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On Behalf of | Aug 9, 2016 | Wang IP Law Blog

When attorney-client relationships end, it is important to understand the ethical and professional duties that attorneys owe to their former clients. Sometimes the end of a client relationship is anticipated and cordial, usually when a transaction or litigation matter comes to a close. Other times, the split is unanticipated and not so amicable, such as when a conflict arises that requires the attorney to withdraw, or when a breakdown in the relationship occurs that results in you and your attorney deciding to part ways.

Duties Owed to Former Clients

California law imposes a limited duty of loyalty on attorneys that continues after an attorney-client relationship ends. This duty arises in situations during an attorney’s proposed representation of a new client, or when their separate business or personal affairs might violate a limited duty of loyalty to a former client. An attorney’s duty of loyalty to a client is mentioned but is not expressly defined in the California Rules of Professional Conduct (CRPC). Generally, this duty is related to an attorney’s disclosure of a client or former client’s confidential information. Furthermore, California Rule 3-100 states that attorneys have a “duty of loyalty and competency” that is outlined in Rule 3-110, which addresses “Failing to Act Competently.”

After concluding a relationship with a client, California law prohibits an attorney from (1) doing anything which will injure the former client in any matter in which the attorney formerly represented the client and (2) using against the former client knowledge or information acquired by virtue of the previous relationship. In Oasis West Realty, LLC v. Goldman, Goldman served as counsel for Oasis in their efforts to obtain city approval for a redevelopment project. 51 Cal.4th 811, 821 (2011). Two years after Goldman terminated his relationship with Oasis, however, he lent his support to a group in opposition of the project. Goldman claimed that his actions constituted free speech regarding a public event that was protected under California’s anti-SLAPP (Strategic Lawsuit Against Public Participation) statute, but the California Supreme Court disagreed.

The court found that an attorney’s fiduciary obligations of loyalty and confidentiality “continue in force even after the representation of a client has ended,” citing Wutchumna Water Co. v. Bailey. 216 Cal.564, 573 (1932). In Wutchumna Water, the Supreme Court of California held that the courts will protect a client’s “legitimate expectation of loyalty to preserve the effective functioning of the fiduciary relationship, which depends on the client’s trust and confidence in counsel.” The duty of confidentiality requires that an attorney not disclose confidential client information to the disadvantage of a former client. Oasis West Realty, 51 Cal.4th at 823; Rest. 3d Law Governing Lawyer § 60, Comment (c)(i).

Under California Rule 3-310(E), an attorney may not accept employment adverse to a client or former client where the attorney possesses confidential client information material to the employment. According to a 2011 California Appellate Court ruling in H.F. Ahmanson & Co. v. Salomon Brothers, Inc., it is presumed that an attorney possesses confidential information adverse to the former client when the latter establishes a substantial relationship between the two matters. 229 Cal.App.3d 1445 (1991). A substantial relationship is determined by three factors: factual similarity, legal similarity and nature and extent of the attorney’s involvement in the prior representation. Where there is a substantial relationship, actual use or disclosure of the confident client information is not required to trigger this duty. California Rule 3-310(E) is violated if there is a “substantial risk” that information protected by California Rule 3-100 would be used or disclosed without consent in a subsequent representation or adverse employment, and in a manner that is contrary to the former client’s interests. Galbraith v. State Bar, 218 Cal. 329, 333 (1933); See also American Airlines, Inc. v. Sheppard, Mullin, Richter & Hampton, 96 Cal.App.4th 1017, 1040-1041 (2002).

California’s Limits to Duties Owed to Former Clients

The American Bar Association’s Model Rules of Professional Conduct (Model Rules) have been adopted by 49 states – all except California. Specifically, Model Rule 1.9(a) (“duties to former clients”) includes both the duty to avoid being disloyal to a former client with respect to work performed for that client as well as the duty to protect that client’s confidential information. California’s current rule does not expressly address both of these duties, as California Rule 3-310(E) speaks only to accepting “employment adverse to a former client where the client has obtained confidential information in representing the former client that is material to the current employment.” California’s proposed Rule 1.9, however, recognizes both duties of loyalty and confidentiality. In the meantime, attorneys in California are held to a standard outlined by case law concerning the broader professional responsibility owed to former clients.