Risk Update

Ethical Walls — California Dreaming, California Ethical Screening (New State Ethics Opinion)

California Lawyers Association Ethics Committee Issues Formal Opinion on Ethical Screens” —

  • “The California Lawyers Association (CLA) Ethics Committee has issued its first formal ethics opinion, Formal Opinion 2021-1, addressing Ethical Screens. The opinion promises to be a vital resource for any law firm wishing to minimize the risk of conflicts. Several Rules of Professional Conduct expressly provide for implementation of a screen without client consent to rebut the presumption of shared confidences, and CLA’s opinion clarifies and expounds on those Rules, including 1.0.1(k) (which provides a definition of the term “screened”).”
  • “The opinion addresses the elements an ethical screen must have in circumstances where such a screen is expressly required by the Rules. Importantly, the opinion notes that there may be a distinction between what is ethically required to comply with professional obligations and what a court may view as necessary to avoid disqualification, which sometimes may be granted without a violation.”
  • “The most critical ethical screen factors are those expressly set forth in the Rules. The screen must be implemented in a timely manner, and include preventative measures to protect against the confidential information of the former or potential client from being shared with others in the firm. There should be no communications related to any matter being protected in either direction across the screen. The lawyers whose conflict results in them being screened off should not receive any portion of the fees from the matters they are screened from. And the affected clients must receive notice of the fact of the screen and its terms so they have an opportunity to comment about them. Additional factors may help the efficacy of the screen in preventing the sharing of confidential information, but whether they should be implemented largely depends on the circumstances.”
  • “Any ethical screen must ultimately be judged by whether it is sufficient to meet its purpose, to satisfy concerns that a prohibited attorney has not and will not have any involvement with, or communication concerning, the screened matter that would support a reasonable inference that confidential information was or will be disclosed.”

CLA issues its first advisory opinion on ethical screens” —

  • “To rebut the presumption that lawyers who are practicing together are sharing confidential information about a particular client, the firm or employer may create an ethical screen. This would allow a firm to take on a client whose interests may be adverse to the interests of another client of the firm or, as is often the case, a client once represented by someone else at the firm.”
  • “This could arise when a government lawyer leaves public service and joins private practice or when a lawyer in private practice leaves one firm for another firm — whether or not the lawyer took their ‘book of business’ with them. The lawyer who is new to the firm may need to be screened from knowledge about certain matters being worked on by their new colleagues. Absent an effective ethical screen, everyone at the lawyer’s new firm would be precluded from representing clients with a conflict vis-à-vis work the lawyer did previously because the lawyer’s conflict is imputed to the entirety of the new firm.”
  • “One of the universally mandatory elements of an effective ethical screen is that it be imposed in a timely manner. In practice, this means instituting the screen as soon as reasonably possible following discovery of a conflict. It is much easier (and ethical!) to decline to take on a matter or to get conflict waivers at the beginning of an engagement than to seek waivers or — worse yet — to have to withdraw, because a conflict was discovered after the representation has begun.”
  • “The last few universally mandatory elements of an effective ethical screen all go together and could be characterized as “good housekeeping” for any law firm. These elements include prohibiting communications across the screen, limiting access by the screened person (for example, the former government lawyer) to the screened matter’s file, and limitations on access to the screened lawyer’s documents and information — e.g., the documents and information the new lawyer brings from their former employer.”
  • “A variety of other tools and techniques are available to law firms and legal employers, depending on the circumstances, all which would enhance the effectiveness of an ethical screen and all of which, if viewed in retrospect, may strengthen a firm’s argument that it had an effective ethical screen in place.”
  • “And, finally, just as one of the most important steps to imposing an ethical screen at the beginning of an engagement is to have mechanism for conducting and to actually conduct a conflicts check, once that screen is in place, firms would be well-served to periodically monitor the screen for its effectiveness.”
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