1. Rex's Ethical Violations
False or Misleading Communications About a Lawyer's Services
Both California and the ABA prohibit a lawyer from making a false or misleading communication about the lawyer or the lawyer's services. A communication is misleading if it contains a material misrepresentation of fact or law or omits a fact necessary to make the statement, considered as a whole, not materially misleading.
Rex's sign contains several misleading representations.
"State Bar-Certified Real Estate Attorney." A lawyer may not communicate that he is "certified" as a specialist in a particular field unless he is in fact certified by an organization accredited by the State Bar, and the certifying organization is clearly identified. In California, real estate is not a specialty recognized for lawyer certification at all. Rex is therefore making a false claim of certification, which is both materially misleading and a direct violation of the rules on communicating specialty status.
"Rex Jones and Associates." Rex is a "solo law practitioner." A name implying multiple lawyers when in fact there is only one is misleading. The rules on firm names prohibit names that create a false impression of the size or nature of the practice.
"1-800-BIG-FIRM." The phone number reinforces the false impression that Rex's practice is a large firm. This is misleading.
Solicitation and Sign Placement
Posting an advertising sign in the lobby of Realty-Co is permitted advertising rather than prohibited in-person solicitation, because Rex is not personally communicating with prospective clients in real time. However, both the ABA and California prohibit a lawyer from giving anything of value for recommending the lawyer's services, with limited exceptions for the reasonable cost of permitted advertising. The fact that Rex's sign is placed "free of charge" raises the inverse concern: a lawyer must not allow a non-lawyer to use the lawyer's services in a way that creates a relationship resembling a partnership or fee-sharing with non-lawyers.
If Rex's relationship with Realty-Co involves any reciprocal referral arrangement—whether Rex feels obligated to direct clients to Realty-Co in exchange for the free advertising space—that would violate the prohibition on referral arrangements, the prohibition on fee-sharing with non-lawyers, and the duty to avoid conflicts of interest because his independent professional judgment would be compromised. On these facts the sign placement appears to be a gratuitous accommodation by his former partner, but Rex must be careful that no quid pro quo develops.
Failure to Disclose Material Information to Clients
A lawyer owes the client a duty of communication: he must keep the client reasonably informed about the status of the matter and provide information necessary for the client to make informed decisions. California in particular requires a lawyer to disclose to the client whenever the lawyer is sued for malpractice in the matter, has been disciplined, or has malpractice insurance issues that could materially affect the representation. More broadly, a pattern of malpractice suits is information a reasonable client would want to know. Rex has been sued four times for malpractice in the past 18 months. His belief that the suits are frivolous and that there have been no judgments does not excuse non-disclosure. Rex has violated his duty of communication.
Conclusion as to Rex
Rex has violated the rules on misleading communications, false claims of certification, and misleading firm names through his sign, and the duty of communication by failing to disclose the malpractice suits to his clients.
2. Nancy's Ethical Violations
Unauthorized Practice of Law (Multijurisdictional Practice)
Both the ABA and California prohibit a lawyer not licensed in the jurisdiction from establishing an office or systematic and continuous presence for the practice of law, or from holding out to the public as licensed in the jurisdiction.
The ABA approach permits an out-of-state lawyer in good standing to practice in another jurisdiction on a temporary basis where the services arise out of or are reasonably related to the lawyer's practice in the home jurisdiction, or where the services are for a client the lawyer represents in the home state. California, by contrast, takes a stricter approach. California has historically held that an out-of-state lawyer who appears in a California real estate transaction—even temporarily—engages in the unauthorized practice of law unless admitted pro hac vice (which is unavailable for a transactional matter) or otherwise authorized.
Nancy is licensed only in Arizona. She is "temporarily representing her client in California in the real estate transaction," and her client is an Arizona resident who happens to own one property in California. Under the ABA approach, this is likely permissible temporary multijurisdictional practice because the matter is reasonably related to her Arizona practice and her client is an Arizona resident. Under California law, however, Nancy may be engaged in the unauthorized practice of law because she is performing legal services in California for compensation without a California license.
Failure to Disclose Prior Disbarment
Although Nancy is "now in good standing" in Arizona, she was previously disbarred there. A lawyer admitted in another jurisdiction has a continuing duty in connection with bar admission and disciplinary matters not to make false or misleading statements, and a broader duty not to engage in conduct involving dishonesty, fraud, deceit, or misrepresentation. If Nancy did not disclose her prior disbarment to her client (the Arizona seller), or to anyone evaluating her authority to act in California, she may have violated her duty of candor and her duty to communicate material information to the client. A reasonable client would want to know that the attorney representing him in a real-estate transaction had previously been disbarred.
Holding Out
By representing a seller at a California real estate closing, Nancy implicitly holds herself out as authorized to practice in California. Both the ABA and California prohibit a lawyer not admitted in the jurisdiction from holding out to the public or otherwise representing that the lawyer is admitted to practice in that jurisdiction. By appearing at the closing without disclosing her Arizona-only status, Nancy creates a misleading impression.
Conclusion as to Nancy
Nancy has likely engaged in the unauthorized practice of law in California and has failed in her duties of candor and communication by not disclosing her prior disbarment to her client. Under ABA standards her conduct may fall within the temporary-practice exception, but California's stricter approach to multijurisdictional transactional practice exposes her to discipline.
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