Oasis Realty v. Goldman, pending before the California Supreme Court, raises the question, how far does the duty of loyalty extend? Can a lawyer who formerly represented a developer later oppose the very project on which the lawyer worked?
Attorney Goldman and his firm represented Oasis Realty in connection with the development of a property in Beverly Hills, for about a year, charging approximately $60,000. Then his representation ended. Some years later according to the Appellate Court opinion, Goldman began working on behalf of a citizen’s committee, and addressed the City Council in a public hearing, opposing a rule requiring that persons seeking signatures on a petition carry the entire EIR with them, solicited signatures on a referendum petition in his neighborhood, along with his wife, for about 90 minutes, and sent emails to a city council member on another matter, but referenced the Oasis project, stating the EIR and traffic reports were not accurate as to the traffic which was predicted not to increase. Oasis sued Goldman and the firm, claiming breach of contract, breach of fiduciary duty, and professional negligence. The defendants filed a special motion to strike, alleging all claims arose from defendant’s right of petition and free speech.

The California Supreme Court will have to decide whether an attorney can express views adverse to his former client consistent with the lawyer’s First Amendment rights, without violating the duty of loyalty. That duty of loyalty requires that the lawyer not do anything that will injuriously affect his former client in any matter in which the lawyer formerly represented the client. Prior law indicates the lawyer may not at any time use against his former client knowledge or information acquired by virtue of the lawyer’s prior relationship with the former client. Wutchumna Water Co. v. Bailey (Cal. 1932). The question is whether, and to what extent, the duty of loyalty governs a lawyer’s conduct in a private capacity, including public participation in government hearings, voter registration drives, and the like.

The appellate court held that a lawyer can express a personal view that is adverse to the interest of a former or present client in a pending matter, as long as client confidences and zealous representation are not compromised. The appellate court said that a lawyer does not, by virtue of representing a client, give up all constitutional rights to speak on matters of public interest.

Notably, the appellate court held that Goldman did not violate the California Rules of Professional Conduct, (“CRPC”) Rule 3-310(E), which prohibits an attorney from successively representing adverse interests in matters that are substantially related, due to the need to protect the confidential information of the original client. Goldman never had a second client, the appellate court said, so the rule did not apply. Nor did Goldman violate CRPC Rule 3-310(C), which prohibits the concurrent representation of clients whose interests conflict, again, because there was no second client.

The authority cited by the appellate court is a Ninth Circuit case in which a federal government lawyer used vacation time to attend a public hearing on a matter for which her agency held opposing views, in which the court held that the lawyer’s conduct was protected under the First Amendment right to assemble and petition. The court also cited a New York ethics opinion, permitting lawyers to espouse personal views adverse to former client’s interests, as well as conflicting comments in the Restatement.
The Court’s statement in People ex. rel. Dept. of Corporations v. SpeeDee Oil Change Systems (1999) that “a distinct fundamental value of our legal system is the attorney’s obligation of loyalty” may be relevant to the resolution. Possibly the Court’s earlier pronouncement that “a lawyer has a duty not to do anything which will injuriously affect his former client,” People ex. Re. Deukmejian v. Brown (1981) will also come into play.

PS – The California Supreme Court decided this case earlier this year – see my article on the Orange County Bar Association website at this link:  http://www.ocbar.org/AllNews/NewsView/tabid/66/smid/384/ArticleID/539/Default.aspx

About Carole J. Buckner

Carole J. Buckner is a Partner and General Counsel with Procopio in San Diego, California. She is an AV Peer Review Rated sole practitioner admitted to the California State Bar in 1984. She holds a BA from the University of California at Berkeley (1980) and a JD from the University of California, Hastings College of the Law in San Francisco (1984). She is available for consulting and legal advice in the field of legal ethics and issues involving professional responsibility, and the law of lawyering.