When can a California lawyer consult outside counsel or law-firm in-house counsel about a current client's matter without creating a conflict and what must the lawyer tell the client?
State Bar of California COPRAC Formal Opinion 2019-197: Consulting Outside or Firm In-House Counsel About a Current Client
Short answer: The opinion concludes that a lawyer's seeking legal advice about ethical obligations to a current client does not by itself create a conflict under Rule 1.7(b) and need not be disclosed under Rule 1.4; once the lawyer learns of an error that could prejudice the client, Rule 1.4 and Business and Professions Code section 6068(m) require disclosure of the underlying material facts, and Rule 1.7(b) requires informed written consent and compliance with Rule 1.7(d) to continue the representation. The analysis is the same whether the consulted lawyer is outside counsel or firm in-house counsel.
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.
Plain-English summary
The opinion analyzes three hypotheticals. In the first, Lawyer at Law Firm consults Outside Counsel about discovery-stage ethical obligations and does not tell Client about the consultation, but does tell Client about the resulting steps (document collection, additional production). In the second, Lawyer later learns the limitations period to file a cross-complaint may have lapsed, consults Outside Counsel, learns the limitations period has likely run, and follows Outside Counsel's advice to disclose the error to Client, explain that a potential conflict has arisen, advise Client to consult independent counsel, and seek Client's informed written consent. The third hypothetical substitutes Firm In-House Counsel for Outside Counsel in each scenario.
On the conflict question, the opinion concludes that under Rule 1.7(b), a conflict requires "a significant risk the lawyer's representation of the client will be materially limited" by the lawyer's own interests, drawing on Flatt v. Superior Court (1994) and Santa Clara County Counsel Attys. Ass'n v. Woodside (1994), and that seeking ethics advice does not meet that threshold because lawyer and client share the interest in ethical compliance. The committee adopts the reasoning of ABA Formal Op. 08-453 and NYSBA Op. 789 (2005), holding that a lawyer's interest in carrying out ethical obligations is inherent in the representation rather than extraneous to it.
On the duty to communicate, the opinion concludes that under Rule 1.4 and Business and Professions Code section 6068(m), and drawing on Neel v. Magana, Olney, Levy, Cathcart & Gelfand (1971), the lawyer's fiduciary duty includes disclosure of material facts that affect the client's rights. Per the opinion, an error that could prejudice the client is a "significant development" under Rule 1.4(a)(3) and must be disclosed, citing Cal. State Bar Formal Op. 2009-178, Beal Bank, SSB v. Arter & Hadden, LLP (2007), Edwards Wildman Palmer LLP v. Superior Court (2014), ABA Formal Op. 481 (2018), Restatement (Third) of the Law Governing Lawyers § 20 Comment c, and NJ Op. 684 (1998). The committee holds that the fact of seeking ethics advice (without an error) need not be disclosed, but the conclusions of the consultation may need to be disclosed when they bear on client conduct (for example, additional document production).
On the post-error analysis, the opinion concludes that once Law Firm becomes aware that Lawyer has likely committed a prejudicial error, Law Firm must disclose the relevant facts to Client (the lapsed deadline, the failure to file, that the error cannot be remedied, the loss of the breach-of-contract claim) and the resulting conflict, but Lawyer and Law Firm may not advise Client about whether the conduct constitutes malpractice, citing Colorado Formal Ethics Op. 113 and NC 2015 Formal Ethics Op. 4. Under Rule 1.4(a)(4), Lawyer must explain the ethical limitation on advising about the malpractice issue when Lawyer knows that Client expects such advice. To continue representing Client, Law Firm must satisfy Rule 1.7(d): Law Firm must reasonably believe it can provide competent and diligent representation, the representation must not be prohibited by law, and the representation must not involve the assertion of a claim by one client against another in the same proceeding. Informed written consent under Rule 1.0.1(e) and (e-1) is required.
On firm in-house counsel, the opinion concludes that the analysis is the same whether the consulted lawyer is outside or in-house, citing recent authorities recognizing the in-house ethics function, including RFF Family Partnership, LP v. Burns & Levinson, LLP (Mass. 2013), Stock v. Schnader Harrison Segal & Lewis LLP (N.Y. App. Div. 2016), In re SonicBlue Inc. (Bankr. N.D. Cal. 2008), and Thelen Reid & Priest LLP v. Marland (N.D. Cal. 2007). The committee notes that because seeking ethics advice does not create a conflict, the imputation rules under Rule 1.10 do not bar the in-house consultation; and that confidentiality permits the lawyer to discuss client matters with another lawyer for the purpose of obtaining legal advice, citing Chubb & Son v. Superior Court (2014), Fox Searchlight Pictures Inc. v. Paladino (2001), and Cal. State Bar Formal Op. 2012-183.
In practice
Under this opinion, conduct that is consistent with California's Rules of Professional Conduct as they stood at the time of the opinion is conduct in which (i) the lawyer treats an ethics consultation, whether with outside counsel or with firm in-house counsel, as compatible with the duty of loyalty under Rule 1.7(b) and does not treat it as itself a conflict; (ii) the lawyer does not, absent material change of circumstance, disclose to the client the fact of the consultation, but does disclose conclusions that affect client conduct (for example, additional production); (iii) once the lawyer becomes aware that an error has likely been committed that could prejudice the client, the lawyer discloses the underlying facts under Rule 1.4 and Business and Professions Code section 6068(m); (iv) the lawyer does not advise the client on whether the conduct constitutes malpractice and instead suggests independent counsel, while explaining the Rule 1.4(a)(4) limitation; and (v) the lawyer obtains informed written consent under Rule 1.7(b) and complies with Rule 1.7(d) before continuing the representation, or withdraws under Rule 1.16.
Common questions
Q: Is consulting outside counsel about an ethics question itself a conflict?
A: Per the opinion, no. The committee holds that under Rule 1.7(b), the lawyer's interest in ethical compliance is shared with the client and does not create "a significant risk" that representation will be "materially limited" by the lawyer's interests. The committee adopts the reasoning of ABA Formal Op. 08-453 and NYSBA Op. 789.
Q: Must the lawyer tell the client about an ethics consultation?
A: Per the opinion, not ordinarily. The committee holds that under Rule 1.4 and Business and Professions Code section 6068(m), the bare fact of consulting another lawyer for ethics advice is not a "significant development" that must be disclosed. The committee notes that conclusions of the consultation that affect client conduct (such as additional document production) must be disclosed, even though the lawyer need not attribute the conclusion to the outside-counsel consultation.
Q: What changes when the lawyer learns of a potential error that could prejudice the client?
A: Per the opinion, the lawyer must disclose the underlying material facts under Rule 1.4(a)(3) and Business and Professions Code section 6068(m), citing Beal Bank, SSB v. Arter & Hadden, LLP and Edwards Wildman Palmer LLP v. Superior Court. The lawyer may not advise the client about whether the conduct constitutes malpractice (the conflict bars that advice) and should advise the client to consult independent counsel. The lawyer must also satisfy Rule 1.7(b) by obtaining informed written consent and Rule 1.7(d) (reasonably believes competent and diligent representation is possible; not prohibited by law; not the assertion of a claim by one client against another in the same proceeding) to continue the representation.
Q: Does the analysis change if the lawyer consults firm in-house counsel rather than outside counsel?
A: Per the opinion, no. The committee holds that the imputation rules under Rule 1.10 do not bar in-house ethics consultation because seeking ethics advice does not create a conflict, and that confidentiality permits the consultation, citing Chubb & Son v. Superior Court, Fox Searchlight Pictures Inc. v. Paladino, and Cal. State Bar Formal Op. 2012-183.
Q: Can the lawyer use client confidences when seeking ethics advice?
A: Per the opinion, yes. The committee notes that California rules do not contain an express exception to Rule 1.6 like ABA Model Rule 1.6, but case law recognizes that attorneys may disclose confidential client information to an attorney for the purpose of seeking legal advice, citing Chubb & Son v. Superior Court (2014), Fox Searchlight Pictures Inc. v. Paladino (2001), and Cal. State Bar Formal Op. 2012-183.
Q: When must the lawyer withdraw rather than continue with informed written consent?
A: Per the opinion, withdrawal is required when Law Firm cannot reasonably believe it will provide competent and diligent representation, when the representation is prohibited by law, or when the representation would involve the assertion of a claim by one client against another in the same proceeding. The committee notes that even informed written consent does not cure a Rule 1.7(d) bar.
Background and rules framework
The opinion interprets California Rules 1.0.1 (definitions of "informed consent" and "informed written consent"), 1.4 (communication, including 1.4(a)(1), (a)(3), (a)(4), and (b)), 1.7 (conflicts, including 1.7(b) and 1.7(d)), 1.6 (confidentiality, by implication for the consultation), and 1.10 (imputation, referenced through ABA Model Rule 1.10(a)), together with Business and Professions Code section 6068(m). The committee draws on Rule 1.0, Comment [4] for the use of out-of-state ethics opinions as persuasive authority. The committee identifies the central propositions: ethics consultation is shared interest, not adversity; an error potentially giving rise to a malpractice claim is a "significant development" requiring Rule 1.4 disclosure; and Rule 1.7(b) and (d) govern continued representation after the error.
Citations and references
Rules of Professional Conduct:
- California Rules 1.0 (Comment [4]), 1.0.1 (including 1.0.1(e) and (e-1)), 1.4 (including 1.4(a)(1), (a)(3), (a)(4), and (b)), 1.6, 1.7 (including 1.7(b) and 1.7(d)), and 1.10 (by reference)
- ABA Model Rules 1.6, 1.7 (including 1.7(a)(2)), and 1.10(a) (referenced for comparison)
Statutes:
- California Business and Professions Code section 6068(m)
Cases:
- Neel v. Magana, Olney, Levy, Cathcart & Gelfand, 6 Cal.3d 176 (Cal. 1971), fiduciary duty to disclose
- Flatt v. Superior Court, 9 Cal.4th 275 (Cal. 1994), duty of loyalty
- People v. Bonin, 47 Cal.3d 808 (Cal. 1989), conflicts threatened by lawyer's own interests
- Santa Clara County Counsel Attys. Ass'n v. Woodside, 7 Cal.4th 525 (Cal. 1994), construing former Rule 3-310(B)(4)
- Stanley v. Richmond, 35 Cal.App.4th 1070 (Cal. Ct. App. 1995), attorney's fiduciary duty
- Beal Bank, SSB v. Arter & Hadden, LLP, 42 Cal.4th 503 (Cal. 2007), duty to disclose acts of malpractice
- Edwards Wildman Palmer LLP v. Superior Court, 231 Cal.App.4th 1214 (Cal. Ct. App. 2014), duty to report acts of malpractice
- Chubb & Son v. Superior Court, 228 Cal.App.4th 1094 (Cal. Ct. App. 2014), confidentiality and ethics consultation
- Fox Searchlight Pictures Inc. v. Paladino, 89 Cal.App.4th 294 (Cal. Ct. App. 2001), same
- Palmer v. Superior Court, 231 Cal.App.4th 1214 (Cal. Ct. App. 2014) (the Edwards Wildman decision referenced as Palmer in the opinion text)
- In re SonicBlue Inc., 2008 WL 170562 (Bankr. N.D. Cal. 2008), in-house ethics consultation public policy
- Thelen Reid & Priest LLP v. Marland, 2007 WL 578989 (N.D. Cal. 2007), in-house ethics advisers
- Loop AI Labs Inc. v. Gatti, 2016 WL 730211 (N.D. Cal. 2016), rejecting fiduciary exception to privilege
- Landmark Screens, LLC v. Morgan, Lewis & Bockius LLP, 2010 WL 289858 (N.D. Cal. 2010)
- E-Pass Technologies, Inc. v. Moses & Singer, LLP, 2011 WL 3794889 (N.D. Cal. 2011)
- Stock v. Schnader Harrison Segal & Lewis LLP, 142 A.D.3d 210 (N.Y. App. Div. 2016), imputation and in-house consultation
- Crimson Trace Corp. v. Davis Wright Tremaine LLP, 355 Or. 476 (Or. 2014)
- RFF Family Partnership, LP v. Burns & Levinson, LLP, 465 Mass. 702 (Mass. 2013), Model Rule 1.10 does not bar in-house ethics counsel
- St. Simons Waterfront, LLC v. Hunter, Maclean, Exley & Dunn, P.C., 293 Ga. 419 (Ga. 2013)
Other opinions cited:
- Cal. State Bar Formal Op. 2009-178: written disclosure when settling claims including potential malpractice
- Cal. State Bar Formal Op. 2012-183: confidentiality after termination of representation
- ABA Formal Op. 08-453: ethics consultation does not create conflict
- ABA Formal Op. 481 (2018): duty to disclose acts of malpractice
- Colorado Formal Ethics Op. 113 (Nov. 19, 2005): lawyer may not advise client about whether malpractice claim exists
- NC 2015 Formal Ethics Op. 4: lawyer must disclose facts but not advise on malpractice
- NYSBA Op. 789 (2005): ethics consultation as shared interest
- NJ Op. 684 (1998): RPC 1.4 requires prompt disclosure
- Restatement (Third) of the Law Governing Lawyers § 20 Comment c (2000)
- Chambliss, The Scope of In-Firm Privilege, 80 Notre Dame L. Rev. 1721 (2005)
See also
- CA COPRAC Op. 2019-198: Settling Before Withdrawal
- CA COPRAC Op. 2020-201: Departing Lawyer Duties
- CA COPRAC Op. 2021-205: Duties to Prospective Clients
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-2019-197-%5B12-0005%5D-Seeking-Advice-About-%20Current-Clients.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. 2019-197
ISSUE: What ethical obligations arise when lawyers in a law firm consult with
outside counsel concerning matters related to the firm's representation
of a current client, such as the lawyer's ethical compliance or a possible
error by the law firm, and do those ethical obligations change if the
lawyer consulted is a member of the same law firm as the consulting
lawyer and serves as law firm in-house counsel?
DIGEST: Attorneys at times may seek legal advice concerning their ethical and
other obligations to clients, advice that may be provided by, among
others, outside counsel or a lawyer within the law firm serving as law firm
in-house counsel. The act of seeking legal advice concerning ethical
obligations owed to a client by itself does not create a conflict with the
client. Once a lawyer becomes aware that he or she has committed an
error that could prejudice the client, the lawyer ethically may seek legal
advice concerning obligations to the client and options available, but
must comply with the rules governing disclosure to clients and conflicts.
The lawyer's ethical obligations in that situation do not vary whether he
or she seeks legal advice from a lawyer outside the firm or law firm in-
house counsel.
AUTHORITIES
INTERPRETED: Rules 1.4 and 1.7 of the Rules of Professional Conduct of the State Bar of
California.
Business and Professions Code section 6068(m).
STATEMENT OF FACTS
-
A law firm ("Law Firm") defends an individual client ("Client") in a litigation matter
involving breach of contract claims. Client's defense includes allegations that there was
no valid contract, or, as an alternative theory, that the other party breached the
contract. During the course of the litigation, one of the attorneys handling the case
("Lawyer") seeks legal advice from outside counsel ("Outside Counsel") concerning
ethical obligations Lawyer must meet in discovery and seeks guidance as to how to
comply with those obligations. Lawyer does not disclose to Client the fact of this
consultation but does inform Client of the steps that must be taken to comply with
Lawyer's ethical obligations, some of which involve how document collection from
Client should proceed and the production of additional documents by Client. -
Later, Lawyer becomes aware that the limitations period for bringing a cross-complaint
on Client's behalf may have lapsed, which if accurate could constitute potential grounds
for a claim by Client against Law Firm. Lawyer consults Outside Counsel concerning
whether or not Client has a potential claim against Law Firm, and if so, the scope of her
ethical obligations to Client. Outside Counsel reviews the facts and applicable law, and
concludes the limitations period has lapsed, which would preclude the filing of a cross-
complaint by Client. On that basis, Outside Counsel also concludes that Client's inability
to bring a cross-complaint could potentially prejudice Client, depending upon how the
litigation develops. Outside Counsel advises Lawyer to disclose to Client the fact that Lawyer failed to file a
cross-complaint, and that the statute of limitations has likely now run on such a claim.
Outside Counsel also advises Lawyer to inform Client that because of these facts there is
a potential conflict between Client and Law Firm, Law Firm may not continue to
represent Client without Client's informed written consent, and Client is encouraged to
seek the advice of independent counsel. Lawyer does as Outside Counsel advises. -
Assume that in each of the two scenarios set forth here, instead of Outside Counsel, the
counsel whom Lawyer consults is a lawyer in the same firm who has been designated as
law firm in-house counsel ("Firm In-House Counsel").DISCUSSION
Lawyers owe every client an ethical obligation to represent the client free of competing
interests or loyalties, including the lawyer's own personal interests, that would materially
impair the lawyer's representation of the client. Lawyers often need legal advice with respect to
their own compliance with professional rules, their obligations to clients, or, sometimes, their
potential liability arising from professional conduct. Lawyers may engage outside counsel to
advise them on such issues, while in other instances they may turn to other lawyers in their
own firms for assistance.
When a lawyer consults another lawyer about matters involving the first lawyer's current client,
ethical questions arise concerning what disclosures if any the lawyer must make to the client
about that consultation. Business and Professions Code section 6068(m). These questions
become particularly important when the lawyer becomes aware of facts that may give rise to a
claim by the client against the lawyer and seeks advice related to that potential claim. The
ethical duties implicated include the duty to communicate with the client and the duty of
loyalty.
- Duty to Communicate With Clients
The fiduciary duty that attorneys owe to their clients includes a duty of communication. "[T]he
dealings between practitioner and client frame a fiduciary relationship. The duty of a fiduciary
embraces the obligation to render a full and fair disclosure to the beneficiary of all facts which
materially affect his rights and interests." Neel v. Magana, Olney, Levy, Cathcart & Gelfand
(1971) 6 Cal.3d 176, 188-189 [98 Cal.Rptr. 837]. The duty to communicate is stated in California
Rule of Professional Conduct 1.4 and Business and Professions Code section 6068(m) (duty to
inform clients of significant developments relating to the representation). Rule 1.4 provides, in
pertinent part:
(a) A lawyer shall:
(1) promptly inform the client of any decision or circumstance with respect to
which disclosure or the client's informed consent is required by these rules
or the State Bar Act;
(2) reasonably consult with the client about the means by which to
accomplish the client's objectives in the representation;
(3) keep the client reasonably informed about significant developments
relating to the representation, including promptly complying with
reasonable requests for information and copies of significant documents
when necessary to keep the client so informed; and
(4) advise the client about any relevant limitation on the lawyer's conduct
when the lawyer knows that the client expects assistance not permitted by
the Rules of Professional Conduct or other law.
(b) A lawyer shall explain a matter to the extent reasonably necessary to permit
the client to make informed decisions regarding the representation.
The duty of communication requires, among other things, the attorney to disclose the material
facts potentially giving rise to any legal malpractice claim against the attorney. Cal. State Bar
Formal Opn. 2009-178 at p. 4 (citing Beal Bank, SSB v. Arter & Hadden, LLP (2007) 42 Cal.4th
503, 514 [66 Cal.Rptr.3d 52] ("attorneys have a fiduciary obligation to disclose material facts to
their clients, an obligation that includes disclosure of acts of malpractice.")); see also Edwards
Wildman Palmer LLP v. Superior Court (2014) 231 Cal.App.4th 1214, 1234 [180 Cal.Rptr.3d 620]
(duty to report acts of malpractice to clients). This conclusion is supported by rule 1.4,
paragraph (a). An error potentially giving rise to a legal malpractice claim is a "significant
development relating to the representation." Other authorities generally support this view.
ABA Formal Opn. No. 481 (2018); Restatement (Third) of the Law Governing Lawyers § 20
Comment c. (2000); New Jersey Supreme Court Advisory Committee on Professional Ethics
Opn. No. 684 (1998) ("Clearly RPC 1.4 [communication] requires prompt disclosure in the
interest of allowing the client to make informed decisions.").
The attorney is not permitted to provide legal advice to the client on the merits of any such
claim; to do so would be to provide legal advice to the client on an issue on which the
attorney's interests squarely conflict with the client's. Instead, as more fully described below,
under rules 1.4 and 1.7(b), the attorney has a duty to disclose the conflict and the resulting
limitations on her ability to advise the client. The attorney should also consider advising the
client to consult independent counsel concerning the circumstances.
- Duty of Loyalty: Conflicts of Interest
The duty of loyalty owed to current clients "forbids any act that would interfere with the
dedication of an attorney's 'entire energies to [the] client's interests . . . .'" Flatt v. Superior
Court (1994) 9 Cal.4th 275, 289 [36 Cal.Rptr.2d 537]; see also People v. Bonin (1989) 47 Cal.3d
808, 835 [254 Cal.Rptr. 298] ("Conflicts of interest broadly embrace all situations in which an
attorney's loyalty to, or efforts on behalf of, a client are threatened by . . . his own interests.").
The duty of loyalty is reflected in the California Rules of Professional Conduct, including rule 1.7,
as well as by case law and common law.
Rule 1.7(b) states in pertinent part that: "A lawyer shall not, without informed written consent
from each affected client and compliance with paragraph (d), represent a client if there is a
significant risk the lawyer's representation of the client will be materially limited . . . by the
lawyer's own interests." As was the case with the predecessor to rule 1.7(b), former rule 3-
310(B)(4), "[t]he primary purpose of this prophylactic rule is to prevent situations in which an
attorney might compromise his or her representation of the client to advance the attorney's
own financial or personal interests." Santa Clara County Counsel Attys. Assn. v. Woodside,
supra, 7 Cal.4th at p. 546 (construing former rule 3-310(B)(4)).
Rule 1.7 differs from its predecessor rule, however, in that it adopts the basic framework, and
important elements of the language, of ABA Model Rule 1.7(a)(2), in three respects that are
relevant here. First, the actual and potential conflicts are those that give rise to a "significant
risk the lawyer's representation of the the client will be materially limited" by the conflicting
interest. Second, instead of requiring written disclosure to the client, rule 1.7 requires informed
written consent. Third, even with the client's informed written consent, rule 1.7(d) states that
the lawyer may not continue with the representation unless: "(1) the lawyer reasonably
believes that the lawyer will be able to provide competent and diligent representation to each
affected client; (2) the representation is not prohibited by law; and (3) the representation does
not involve the assertion of a claim by one client against another client represented by the
lawyer in the same litigation or other proceeding before a tribunal."
Under rule 1.4, the identification of a potential conflict of interest gives rise to additional
disclosure obligations. Under rule 1.4(a)(1), the lawyer must promptly inform the client of any
decision or circumstance requiring informed consent – that would include an informed consent
to continued representation. In addition, because the lawyer cannot advise a client concerning
a matter where the lawyer's interest conflicts with the client, and because many clients may
not be aware of that prohibition, rule 1.4(a)(4) will require that the lawyer advise the client of
that limitation on his or her representation, at least when the lawyer knows that the client
expects such advice.
Thus, where there is a significant risk that a lawyer's representation of a client may be
materially limited by the lawyer's personal interests, including interests that are actually or
potentially adverse to the client's interests, a conflict of interest exists, which would require
informed written consent and compliance with rule 1.7(d), and may justify additional steps as
discussed below.
APPLICATION
- Hypothetical One: Lawyer Seeks Legal Advice Concerning Ethical Compliance in
Discovery
The first hypothetical involves Lawyer seeking legal advice from Outside Counsel concerning her
ethical obligations in connection with a discovery matter. The central ethical questions are: (1)
whether Lawyer has an actual or potential conflict of interest with the client that requires
further action and (2) whether Lawyer met his ethical duty to communicate with Client.
With regard to the question of whether the circumstances here give rise to or reflect a conflict
between Lawyer and Client, the starting point of the analysis is whether the provisions of rule
1.7(b) apply.
The American Bar Association (ABA) looked at a similar issue in ABA Formal Opn. No. 08-453.
Applying the substantially identical language of Model Rule 1.7(a)(2), the ABA considered
whether a lawyer's seeking legal advice regarding ethical obligations owed to a client created a
conflict of interest with that client. The ABA opined that "[a] lawyer's effort to conform her
conduct to applicable ethical standards is not an interest that will materially limit the lawyer's
ability to represent the client . . . . In situations . . . where the lawyer is seeking prophylactic
advice to assist in her representation of the client, there is no significant risk that the lawyer's
ability to consider, recommend, or carry out an appropriate course of action for the client will
be materially limited by the lawyer's interest in avoiding ethical misconduct." ABA Formal Opn.
No. 08-453, p. 3.
We believe that the same result should follow under the language of California rule 1.7(b). The
principle that a lawyer seeking legal advice to ensure compliance with ethical obligations does
not in itself create adversity between the client's and the lawyer's interests seems clearly
correct. Lawyer and Client have a shared interest in ensuring that Lawyer meets his professional
obligations. Clients should understand that their attorneys are required to act ethically, that is,
in accordance with professional rules and standards; the fact that attorneys may seek legal
advice concerning how to conduct themselves ethically is not in any way contrary to the client's
valid interests or inconsistent with rule 1.7(b). In fact, a lawyer may need advice to even
determine whether rule 1.7(b) applies. Accordingly, Lawyer's consultation with Outside Counsel
seeking advice concerning his ethical obligations and compliance does not itself create a
conflict between Lawyer and Client.
With regard to the duty to communicate, rule 1.4(a)(3) requires disclosure of "significant
developments relating to the representation." In the hypothetical, Lawyer disclosed the
conclusions reached as a result of the consultation with Outside Counsel, but did not reveal to
Client the fact that Lawyer had sought legal advice concerning his ethical obligations.
Looking at a similar issue, the New York State Bar Association concluded that, ordinarily, where
a lawyer seeks legal advice on compliance with ethical obligations, the lawyer does not need to
disclose the fact of that consultation to the client. "Clients are entitled to counsel who comply
with applicable standards of professional responsibility. Those lawyers are entitled to seek
advice on how best to comply with those standards, and to do so without apprehending that
seeking the advice is itself a violation of those standards. The Code does not obligate a lawyer
to tell a client how the lawyer has reached a conclusion concerning a particular matter of
professional responsibility." New York State Bar Association Opn. No. 789 (2005), p. 3.
While rule 1.4 is not identical to New York's Rule of Professional Conduct 1.4 governing
disclosure to clients, the same reasoning set forth in the New York opinion would apply under
California ethics rules and law: adhering to professional rules and standards is an inherent part
of a lawyer's representation of a client. Accordingly, the fact that a lawyer has secured legal
advice concerning such compliance would not normally constitute a "significant development"
the lawyer is required to disclose.
In many instances, however, it may be necessary for the lawyer to disclose to the client the
conclusions reached as part of that consultation. For example, if Lawyer determined as part of
the consultation with Outside Counsel that the rules required Lawyer to advise Client that
additional documents must be produced to the other side, Lawyer would have an obligation to
disclose that fact to Client, and may need to explain the reasoning behind the decision reached.
Lawyer would not be required to disclose to Client the fact that Lawyer reached the decision
concerning document production as the result of a consultation with Outside Counsel, but
would be permitted to do so.
Consistent with this analysis, Lawyer here acted in accordance with his ethical obligations.
- Hypothetical Two: Ethical Obligations Arising from Lawyer's Consultation With
Outside Counsel Concerning Possible Negligence in the Representation
In the second scenario presented, Lawyer consults Outside Counsel regarding his concern about
a possible error – failing to file the cross-complaint within the applicable limitations period –
which, if Lawyer is correct that the limitations period has lapsed, could potentially prejudice
Client and give rise to a claim by Client against Law Firm. This situation implicates possible
conflicts of interest, and may give rise to certain obligations owed by Lawyer to Client.
As a general rule, a conflict arises between Client and Lawyer/Law Firm when their interests
become adverse, including when there is a significant risk that the lawyer's representation of
the client may be materially limited by his or her own interests. Rule 1.7(b); see, e.g., Stanley v.
Richmond, supra, 35 Cal.App.4th at p. 1086. Lawyers have a continuing obligation to monitor
their client relationships for conflicts, whether, for example, in the form of a newly discovered
claim by one client against another client of the firm, a witness disclosed to testify against a
client and with whom a lawyer has a professional relationship, or an adverse interest
developing between the lawyer and the client. If a lawyer becomes aware of facts that may give
rise to a conflict, the lawyer must take action to investigate, analyze the situation and take any
additional steps required by the rules. What the lawyer may not do in the course of such
investigation and analysis is take any actions that could prejudice the interests of his or her
client in the ongoing representation.
In the second hypothetical, at the initial point of the consultation, when Lawyer first raises the
possibility with Outside Counsel that he has committed a prejudicial error but is not yet certain
that he has committed an error, any conflict between Lawyer and Client is only a possible one
that, under these facts, has not affected his representation of Client. Lawyer's concern may be
unfounded, either because he was incorrect in his understanding of the deadline for filing a
cross-complaint, or because there may be options for relief from any deadlines that had
passed. Therefore, under these facts, Lawyer and Law Firm do not yet know whether their
interests give rise to a significant risk of a material limitation to the representation. At that
point there is not yet a duty to inform Client; however, Lawyer and Law Firm owe Client a duty
to investigate further.
Lawyer's actions in seeking legal advice as to whether he committed an error, his obligations to
Client, and possible remedial measures to protect the client are not adverse to Client. "A law
firm is not necessarily disloyal to a client 'by seeking legal advice to determine how best to
address [a] potential conflict [with a current client].'" Palmer v. Superior Court, supra, 231
Cal.App.4th at p. 1233 (citing RFF Family Partnership, LLP v. Burns & Levinson LLP (2013) 465
Mass. 702 [991 N.E.2d 1066, 1078]). "The attorney's and client's interests are likely to
dovetail insofar as the attorney seeks to resolve the dispute to the client's satisfaction, or
determine through consultation with counsel what his or her ethical and professional
responsibilities are in order to comply with them." Id. at p. 1233-1234.
The ethical obligations owed to Client once Law Firm is aware that Lawyer erred include the
duty to disclose the relevant facts to Client. Beal Bank, SSB v. Arter & Hadden, LLP, supra, 42
Cal.4th at p. 514. The disclosure would likely include the fact that the deadline to file a cross-
complaint had passed; that Lawyer failed to file a cross-complaint; that the error cannot be
remedied; and that the client no longer has the opportunity to seek its own breach of contract
claims against the opposing party. Lawyer and Law Firm may disclose other facts that may bear
upon Client's decision regarding how to proceed, including (as applicable) the possible impact
of the lost cross-complaint upon Client's potential recovery and handling of the case. Lawyer
and Law Firm should not advise Client as to its rights against the firm, or whether the actions
constitute malpractice. Lawyer and Law Firm have a conflict of interest that bars them from
advising the Client on those issues and should consider advising Client to consult independent
counsel concerning the circumstances. As noted above, rule 1.4(a)(4) requires Lawyer to
explain the ethical limitations that prevent her from giving such advice when she knows that
the client expects it. In addition, Lawyer should consider whether such explanation is required
under Rule 1.4 (a)(3) to ensure that the Client is reasonably informed concerning the
consequences of this significant development in the case.
As part of the required disclosure, must Lawyer or Law Firm disclose to Client that he or it has
consulted Outside Counsel? The answer depends on whether the consultation with Outside
Counsel is itself a significant development relating to the representation under rule 1.4. In this
situation, if Lawyer discloses to Client the facts set forth above, Client will be in a position to
understand the circumstances and assess the situation. The additional fact that Lawyer
consulted Outside Counsel to make the determination that the statute had run and/or to advise
Lawyer as to his obligations to Client would not appear under these facts to constitute a
significant fact concerning the Client's representation, as who made the determination makes
no difference to what happened or what options are available for moving ahead at this point.
There may be other situations, however, where consultation with Outside Counsel would
constitute a fact that a lawyer should disclose to a client pursuant to rule 1.4.
Once Law Firm knows that Client has a potential claim, Law Firm must consider carefully
whether it may ethically continue to represent Client or whether it should withdraw.
Consistent with rule 1.7(d), Law Firm should not continue to represent the client unless it
reasonably believes that it will be able to provide competent and diligent representation,
including by exercising independent judgment on Client's behalf. If Law Firm concludes it can
ethically continue to represent Client, it should seek the Client's informed written consent to
proceed with the representation.
Under the second hypothetical presented, Lawyer and Law Firm acted in compliance with their
ethical obligations. Once Outside Counsel determined that Lawyer committed an error that
could materially prejudice Client by failing to file the cross-complaint within the limitations
period, Lawyer informed Client of the relevant circumstances, including the facts surrounding
the error, and explained that as a result Law Firm and Client had a conflict of interest. Lawyer
also advised Client to consider seeking the advice of independent counsel as to whether to
continue to be represented by Law Firm, and sought informed written consent to continue such
representation.
- Hypothetical Three: Do Lawyer's Ethical Obligations Change if Counsel Consulted is
Firm In-House Counsel
The third hypothetical is a variant on the first two. If, instead of seeking legal advice from
Outside Counsel, Lawyer consults Firm In-House Counsel, do any of the ethical obligations
Lawyer (and Law Firm) owe to Client in either of those two scenarios change?
For the past few years, there has been considerable attention given to law firm in-house
counsel and whether law firms may assert the attorney-client privilege with respect to
communications with law firm in-house counsel regarding current clients. Courts have
acknowledged potential benefits to clients of having law firm in-house counsel available to
advise lawyers concerning their ethical and professional obligations, including the opportunity
to enhance ethical compliance, early identification of potential problems or mistakes, and the
possibility of rectifying those mistakes. ". . . [P]ublic policy encourages lawyers to consult with
their in-house counsel to understand and comply with their professional responsibilities and
ethical restraints." In re: SonicBlue Inc., supra, 2008 WL 170562, 9. "The court recognizes that
law firms should and do seek advice about the their legal and ethical obligations in connection
with representing a client and that firms normally seek this advice from their own lawyers.
Indeed, many firms have in-house ethics advisers for this purpose." Thelen Reid & Priest LLP v.
Marland, supra, 2007 WL 578989, 7.
Questions have been raised about whether imputation rules make it ethically impermissible for
law firm in-house counsel to advise the firm on matters concerning current clients. However, in
recent cases, courts have rejected that view in certain instances. "[T]here is nothing in the
language or commentary to [Model Rule 1.10(a), the imputation rule] to suggest that the rule
of imputation was meant to prohibit an in-house counsel from providing legal advice to his own
law firm in response to a threatened claim by an outside client." RFF Family Partnership, supra,
991 N.E.2d at p. 1078-79; see also Stock v. Schnader Harrison, supra, 142 A.D.3d at p. 233.
Because we conclude that the act of seeking advice regarding a lawyer's ethical obligations
does not create a conflict, we do not believe imputation applies.
In Hypothetical One, Lawyer seeks advice concerning his ethical obligations and compliance, a
situation which we opine does not in itself give rise to a conflict between Lawyer and Client.
The ethical obligations Lawyer and Law Firm owe Client in that circumstance are therefore the
same whether Firm In-House Counsel or Outside Counsel is involved.
Hypothetical Two concerns Lawyer's consultation with Outside Counsel concerning whether or
not he has committed negligence, and if so, what his next steps may be. Does the ethical
analysis change if that initial consultation is with Firm In-House Counsel? We conclude in
Hypothetical Two that the act of Lawyer's seeking legal advice concerning his possible error and
his resulting ethical obligations to Client does not itself create a conflict between Law Firm and
Client. Once Law Firm concludes that Lawyer has committed an error and Client has a possible
claim against the Firm, there is a potential conflict that triggers a duty to disclose and to seek
informed written consent to continued representation under the conflicts rules.
Based on our analysis, there is no reason to treat differently a consultation by Lawyer with Firm
In-House Counsel under the facts described. Law Firm necessarily must do the analysis required
by the rules to determine its ethical obligations to client and the options available to both Client
and Law Firm. Whether that analysis is performed by Lawyer himself, a colleague, Firm In-
House Counsel or Outside Counsel, there is no conflict that prevents any lawyer from
undertaking that preliminary task; in fact, the rules require that lawyers consider and analyze
possible conflicts. Further, as noted in case law and commentary, there are potential benefits
to the client and the law firm of having in-house counsel involved, including accessibility and
timing. Of course, once Firm In-House Counsel concludes that Lawyer committed an error, at
that point, just as when Outside Counsel is involved, Law Firm must make appropriate
disclosure to Client of the material facts, and must carefully consider whether continued
representation is possible and under what terms, or whether Law Firm must withdraw.
The last question is whether the participation of Firm In-House Counsel must be disclosed to
Client at any stage in the fact scenarios set forth in Hypotheticals One and Two. For the
situation described in Hypothetical One, where lawyer seeks advice on compliance with ethical
obligations and rules only, there is no reason Lawyer must disclose to Client that he consulted
Firm In-House Counsel. Both Lawyer and Client have an interest in ensuring that Lawyer meets
ethical obligations, and therefore the consultation itself is not a material development that
must be disclosed pursuant to rule 1.4(a)(3).
With regard to Hypothetical Two, under the facts present here, there appears to be no
requirement to disclose Firm In-House Counsel's involvement to Client, just as there was no
requirement to disclose the role played by Outside Counsel. However, as with respect to the
participation of Outside Counsel, there may be facts in a given situation that would cause the
participation of Firm In-House Counsel to be a material development. In that instance, Law Firm
would have an obligation to disclose under rule 1.4(a)(3).
CONCLUSION
A lawyer's seeking legal advice concerning ethical obligations owed to a client does not by itself
create a conflict with the client. Once a lawyer becomes aware that he or she has committed an
error that could prejudice the client, the lawyer ethically may seek legal advice concerning
obligations to the client and options available, but must comply with the rules governing
disclosure to clients and conflicts of interest. The lawyer's ethical obligations in that situation
do not vary whether he or she seeks legal advice from a lawyer outside the firm or law firm in-
house counsel.
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 licensee of the State Bar.