negotiations (August 2002), ABA Section of Litigation, at page 56 ("there is no general ethics obligation, in the settlement context or elsewhere, to correct the erroneous assumptions of the opposing party or opposing counsel . . .").

On the other hand, it is unlawful (and a violation of an attorney's ethical obligations) for an attorney to commit any act of moral turpitude, dishonesty, or corruption. Business and Professions Code section 6106 provides that: "The commission of any act involving moral turpitude, dishonesty or corruption, whether the act is committed in the course of his relations as an attorney or otherwise, and whether the act is a felony or misdemeanor or not, constitutes a cause for disbarment or suspension." It is similarly inappropriate for an attorney to engage in deceit or active concealment, or make a false statement of a material fact to a nonclient. Business and Professions Code section 6128(a) provides that: "Every attorney is guilty of a misdemeanor who . . . [i]s guilty of any deceit or collusion, or consents to any deceit or collusion, with intent to deceive the court or any party." Also, an attorney may not knowingly assist his or her client in any criminal or fraudulent conduct. See: rule 3-210; Business and Professions Code section 6068(a); and ABA Model Rule 1.2(d).

As a result, an attorney may have an obligation to inform opposing counsel of his or her error if and to the extent that failure to do so would constitute fraud, a material misstatement, or engaging in misleading or deceitful conduct. "While an attorney's professional duty of care extends only to his own client and intended beneficiaries of his legal work, the limitations on liability for negligence do not apply to liability for fraud. [Citation.] Accordingly, a lawyer communicating on behalf of a client with a nonclient may not knowingly make a false statement of material fact to the nonclient [citation] . . . ." Vega v. Jones, Day, Reavis & Pogue (2004) 121 Cal.App.4th 282, 291. Even when no duty of disclosure would otherwise exist, "where one does speak he must speak the whole truth to the end that he does not conceal any facts which materially qualify those stated. [Citation.] One who is asked for or volunteers information must be truthful, and the telling of a half-truth calculated to deceive is fraud." Cicone v. URS Corp. (1986) 183 Cal.App.3d 194, 201.

Scenario A

In Scenario A of our Statement of Facts, although the Purchase and Sale Agreement contains a covenant not to compete, the apparent error of Buyer's Attorney limits the effectiveness of the covenant because the penalty for breach results in payment by Seller of only $1. However, Seller's Attorney has engaged in no conduct or activity that induced the apparent error. Further, under our Statement of Facts, there had been no agreement on the allocation of the purchase price to the covenant, and the Purchase and Sale Agreement does in fact contain a covenant not to compete the terms of which are consistent with the parties' mutual understanding. Under these circumstances, where Seller's Attorney has not engaged in deceit, active concealment or fraud, we conclude that Seller's Attorney does not have an affirmative duty to disclose the apparent error to Buyer's Attorney.

Scenario B

Had Seller's Attorney intentionally created a defective "redline" to surreptitiously conceal the change to the covenant not to compete, his conduct would constitute deceit, active concealment and possibly fraud, in violation of Seller's Attorney's ethical obligations. However, in Scenario B of our Statement of Facts, Seller's Attorney intentionally made the change which essentially renders the covenant not to compete meaningless, but unintentionally provided a defective "redline" that failed to highlight for Buyer's Attorney that the change had been made. Under these circumstances, and prior to discovery of the unintentional defect, Seller's Attorney has engaged in no such unethical conduct. But once Seller's Attorney realizes his own error, we conclude that the failure to correct that error and advise Buyer's Attorney of the change might be conduct that constitutes deceit, active concealment and/or fraud, with any such determination to be based on the relevant facts and circumstances. If Seller instructs Seller's Attorney to not advise Buyer's Attorney of the change, where failure to do so would be a violation of his ethical obligations, Seller's Attorney may have to consider withdrawing.

CONCLUSION

Where an attorney has engaged in no conduct or activity that induced an apparent material error by opposing counsel, the attorney has no obligation to alert the opposing counsel of the apparent error. However, where the attorney has made a material change in contract language in such a manner that his conduct constitutes deceit, active concealment, or fraud, the failure of the attorney to alert opposing counsel of the change would be a violation of his ethical obligations.

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 Trustees, any persons, or tribunals charged with regulatory responsibilities, or any member of the State Bar.