Ethics Opinon 1977-2

March 1, 1977

I
QUESTION PRESENTED

An attorney, employed by Legal Aid, accepted, in the course of his employment, the case of a client which had been refused by a number of attorneys in private practice. The case was of the type traditionally considered compensible by contingency fee. Suit was instituted in behalf of the client and a $20,000 judgment was recovered, of which $18,000 constituted punitive damages. Legal Aid, under its charter, was not permitted to accept any fee for the case notwithstanding the nature of the recovery and the ability of the defendant to pay. The Legal Aid attorney handling the case subsequently terminated his employment with Legal Aid and entered private practice. The client requested a meeting with the attorney and gratuitously tendered an unsolicited gift of $500 as a reward for the fine quality of representation. May the attorney retain the $500 and, if so, under what circumstances?

II
SUMMARY

No unethical or unlawful conduct would be committed by the attorney in retaining the $500 gift provided said gift was neither solicited nor suggested by the attorney.

III
STATUTES, CANONS, AND LEGAL AID CHARTER SECTIONS

LEGAL AID CHARTER SECTION

The Legal Aid Society has adopted the Rules and Regulations of the Legal Services Corporation, Federal Register, Vol. 41, 38505-06 (September 10, 1976). Part 1609, entitled Fee Generating Cases provides that "in instances where no private attorney is willing to represent an individual, because the recovery of a fee is unlikely, the potential fee is too small, or for some other reason", then legal service lawyers may accept the case, provide legal assistance and receive any award of attorney's fees. However, all of said award must be remitted to the recipient-client, used solely for purposes authorized by the Act, and reported to Legal Aid.

The aforementioned rules adopted by Legal Aid state under which circumstances a legal service lawyer may accept a contingency fee case (section 1609.4) and provides the procedure to be followed in acceptance of fees awarded or approved by a court.

STATUTES AND CANONS OF ETHICS

Business and Professions Code section 6076 et seq., which contains the California Rules of Professional Conduct does not have a specific provision bearing on this subject. However, Rule 1-100 states: "Nothing in these rules is intended to limit or supersede any provision of law relating to the duties and obligations of attorneys or the consequences of a violation thereof. . .". Thus, although the A.B.A. Rules of Professional Conduct are not in effect in California, they are nevertheless insightful with respect to the ethical obligations of lawyers. Canon 5 of the A.B.A. Code states that a lawyer should exercise independent professional judgment on behalf of a client. Ethical consideration 5-5 thereunder provides in relevant part:

"A lawyer should not suggest to his client that a gift be made to himself or for his benefit. If a lawyer accepts a gift from his client, he is peculiarly susceptible to the charge that he unduly influenced or over-reached the client. If a client voluntarily offers to make a gift to his lawyer, the lawyer may accept the gift, but before doing so, he should urge that his client secure disinterested advice from an independent, competent person who is cognizant of all the circumstances. . ."

IV
ETHICS OPINIONS

A.B.A. Informal Opinion No. 1334 issued on May 27, 1975, states that the Disciplinary Rules of the A.B.A. Code do not forbid a Legal Aid organization from receipt of an award of attorney's fees provided the court is fully informed of the circumstances.

Several ethics opinions issued by the San Diego County Bar Association are relevant. Ethics Opinion 1974-9 state with respect to Legal Aid clinic's acceptance of donations

"Ethical Consideration 5-5 prohibits an attorney from suggesting that a client make a gift to him. Disciplinary Rules prohibit a lawyer from sharing a fee with nonlawyers. It is clear that any donations requested and accepted must go only to the clinic operational expenses and not to any attorney."

Ethics Opinion 1976-7, consistent with the newly promulgated Rules and Regulations for Legal Services Corporations, defines a "fee-generating" case as one in which a retainer be made on a contingent fee basis, where there is reasonable expectation of recovery of fees or where there is an immediate, available corpus. When such is the case, then regardless of the client profile, the case is to be labeled "fee-generating."

Ethics Opinion 1976-13 provides that any lawyer who performs services for a client following termination of employment must divide all fees generated therefrom with his former employer according to the requirements of Rule 2-108(2).

Since it could be construed that the $500 gift was a fee, Ethics Opinion 1976-13, based upon Rule 2-108(2) seems to dictate the advisability of the attorney securing a release from his former employer as well as the donor.


V
DISCUSSION

It is the opinion of this Committee that acceptance of the $500 would not constitute unethical conduct. Acceptance of the case by Legal Aid was permissible under the Rules and Regulations it has adopted. Provided the gift of $500 was neither sought nor solicited by the lawyer, and was made wholly out of the client's beneficence, the lawyer may ethically retain said $500 so long as there exists no special contract between the lawyer and his former employer. Ethical retention of such a gift by a lawyer is premised on his/her compliance with the following conditions:

1) The lawyer obtain a written letter signed by the donor stating that said donor is making a gift to said lawyer in a sum certain, that said gift is for the benefit of the individual lawyer and not for Legal Aid. That said donor has received independent legal advice concerning the advisability of making said gift or realizes he has a right to such advice, but has chosen to forego such right, and

2) The lawyer must disclose, in full, to the Board of Directors of Legal Aid and obtain said Directors' written, informed consent.

It is elementary that if said gift to the lawyer was, in fact, for the payment of attorney's fees or approved by the court or if the gift was solicited by the attorney in any manner whatsoever, then said gift must be promptly remitted to Legal Aid.

Returning to the facts of this case, the lawyer has no ethical duty to refuse or relinquish the $500 to his former employer--Legal Aid. The Committee feels the same legal ethics should prevail in the employment of attorneys by private law firms. However in this regard, the Committee purports to make no decision herein as to the propriety of lawyers retaining very large sums of money or extremely generous gifts. The likeness of such a gift to a fee payment is not decided today.

This opinion is advisory only. It is not binding upon the State Bar, the Board of Governors, its agents or employees.

 

Disclaimer: This opinion was issued by the Legal Ethics Committee of the San Diego County Bar Association. It is advisory only and is not binding upon any member of the SDCBA, any other member of the State Bar of California, the State Bar of California or its Board of Governors, or any persons or tribunals charged with regulatory responsibilities. The SDCBA, its officers, directors, agents, and the Legal Ethics Committee members assume no responsibility or liability in rendering this opinion.