The new attorney rules could unleash Pandora’s box of unintended consequences

Should lawyers in California be under an ethical obligation to report criminal or “dishonest” conduct by other lawyers to the State Bar or other regulatory bodies, including courts, with jurisdiction over the lawyer’s conduct? After years of blocking such reporting rules, California lawyers now face two significant professional misconduct reporting rules which could expose them to discipline or even disbarment for not reporting a colleague’s questionable conduct to the State Bar or other appropriate agency.

As of Aug. 1, 2023, Rule of Professional Conduct 8.3 (which opponents derisively called “the snitch rule”) requires lawyers in California to “without undue delay, inform the State Bar, or a tribunal with jurisdiction to investigate or act upon such misconduct, when a lawyer knows of credible evidence that another lawyer has committed a criminal act or has engaged in conduct involving dishonesty, fraud, deceit, or reckless or intentional misrepresentation or misappropriation of funds or property that raises a substantial question as to that lawyer’s honesty, trustworthiness, or fitness as a lawyer in other respects.” RPC 8.3 (a).

In an apparent response to the Jan. 6, 2021 “insurrection” at the U.S. Capitol, the California legislature enacted an additional reporting requirement on the state’s lawyers. Effective Jan. 1, 2024, new section 6090.8 of the California Business & Professions Code (“B&P Code”) will obligate all California-licensed attorneys to inform the State Bar when they know that another lawyer has engaged in, or conspired to engage in, “seditious conspiracy,” “treason” or “rebellion or insurrection.” Section 6090.8 defines these specific terms pursuant to the prohibitions contained in Title 18 of the United States Code.

Mandatory lawyer misconduct reporting requirements are not new in states other than California. In fact, California was the last state that did not require its lawyers to report other lawyer’s misconduct. American Bar Association Rule of Professional Conduct 8.3 was adopted in one form or another in the 49 states and District of Columbia requiring attorneys to report other lawyers who have “committed a violation of the Rules of Professional Conduct that raises a substantial question as to that lawyer’s honesty, trustworthiness or fitness as a lawyer in other respects.” California refused to adopt a version of ABA Rule 8.3 when it rewrote its Rules of Professional Conduct in November 2018. However, the recent scandal involving disgraced personal injury attorney Tom Girardi and the misappropriation of client funds his firm held in trust seems to have been the impetus to push this new rule through the State Bar committees and to get approval from the California Supreme Court.

So what’s wrong with lawyers having an ethical obligation to report the misconduct of other lawyers to the State Bar or a court overseeing a litigated case? Nothing, at least on the surface. Dishonest lawyers or lawyers who commit criminal acts should be reported to the State Bar and disciplined or disbarred. Indeed, lawyers should take a leading role in policing the profession and reporting misconduct when it becomes obvious. Arguably, lawyers in California have been doing just that for decades. Girardi’s misconduct continued unabated for years because Girardi used his prestige, influence and political clout to get the State Bar to ignore numerous complaints from lawyers, clients and others which could have stopped the Girardi scandal before it got so much worse.

Will there be unintended consequences of the new Rule 8.3 or B&P Code § 6090.8?

For example, will lawyers in hotly contested litigation file State Bar complaints against opposing counsel for submitting arguably “false” declarations or making dishonest arguments? Will clients, who often demonize opposing counsel, pressure their lawyers to file State Bar complaints against the opposing lawyer to gain an advantage in litigation or business transactions?

As for B&P Code § 6090.8, could lawyers defending whistle blowers or media outlets disclosing confidential governmental documents (like the Pentagon Papers or WikiLeaks) have to defend against State Bar complaints from their opposing counsel or other lawyers who disagree with their position? Could lawyers who don’t report their opposing counsel to the State Bar in this situation be subject to discipline or even disbarment if disputed conduct later is proven to be dishonest or seditious?

There are exceptions to the reporting requirements for information obtained through the attorney-client privilege and in a Lawyer Diversion or Assistance Program. And an attorney who makes a State Bar complaint pursuant to section 6090.8 against another lawyer “with the intent to intimidate, harass, or otherwise deter a fellow licensee from engaging in the lawful practice of law shall be deemed to have committed professional misconduct.” B&P § 6090.8 (c). Curiously, this provision could subject a complaining lawyer to discipline for filing a meritorious complaint with the State Bar if the lawyer had “bad” intentions. But does this provision really make sense? A lawyer should not be subject to discipline for filing a meritorious complaint against another lawyer under B&P § 6090.8, regardless of the lawyer’s intent, especially when the lawyer is now obligated to make that complaint.

Thus, do these new reporting rules create more problems than they solve for the State Bar, which often complains that it is underfunded and understaffed to handle its existing oversight duties? Moreover, do these new rules place a difficult burden on California lawyers to report colleagues or even adversaries for possibly questionable, but not necessarily obvious misconduct to the State Bar, or face discipline themselves for failing to report questionable conduct in the heat of a legal dispute?

The new rules also raise the specter of lawyers having to report alleged dishonesty, financial misconduct or “seditious” activity by lawyers within their own law firms.

Again, reporting actual misconduct could be a positive result of the new rules, especially if it exposes fraudulent or even criminal conduct in the operation of law firms. But newly minted attorneys with little or no experience in running a law firm need to know that they now have an affirmative duty to report their employers to the State Bar if they have “credible evidence” that other lawyers in the firm are engaged in conduct involving “dishonesty, fraud, deceit or reckless or intentional misrepresentation or misappropriation of funds or property” or “seditious conspiracy” or “rebellion.” Will the new rules breed a new genre of “whistleblower” wrongful termination or retaliation cases filed by associates?

Or will a fledging lawyer get hit with State Bar discipline because he or she did not report their co-worker or supervisor who may have done something later proven to be wrong or an alleged crime?

We can only wait and see whether these new mandatory reporting requirements will help prevent another Girardi scandal or Jan. 6 insurrection, or whether the rules have opened a Pandora’s box of unintended consequences that create more problems than they solve.