California State Bar Task Force Identifies 16 Options to Significantly Change the Practice of Law

While attending a BASF reception event this past Friday evening I introduced myself to two attorney attendees who were already engaged in a discussion. I did not know either of the two attorneys. As it turns out, the discussion was about a topic that I had heard nothing about – a California State Bar Task Force evaluating and apparently recommending changes – significant changes – to the practice of law. Occasionally I post discussions about the practice of law in this blog or in my other blog (D&O, audit committees, risk management, etc., http://auditcommitteeupdate.com), including, for example, somewhat recent posts about rule of professional responsibility changes pertaining to conflicts of interest, confidentiality, and attorney as a witness rules.

One of the attorneys from this past Friday evening emailed some additional information to me about the State Bar Task Force. The materials, and the possible changes that are being evaluated are detailed and significant, including, for example, options for expanding the practice of law by non-attorneys and business entities that are not law firms, allowing non-attorney ownership of law firms, changing confidentiality and conflict rules, changing limitations on the sharing of fees with non-lawyers, and more.

Frankly, it would take me considerable time to evaluate the possible changes, of which it appears that there are or could be 16 options that are proposed. Thus, for your additional information and reading, below I have provided links to some of the Task Force materials.

The following is part of the State Bar’s description of the Task Force’s assignment: The State Bar Board appointed a Task Force on Access Through Innovation of Legal Services (ATILS) and assigned it to identify possible regulatory changes to remove barriers to innovation in the delivery of legal services by lawyers and others. ATILS was charged with balancing dual goals: consumer protection and increased access to legal services. ATILS has developed 16 concept options for possible regulatory changes, and the Task Force is now seeking public input to help evaluate these ideas.

The following is a Task Force chart that broadly illustrates areas of possible change. Note that this chart does not list or illustrate the individual options that are being considered – also note that if the chart is somewhat difficult to read in this format you will also find a version of the chart by clicking on the Options for Regulatory Reform link below:

The following is a link to a rather long pdf report by the Task Force – I note that the report description indicates “Tentative Recommendations,” indicating or suggesting that although hearings are ongoing the Task Force appears to have already reached tentative recommendations: Board of Trustees Agenda Item 701 JULY 2019: State Bar Task Force on Access Through Innovation of Legal Services Report: Request to Circulate Tentative Recommendations for Public Comment

The following is a link to the Task Force’s website with the heading: Options for Regulatory Reform: http://www.calbar.ca.gov/About-Us/Our-Mission/Protecting-the-Public/Public-Comment/Public-Comment-Archives/2019-Public-Comment/Options-for-Regulatory-Reforms-to-Promote-Access-to-Justice

The following is a link to the Task Force’s primary website: http://www.calbar.ca.gov/About-Us/Who-We-Are/Committees-Commissions/Task-Force-on-Access-Through-Innovation-of-Legal-Services/Task-Force-on-Access-Through-Innovation-of-Legal-Services

These Task Force materials are important for all attorneys, prospective attorneys, law schools, and providers or potential providers of legal services. Currently I have no insight as to which if any changes will be made; however, I am sure that more on these topics will follow.

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Remember, every case and situation is different. It is important to obtain and evaluate all of the evidence that is available, and to apply that evidence to the applicable standards and laws. You do need to consult with an attorney and other professionals about your particular situation. This post is not a solicitation for legal or other services inside of or outside of California, and, of course, this post only is a summary of information that changes from time to time, and does not apply to any particular situation or to your specific situation. So . . . you cannot rely on this post for your situation or as legal or other professional advice or representation.

Thank you for reading this website. I ask that you also pass it along to other people who would be interested as it is through collaboration that great things and success occur more quickly.

Best to you, David Tate, Esq. (and inactive California CPA) – practicing in California only.

I am also the new Chair of the Business Law Section of the Bar Association of San Francisco.

Blogs: Trust, estate/probate, power of attorney, conservatorship, elder and dependent adult abuse, nursing home and care, disability, discrimination, personal injury, responsibilities and rights, and other related litigation, and contentious administrations http://californiaestatetrust.com; Business, D&O, board, director, audit committee, shareholder, founder, owner, and investor litigation, governance, responsibilities and rights, compliance, investigations, and risk management  http://auditcommitteeupdate.com

The following are copies of the tables of contents of three of the more formal materials that I have written over the years about accounting/auditing, audit committees, and related legal topics – Accounting and Its Legal Implications was my first formal effort, which resulted in a published book that had more of an accounting and auditing focus; Chapter 5A, Audit Committee Functions and Responsibilities, for the California Continuing Education of the Bar has a more legal focus; and the most recent Tate’s Excellent Audit Committee Guide (February 2017) also has a more legal focus:

Accounting and Its Legal Implications

Chapter 5A, Audit Committee Functions and Responsibilities, CEB Advising and Defending Corporate Directors and Officers

Tate’s Excellent Audit Committee Guide

The following are other summary materials that you might find useful:

OVERVIEW OF A RISK MANAGEMENT PROCESS THAT YOU CAN USE 03162018

Audit Committee 5 Lines of Success, Diligence, and Defense - David Tate, Esq, 05052018

COSO Enterprise Risk Management Framework ERM Components and Principles

From a prior blog post which you can find at https://wp.me/p75iWX-dk if the below scan is too difficult to read:

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Discussions About Powers of Attorney – Responsibilities and Rights (Part 1)

I am writing a couple of posts discussing powers of attorney under the California Probate Code. One of my current cases involves responsibilities and rights under financial and healthcare powers of attorney. A prior case in litigation involved whether or not to disconnect mom from medical equipment that was believed to be keeping her alive. Some of the discussion in these posts will be from a talk that I presented for the Professional Fiduciary Association of California.

Responsibilities and rights under a power of attorney are determined by the wording of the power of attorney itself, statutes, case law, and the facts and circumstances of the situation. These can be complicated issues. Although the wording of the power of attorney is extremely important, and that wording should be where the determination of responsibilities and rights starts, as you will see in these posts, the wording of the power of attorney does not give the complete answer. There are lengthy chapters and books written on these topics – in this and a couple of following posts I will be discussing some of the statutory provisions that govern responsibilities and rights under powers of attorneys under the California Probate Code.

Under the California Probate Code powers of attorney are discussed at Probate Code §§4000-4545.

Thus, for example, California Probate Code §§4050 and 4051 provide as follows:

Probate Section 4050:

(a) This division applies to the following:

(1) Durable powers of attorney, other than powers of attorney for health care governed by Division 4.7 (commencing with Section 4600).

(2) Statutory form powers of attorney under Part 3 (commencing with Section 4400).

(3) Any other power of attorney that incorporates or refers to this division or the provisions of this division.

(b) This division does not apply to the following:

(1) A power of attorney to the extent that the authority of the attorney-in-fact is coupled with an interest in the subject of the power of attorney.

(2) Reciprocal or interinsurance exchanges and their contracts, subscribers, attorneys-in-fact, agents, and representatives.

(3) A proxy given by an attorney-in-fact to another person to exercise voting rights.

(c) This division is not intended to affect the validity of any instrument or arrangement that is not described in subdivision (a).

Probate Section 4051:

Except where this division provides a specific rule, the general law of agency, including Article 2 (commencing with Section 2019) of Chapter 2 of Title 6 of, and Title 9 (commencing with Section 2295) of, Part 4 of Division 3 of the Civil Code, applies to powers of attorney.

In relevant part, California Civil Code Sections 2019, 2020 and 2022 provide:

Civil Code Section 2019 – an agent must not exceed the limits of his actual authority.

Civil Code Section 2020 – an agent must use ordinary diligence and keep his or her principal informed of his or her acts.

Civil Code Section 2022 – a mere agent of an agent is not responsible as such to the principal of the latter.

Thus, whereas the power of attorney might appear to say or suggest that the attorney-in-fact has absolute authority at least in the circumstances that are listed, you can see that, nevertheless, the attorney-in-fact cannot exceed his or her actual authority, he or she has to use at least ordinary diligence unless the power of attorney states otherwise, and the attorney-in-fact must keep his or her principal informed of his or her acts. And these are themes and requirements that run throughout the statutes that more specifically discuss responsibilities and rights, and that will be discussed in future posts.

Every case and situation is different. You do need to consult with an attorney and other professionals about your particular situation. This post is not a solicitation for legal or other services inside of or outside of California, and, of course, this post only is a summary of information that changes from time to time, and does not apply to any particular situation or to your specific situation. So . . . you cannot rely on this post for your situation or as legal or other professional advice or representation.

Thank you for reading this website. I ask that you also pass it along to other people who would be interested as it is through collaboration that great things and success occur more quickly.

Best to you, David Tate, Esq. (and inactive California CPA) – practicing in California only. I am also the new Chair of the Business Law Section of the Bar Association of San Francisco.

Blogs: Trust, estate/probate, power of attorney, conservatorship, elder and dependent adult abuse, nursing home and care, disability, discrimination, personal injury, responsibilities and rights, and other related litigation, and contentious administrations http://californiaestatetrust.com; Business, D&O, board, director, audit committee, shareholder, founder, owner, and investor litigation, governance, responsibilities and rights, compliance, investigations, and risk management  http://auditcommitteeupdate.com

 

OVERVIEW OF A RISK MANAGEMENT PROCESS THAT YOU CAN USE 03162018

Audit Committee 5 Lines of Success, Diligence, and Defense - David Tate, Esq, 05052018

COSO Enterprise Risk Management Framework ERM Components and Principles

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New California case – the consequences to the attorney for failing to disclose a conflict can be significant – possible disqualification and possible denial of fees

In Sheppard, Mullin, Richter & Hampton v. J-M Manufacturing Company, Inc. a motion to disqualify the law firm from representing a client was granted. The firm represented a manufacturing company in a federal qui tam action brought on behalf of a number of public entities, while at the same time also represented one of those public entities in matters entirely unrelated to the qui tam suit.

Although both clients executed engagement agreements that contained blanket waivers of all conflicts of interest, both current and future, the waivers failed to list the specific then existing actual conflict. Note, there was no evidence that the conflict in any way prejudiced either client, or that the firm breached any duty of loyalty, or that there was any intent to not disclose the conflict. The issue was simply that the firm failed, inadvertently, to satisfy a Rule of Professional Conduct, in this case the disclosure of an actual conflict involving current clients. The case pertained to Rule of Professional Conduct 3-310(C)(3), which is now Rule 1.7 as of November 1, 2018. The case is Sheppard, Mullin, Richter & Hampton (2018) 6 Cal. 5th 59, and is a California Supreme Court case.

In relevant part, the Court held that “To be informed, the client’s consent to dual representation must be based on disclosure of all material facts the attorney knows and can reveal.” The fact that the client was sophisticated, and also had corporate counsel who was involved, were irrelevant. “The transaction [i.e., the engagement agreement] was entered under terms that undermined an ethical rule designed for the protection of the client as well as for the preservation of public confidence in the legal profession.”

As a result, the law firm was disqualified from representing the manufacturing company client, and the engagement agreement was rendered unenforceable because when the client executed the conflict waiver the client had not been sufficiently informed of the conflict(s). The entire engagement agreement (including the arbitration clause therein) was held to be unenforceable.

The firm was then stuck in the position of having to prove entitlement to recovery of attorneys’ fees under quantum meruit. The case was remanded to the trial court on the quantum meruit issue – the attorneys’ fees issue had already been determined in a prior arbitration proceeding; however, that ruling was vacated because the arbitration clause which was in the engagement agreement also was invalid. Although the case was remanded on the quantum meruit issue, the decision contains a good discussion about quantum meruit and possible recovery thereunder, and what is required to establish recovery of attorneys’ fees under quantum meruit in a situation such as this, which isn’t a simple walk in the park.

Although in Sheppard, Mullin the existence of the actual, then existing conflict in was self-evident, you should be mindful that actual or potential conflicts can be numerous and need to be carefully considered in proceedings involving estate planning, or trust and estate administration, or the probate court. And you should also consider the possible applicability of not only Rule 1.7, but also Rules 1.9, 1.10, 3.7, 1.6, and possibly others. See also other posts on this blog pertaining to the revised Rules of Professional Conduct as of November 1, 2018.

Thanks for reading this post. If you have found value in this post, I ask that you also pass it along to other people who would be interested as it is through collaboration that great things and success occur more quickly. And please also subscribe to this blog and my other blog (see below), and connect with me on LinkedIn and Twitter.

Every case situation is different. You do need to consult with professionals about your particular situation. This post is not a solicitation for services inside of or outside of California, and, of course, this post only is a summary of information that changes from time to time, and does not apply to any particular situation or to your specific situation. So . . . you cannot rely on this post for your situation.

Best to you, David Tate, Esq. (and inactive California CPA) – practicing in California only

Blogs: California trust, estate, and elder abuse litigation and contentious administrations http://californiaestatetrust.com; D&O, audit committee, governance and risk management http://auditcommitteeupdate.com

New California case – California lacks personal jurisdiction over a Utah resident on a cross-complaint against her individually as a third party for intentional interference with prospective economic advantage, although the real property was located in California, and the Utah resident was appointed guardian ad litem for her mother in California

Keri Jensen v. Trine Jensen (Court of Appeal, Second Appellate District, B2896111, January 24, 2019), is very fact specific, so its value is mostly in the court’s legal evaluation as applied to this specific case. Frankly, I am a bit surprised by the court’s holding. Daughter Trine came to California and moved her mother back to Utah to stay with Trine. Trine was also appointed as guardian ad litem for her mother in California. Mother sued other daughter Keri in California relating to a parcel of real property that had been co-owned by mother and daughter Keri. In that lawsuit Keri then cross-complained against Trine personally and individually, not as guardian ad litem, for intentional interference with prospective economic advantage claiming that Trine took advantage of mom’s advancing dementia and coerced mom to sever the joint tenancy in the California real property.

Trine filed a motion to quash for lack of personal jurisdiction which the trial court granted and the court of appeal upheld. Since the parties apparently agreed that Trine was not subject to general jurisdiction in California, the court evaluated whether Trine purposefully availed herself of the California forum benefits, whether the controversy is related to or arises out of the Trine’s contacts in California, and whether California’s assertion of personal jurisdiction over Trine would comport with fair play and substantial justice.

It seems to me that this case is a close call as the real property is located in California. The court in dicta also made the point that Trine was not sued in California as guardian ad litem. I also note that there would be jurisdiction over Trine in Utah. The case also has other less relevant facts and is interesting reading relating to possible undue influence.

Thanks for reading this post. If you have found value in this post, I ask that you also pass it along to other people who would be interested as it is through collaboration that great things and success occur more quickly. And please also subscribe to this blog and my other blog (see below), and connect with me on LinkedIn and Twitter.

Every case situation is different. You do need to consult with professionals about your particular situation. This post is not a solicitation for services inside of or outside of California, and, of course, this post only is a summary of information that changes from time to time, and does not apply to any particular situation or to your specific situation. So . . . you cannot rely on this post for your situation.

Best to you, David Tate, Esq. (and inactive California CPA) – practicing in California only

Blogs: California trust, estate, and elder abuse litigation and contentious administrations http://californiaestatetrust.com; D&O, audit committee, governance and risk management http://auditcommitteeupdate.com

New California case upholds the substantial benefit doctrine for payment and recovery of attorneys’ fees and expert witness fees from the entire trust and the shares of all of the beneficiaries

In Smith v. Szeyller (Court of Appeal, Second Appellate District, B281758, January 16, 2019), the court held that the probate court’s award approving payment of attorneys’ fees and expert witness fees from the trust to the beneficiary who challenged the trustees’ accounting and management of the trust was appropriate under the substantial benefit doctrine. The beneficiary who challenged the trustees’ accounting and management of the trust prevailed, thus benefiting the trust and all beneficiaries of the trust although only the one beneficiary challenged the accounting and management. As the trust and all of its beneficiaries benefited from the successful challenge, it was appropriate that the attorneys’ fees and expert witness fees be paid and reimbursed from the assets of the entire trust and the shares of each of the beneficiaries thereof.

Note: I used this doctrine after a successful week-long trial in one of my cases.

Thanks for reading this post. If you have found value in this post, I ask that you also pass it along to other people who would be interested as it is through collaboration that great things and success occur more quickly. And please also subscribe to this blog and my other blog (see below), and connect with me on LinkedIn and Twitter.

Every trust situation is different. You do need to consult with professionals about your particular situation. This post is not a solicitation for services inside of or outside of California, and, of course, this post only is a summary of information that changes from time to time, and does not apply to any particular situation or to your specific situation. So . . . you cannot rely on this post for your situation.

Best to you, David Tate, Esq. (and inactive California CPA) – practicing in California only

Blogs: California trust, estate, and elder abuse litigation and contentious administrations http://californiaestatetrust.com; D&O, audit committee, governance and risk management http://auditcommitteeupdate.com

California Trustee – Some Of The Things That Could Keep You Up At Night

Trustee responsibilities are extensive and they arise from different sources including the wording of the trust itself, statutes, and case law. Of course, you have to cover all areas of your trustee responsibility, but here is my list of primary issues that could keep me up at night as a trustee. If you are a trustee, you want to do it right. If you are a beneficiary, you want to receive that to which you are entitled. And there can be a lot of angst, stress, misunderstanding, and disagreement in these situations. A significant part of my practice includes trust, estate, and elder abuse litigation and disputes – including contentious administrations. This list is not in any particular order. You might also notice that I update and republish this discussion from time to time as it includes important points that can apply to most trust administrations.

  1. Do you understand what the trust says and requires? This might sound basic, but it isn’t always.
  2. Have you marshalled and safeguarded the assets that are in or that are supposed to be in the trust? Are the assets in the trust, and are they under your control?
  3. Do you really understand your legal responsibilities including not only the wording and requirements in the trust, but also what the probate code and case law require of you? As a trustee you are a fiduciary. You have one of the highest standards of care, responsibility, liability and unbiased fairness and good faith required by law.
  4. Do you have a game plan for the steps required to accomplish the administration of the trust, including the time and timing that it will take? Completing the administration typically takes longer than most people would think. And this alone can cause disagreements, stress, and disputes. There is a court case on this issue, and there are court cases on many of these issues – basically, the case held that a trustee needs to conduct the administration process reasonably expeditiously, but the court decided to not to say that the administration must be “fast” or “quick” or completed in the “fastest” manner. In other words, there is a degree of reasonableness here.
  5. Are the trust assets being invested, managed and recorded properly and prudently? You need to evaluate and manage the returns and the risks, in accord with the wording of the trust and your statutory and case law fiduciary duties. So, for example, the stock market goes up and down. If the market goes down, is your approach to the portfolio management designed to help you avoid liability for losses, not just because the market went down, but also because you have implemented a portfolio approach and might allow you to net losses against gains? And are your investments prudently diversified, also taking into consideration possible risks? You will find additional posts on this blog about investment responsibilities.
  6. Do you have and use the proper fiduciary demeanor and decision-making approach required of a trustee?
  7. Is the trust cash flow prudently managed? You might, for example, through no fault of your own have a trust with declining asset values or liquidity issues, or there might simply be expense and distribution timing issues.
  8. Do you know what to do if you have beneficiaries who are disagreeing with your decisions, or who are threatening litigation, or who have initiated litigation?
  9. Do you know what information you must or possibly should provide to the beneficiaries and when to provide it, including, for example, possible accountings and other information? Even if an accounting isn’t required, sometimes I recommend that a trustee prepare an accounting or some form of an accounting anyway. And, of course, under all circumstances you should and usually must keep accurate and complete records. Even if an accounting is not required, or is not required to be prepared to cover a particular period of time, it is not uncommon for courts to require that an accounting be prepared anyway. And, court and probate code compliant accountings include specific and detailed requirements.
  10. Do you understand that you have personal liability exposure for the actions that you take or don’t take as the trustee? You are required to be prudent with risk management. Also consider possible fiduciary insurance coverage although in most situations it isn’t required or necessary.
  11. Do you know what additional planning opportunities exist or might exist, such as for tax purposes? Similarly, are you aware of new or changing tax, probate code, planning, and investment statutes and rules? And have you calendared important planning and compliance dates?
  12. Do you know how to prudently handle distributions and the timing of distributions? Do you know how to wrap things up and conclude the administration?
  13. Do you know what to do if there is a dispute about how the administration is being handled? This is important. As a trustee you can get yourself into even greater difficulty depending on how you handle disputes and disagreements. And for administration attorneys, I have written about changes to the Rules of Professional Conduct that were implemented on November 1, 2018, and that should be considered in appropriate circumstances.
  14. And last on this list, are you represented by the necessary and appropriate professionals to advise you on your fiduciary duties, trust administration management, compliance, taxes, investments, insurance, asset protection and preservation, communicating with beneficiaries, and other important or possibly important issues?

Thanks for reading this post. Every trust situation is different. You do need to consult with professionals about your particular situation. This post is not a solicitation for services inside of or outside of California, and, of course, this post only is a summary of information that changes from time to time, and does not apply to any particular situation or to your specific situation. So . . . you cannot rely on this post for your situation.

Best to you, David Tate, Esq. (and inactive California CPA) – practicing in California only

Blogs: California trust, estate, and elder abuse litigation and contentious administrations http://californiaestatetrust.com; D&O, audit committee, governance and risk management http://auditcommitteeupdate.com

If you have found value in this post, I ask that you also pass it along to other people who would be interested as it is through collaboration that great things and success occur more quickly. And please also subscribe to this blog and my other blog (see above), and connect with me on LinkedIn or Twitter.

Deaths From Opioids Now Exceed Vehicle Deaths (Forwarding) – But Where Are The Numbers For Seniors And People In Care Facilities?

The following is a link to a short article discussing deaths from opioids now exceeding vehicle deaths. You have already been hearing a lot about opioids and deaths and addictions. Click Here

My issue with the discussion is that information and numbers aren’t given for seniors and people in care facilities. More is needed.

Best to you, David Tate, Esq. (and inactive California CPA)

Blogs: California trust, estate, and elder abuse litigation and contentious administrations http://californiaestatetrust.com; D&O, audit committee, governance and risk management http://auditcommitteeupdate.com

If you have found value in this post, I ask that you also pass it along to other people who would be interested as it is through collaboration that great things and success occur more quickly. And please also subscribe to this blog and my other blog (see above), and connect with me on LinkedIn or Twitter.