Author Archives: tra

Washington Supreme Court to review a new reservation of rights insurance defense case

In September, the Washington State Supreme Court granted review in a case raising important conflict and disclosure issues in the context of a reservation of rights insurance defense.

Arden v. Forsberg & Umlauf, P.S., 193 Wn. App. 731, 373 P.3d 320 (2016), review granted sub nom.Arden v. Forsberg Umlauf, PS,  2016 WL 5407925 (Wash. Sept. 28, 2016).

Plaintiff Arden shot a neighbor’s dog and when the neighbor sued him and his wife, he submitted the claim to his homeowner’s insurer, Property and Casualty Insurance Company of Hartford (Hartford).   Hartford initially declined coverage under the “intentional act” exclusion in the policy, but after the Ardens hired personal counsel, he convinced Hartford that it had a duty to defend the negligence claim.  Hartford undertook the defense under a reservation of rights and hired Forsberg and Umlauf to defend the Ardens.    Forsberg and Umlauf had defended other insureds for Hartford and had also represented Hartford on coverage claims.   Eventually, after mediation,  Hartford funded a settlement of the neighbors’ lawsuit against the Ardens,   But by that time, the Ardens had sued Forsberg & Umlauf for breach of fiduciary duty and malpractice.   They alleged that the lawfirm and lawyers who represented them had an undisclosed and unwaived conflict of interest.   They also alleged that the firm had had failed to disclose to them various settlement offers and counteroffers, and had failed to consult with them adequately during settlement negotiations.    The trial court granted summary judgment for the law firm and the appeals court affirmed.  It found that  there was no conflict of interest under RPC 1.7 and so so violation of the firm’s fiduciary duties to the Ardens on that score.  It also found that Hartford had not violated its duties under Tank v. State Farm by failing to provide independent counsel.  Finally, even if there were aspects in which the law firm had failed adequately to consult with the Ardens during settlement negotiations, there was no evidence that the Ardens had been injured by this failure, so no relief was available for these breaches.
Since the state Supreme Court has granted review, it may well be that it will take the opportunity to further clarify the obligations of defense counsel hired by insurance companies under a reservation of rights.

Important new decision by Washington Supreme Court on the attorney/client privilege

On October 20, 2016, the Washington Supreme Court, sitting en banc, decided in a 5/4 decision to adopt a bright-line test and refused to extend the attorney/client privilege to communications between corporate counsel and former corporate employees.   Newman v. Highland School District No. 203,  2016 WL 6126472 (WA Oct. 20 2016). 

A brief summary of the decision by Peter Jarvis and his colleagues, situating it in the national context, may be found here.

Important changes to the APRs and RPCs Adopted Effective Sept. 1, 2016

In November 2015, the Washington State Supreme Court published for comment proposed rule changes to the APRs and to the RPCs.   Comments were to be filed by April 30, 2016.    The changes were adopted by the Court, effective September 1, 2016.  WRPC Court Order (June 2 2016)

RPC Changes:

The proposed changes to the RPCs were intended to update the Washington RPCs to reflect changes made by the ABA in response to the so-called “Ethics 20-20” Commission.   The proposed changes were adopted by the Court in an order dated June 2, 2016, effective September 1, 2016.

The only anomalies in bringing the Washington RPCs into conformity with the ABA 20-20 changes are that: (a) Washington’s adoption of the  Ethics 20-20 changes had to be reconciled with the recent RPC changes made to accommodate LLLTs; (b) Washington has changed MR 5.5(d)(1) relating to in-house counsel and so some of the ABA changes there did not fit; and (c) Washington would make a slight change relating to the solicitation rules.

APR Changes:

A proposed change to APR 11 was intended to enable judges returning to the private sector to convert judicial education credits to CLE.   It has not been adopted.

On the other hand, proposed changes to APR 20-25 were adopted, effective September 1, 2016.  These changes are quite important.  Here is how the Rule 9 Statement describes their purpose and background:

The primary purposes for the suggested amendments to APR 20 – 25.6 are to bring Washington’s character and fitness procedures into alignment with recent interpretations of the Americans with Disability Act (ADA), as it relates to bar admissions, by the United States Department of Justice (DOJ), and to clarify Washington’s character and fitness procedures and make the process easier to understand.


The approach being recommended derives from the approach described by the DOJ in a settlement it reached in 2014 with the Louisiana State Bar, and from models used in other states around the country. That settlement provides guidance for determining whether, when and how inquiries into mental health and substance abuse issues should be conducted. See, Settlement Agreement Between the United States and the Louisiana Supreme Court Under the Americans with Disabilities Act, August 14, 2014.

Under the terms of the settlement agreement, the DOJ agreed that it was permissible for the Louisiana Supreme Court to ask the mental health questions that are now being used by the National Conference of Bar Examiners (NCBE). The questions approved by the DOJ in the settlement agreement with Louisiana (1) involve some inquiry into a current condition that might impair the practice of law but not a past condition and(2) are inquiries about conduct that might call into question one’s ability to practice law or that might indicate an underlying issue requiring further questions. Further, the DOJ provided guidance about when and how to make inquiries in these areas

Links to the proposals follow.

Admission and Practice Rules(APR)

Rules of Professional Conduct(RPC)

Wrongful Discharge of Lawyers in Washington: Revisiting Weiss v. Lonnquist, 173 Wn. App. 344 (2013)

Two years ago, a lawyer named Weiss was denied relief against her employer Lonnquist, whom Weiss alleged had discharged her for trying to comply with the Rules of Professional Conduct. Weiss v. Lonnquist, 173 Wash. App. 344; 293 P.3d 1264, review denied, 178 Wn. 2d 1025; 312 P.3d 652 (2013).   Weiss believed that her employer was assisting a client in perpetrating a fraud on the court and complained to her employer about this. Weiss refused to work further on the case, but did not lodge a complaint with the disciplinary authorities.   Lonnquist relieved Weiss of the assignment and two weeks later, gave Weiss a 30 day notice of termination.   In a trial presided over then trial judge Stephen Gonzales, Weiss won a substantial verdict against Lonnquist:

The jury found for Weiss on her claim of wrongful discharge and her wage claims. The court entered judgment for damages totaling $36,465.26. Of this total, $16,250.00 was for emotional distress caused by the wrongful discharge. The remainder was for wages lost as a result of the wrongful discharge and wages willfully withheld, doubled by the court under RCW 49.52.070. The court awarded Weiss attorney fees of $128,386.00. Liability for damages and attorney fees was imposed both upon Lonnquist in her personal capacity and upon her law firm.

173 Wash. App. At 351; 293 P.3d at 1268.

But the court of appeals reversed, concluding that the trial court should have granted summary judgment for Lonnquist.   Relying heavily on a case handed down by the state supreme court while the Weiss case was pending — Cudney v. ALSCO, Inc., 172 Wash.2d 524, 259 P.3d 244 (2011) — the appeals court concluded that “[t]he bar disciplinary process is an adequate means of promoting the public policy rooted in the rules of professional conduct.”   Id. at 357.

When Weiss refused to engage in the conduct she perceived as unethical, the public policy she was promoting was the policy demanding candor to the tribunal as set forth in the Rules of Professional Conduct. And she concedes that the disciplinary rules of the bar “may offer an adequate alternative means of protecting that public policy because the Washington State Bar Association has the authority and the ability to sanction an attorney who is found to be in violation of the rule.” This concession is appropriate and significant because it is ultimately dispositive.

173 Wn.App. at 357-8; 293 P.3d at 1271. The court reasoned that Weiss was permitted to disclose this confidence without the client’s consent to prevent the client from committing a crime (RPC 1.6(b)(2)) and/or to prevent the client from committing a crime or fraud reasonably certain to result in substantial financial injury in connection with which Weiss’ services had been sued (RPC 1.6(b)(3)). And she should have done that before suing her employer.

Weiss objected that the disciplinary process was inadequate to provide relief to her, but the court believed that this was not essential to an evaluation of whether the tort of wrongful discharge should be available:

It is true that the bar association provides no comparable remedy offering personal relief and protection from retaliation for an attorney who refuses her supervisor’s directive to engage in conduct she perceives as unethical. But we do not read Cudney as holding that alternative remedies, to be adequate, must provide relief personal to the employee.

173 Wn.App. at 359; 293 P.3d. at 1271-72.

The appeals court’s contention that “[t]he bar disciplinary process is an adequate means of promoting the public policy rooted in the rules of professional conduct,”   supra, is striking. Commentators on the “law of lawyering” have long noted that there is a collage of ways in which the policies underlying the rules of professional conduct get enforced: disciplinary actions, malpractice actions, fee disputes, disqualification motions, procedural sanctions, criminal prosecutions, and judicial contempt actions.   Some would argue that even after all these enforcement mechanisms are taken into account, they are not adequate to enforce the policies.   (Isn’t this essentially the fulcrum of all those lawyer jokes?) Few would argue that the disciplinary process, alone, has ever been adequate to enforce those policies. But at the heart of the Weiss case was a reading of our state supreme court’s “wrongful discharge” jurisprudence.

That basis of Weiss must now be reexamined in light of a trilogy of case issued by the supreme court in September of 2015. Rose v. Anderson Hay & Grain Co., 2015 WL 5455681 (Wash. 2015); Rickman v. Premera Blue Cross, 2015 WL 5455799 (Wash. 2015); Becker v. Cmty. Health Sys., Inc., 2015 WL 5455679 (2015).   In those cases, the court revisited its wrongful discharge jurisprudence and concluded that two conflicting lines of authority had developed which required resolution.   One line of authority had developed which required a wrongful discharge plaintiff to prove –as the court of appeals held Weiss was required to do– that there was no other adequate remedy to promote the public policy at issue. This was the so-called “strict adequacy” requirement. The other line of authority required the plaintiff only to prove that alternative remedies were not exclusive. This is the “exclusivity” requirement. In this new trilogy of cases, the court has now abandoned that “strict adequacy” requirement and reinstated the “exclusivity” requirement. As the court stated in Rose:

[W]e conclude that the additional “adequacy of alternative statutory remedies” component of the jeopardy prong is incorrect and harmful. We disavow the requirement that a plaintiff establish inadequacy of alternative remedies and overrule our cases to the extent they hold otherwise.

Rose v. Anderson Hay & Grain Co., 2015 WL 5455681, at *6 (Wash. 2015). In explaining its rejection of the “strict adequacy” requirement, the court noted that earlier cases — cases which it reaffirmed in Rose — had specified two alternative ways in which a plaintiff might establish the “jeopardy” prong of the wrongful discharge tort: “We said the plaintiff establishes jeopardy by demonstrating that his or her conduct was either directly related to the public policy or necessary for effective enforcement. …. In the first type of case, where there is a direct relationship between the employee’s conduct and the public policy, the employer’s discharge of the employee for engaging in that conduct inherently implicates the public policy.”   But the “strict adequacy” requirement renders the first alternative “superfluous.”

Where does that leave the wrongful discharge tort?

Though we reject this adequacy requirement, courts still must consider whether a statutory remedy is intended to be exclusive. A review of exclusivity is a more consistent, clearer, and legislatively deferential standard. It is more consistent with our analysis of all other wrongful discharge torts, all of which embrace the same exclusivity analysis and better reflects the role of the common law in supplementing statutory principles….Our courts are familiar with analyzing statutes for preemptory and mandatory language, and our well-established jurisprudence would guide the application of this tort toward more consistent, predictable results. And finally, the exclusivity requirement respects the legislature’s choice to either preclude or supplement the common law remedies as it deems necessary. Congress and the legislature know how to create exclusive remedies, and as the popularly responsive branch of government, they are in the best position to determine when such remedies should be restricted in favor of employers.


For these reasons, we abrogate our precedent only to the extent that it has required an adequacy, rather than an exclusivity, analysis of alternative remedies. We reaffirm the approach we established in Thompson and Gardner as the appropriate analytical framework for the tort. Wilmot applies the proper exclusivity analysis when alternative remedial statutes address the same public policy. Because our cases since Thompson, Gardner, and Wilmot have embraced the same core principles, and in large part remain good law, we abrogate them only to the extent they require an analysis of the adequacy of alternative remedies.

Rose, 2015 WL 5455681, at *8-9.   Among the cases whose “strict adequacy” doctrine was “abrogated” by Rose and its companion cases were Cudney and Korslund, on which the Weiss court had relied.

Would application of the “exclusivity” requirement of prior cases have changed the result in Weiss? Quite possibly. The Rules of Professional Conduct do not suggest that disciplinary actions are intended to be the exclusive means for enforcing the policies underlying them.   The “Scope” section of the RPCs states this:

[15] The Rules presuppose a larger legal context shaping the lawyer’s role. That context includes court rules and statutes relating to matters of licensure, laws defining specific obligations of lawyers and substantive and procedural law in general. The Comments are sometimes used to alert lawyers to their responsibilities under such other law.


[20] Violation of a Rule should not itself give rise to a cause of action against a lawyer nor should it create any presumption in such a case that a legal duty has been breached. In addition, violation of a Rule does not necessarily warrant any other nondisciplinary remedy, such as disqualification of a lawyer in pending litigation. The Rules are designed to provide guidance to lawyers and to provide a structure for regulating conduct through disciplinary agencies. They are not designed to be a basis for civil liability. Furthermore, the purpose of the Rules can be subverted when they are invoked by opposing parties as procedural weapons. The fact that a Rule is a just basis for a lawyer’s self-assessment, or for sanctioning a lawyer under the administration of a disciplinary authority, does not imply that an antagonist in a collateral proceeding or transaction has standing to seek enforcement of the Rule. Nevertheless, since the Rules do establish standards of conduct by lawyers, a lawyer’s violation of a Rule may be evidence of breach of the applicable standard of conduct.

The particular public policy at issue in the Weiss case was maintaining the integrity of the judicial system: Weiss was concerned that her supervisor and the client were perpetrating a fraud on the court.   It is quite clear that there are other remedies than the disciplinary system to enforce that policy: perjury is a crime, and is prosecuted as such. Given that the disciplinary enforcement is not an exclusive remedy for furthering the policy goals, it seems unlikely that the Weiss case would have been dismissed on summary judgment under the Rose approach to the jeopardy element for wrongful discharge.

There were other aspects of the Weiss case that might have also created difficulties.   One allegation by Lonnquist was that Weiss’ refusal to work on the client matter was ill informed and her conclusion that the client and Lonnquist were misleading the court was premature. Perhaps it was, although that does not seem to have been the conclusion of the jury that heard the case. One of the other cases decided along with Rose is suggestive on this point.   In Rickman v. Premera Blue Cross, 2015 WL 5455799 (Wash. 2015), one of the arguments made was that the employee’s belief that her employer was engaged in a plan that would constitute a HIPAA violation was not reasonable.   In response, the court noted that “[w]e have never adopted as an element of the four-part Perritt test, or of wrongful discharge generally, a requirement that the plaintiff confirm the validity of his or her concerns before taking action.”  Id. at *6.  That proposition might apply equally to the Weiss case.

But it is pointless to relitigate the Weiss case.   The point is that this new trilogy of wrongful discharge cases suggests that a wrongful discharge case brought by a lawyer for discharge after trying to comply with the RPCs has much better prospects than it did under the prior precedent.




May counsel waive a parent’s right to public hearing in a parental termination proceeding?

In In re Adoption of M.S.M.-P., No. 90467-7, 2015 WL 5916968, at *2-3 (Wash. Oct. 8, 2015), the state Supreme Court held that counsel could do this.   While acknowledging that wavier by counsel alone would not suffice to waive a right to a jury trial, it found the right to a public trial in the termination of parental rights to be more like other rights that could be waived by counsel alone.    The Court’s comparisons are interesting:
N.P. argues that there was no valid waiver because N.P. was not advised on the record of the right to a public trial and was not present when the closure was ordered. In criminal proceedings a defendant must personally make an informed waiver of certain fundamental constitutional rights. See, e.g., Brookhart. v. Janis, 384 U.S. 1, 7–8, 86 S.Ct. 1245, 16 L.Ed.2d 314 (1966) (right to plead not guilty); Johnson v. Zerbst, 304 U.S. 458, 464–65, 58 S.Ct. 1019, 82 L.Ed. 1461 (1938) (right to counsel); Patton v. United States, 281 U.S. 276, 312, 50 S.Ct. 253, 74 L.Ed. 854 (1930) (right to trial by jury); United States v. Gordon, 264 U.S.App. D.C. 334, 829 F.2d 119, 123 (1987) (right to be present at trial). These rights are fundamental to ensure fair and constitutional criminal trials, and so such decisions have been deemed “of such moment that they cannot be made for the defendant by a surrogate.” Florida v. Nixon, 543 U.S. 175, 187, 125 S.Ct. 551, 160 L.Ed.2d 565 (2004). But whether to exclude the public from all or a portion of a hearing on a civil parental termination petition is distinct from the highly consequential decisions in criminal cases that are reserved to criminal defendants alone.
*3 2 ¶ 8 We find that the right of a litigant in a parental termination proceeding to an open hearing under article I, section 10 is more commensurate with other constitutional rights that may be waived through counsel. See, e.g., Wilson v. Gray, 345 F.2d 282, 287–88 (9th Cir.1965) (right to confrontation may be waived by criminal defendant’s counsel as a matter of trial tactics or strategy); State v. Valladares, 99 Wash.2d 663, 671–72, 664 P.2d 508 (1983) (withdrawal of pretrial motion to suppress evidence waived constitutional rights); Basil v. Pope, 165 Wash. 212, 218–19, 5 P.2d 329 (1931) (failure to challenge juror or move for mistrial waives litigant’s right to claim deprivation of right to a fair trial because of biased juror); In re Welfare of Carpenter, 21 Wash.App. 814, 820, 587 P.2d 588 (1978) (in a parental termination proceeding, failure to affidavit a potentially biased judge waives right to assert deprivation of fair trial on appeal). Following Basil, Carpenter, and Valladares, we hold that in a parental termination case, counsel can effectively waive a party’s article I, section 10 rights by saying “no objection” on the record when the judge inquires about closing the court. We stress that this waiver is personal to that party and does not affect any other person’s article I, section 10 rights.
It is also interesting to consider counsel’s decision in connection with RPC 1.2.  That rule does not require counsel to defer to a client’s decision on this issue, but it at least requires counsel to consult with his client before deciding a “means” question, unless the decision is “impliedly authorized” to carry out the representation.   Apparently counsel did not have the opportunity to consult with the client, who was not present when the waiver occurred.   Was it “impliedly authorized”?

Antitrust and the Bar Association

Last February, the U.S. Supreme Court decided an antitrust case involving the dental profession in North Carolina.   North Carolina State Board of Dental Examiners  v. FTC, 135 S.Ct. 1101; 2015 WL 773331; 191 L.Ed.2d 35 (2015)(“BDE”).   Washington lawyers might wonder what, if anything, the activities of the dental profession in North Carolina might have to do with them?   The answer may surprise them.

First, the case:

The NC Board of Dental Examiners is an agency of the state of North Carolina for the regulation of the practice of dentistry.   N.C. Gen. Stat. Ann. 90-22(a).  (Bear with me, these facts are important):  Its primary duty is to create, administer, and enforce a licensing system for dentists.   Included is the power to file suit to “perpetually enjoin any person from … unlawfully practicing dentistry.”  Id at 90-40.1.   The Board has eight members, six of whom must be licensed dentists engaged in active practice and these six are elected by other licensed dentists in the state.  A seventh member is a licensed dental hygienist elected by other licensed hygienists.  The final member is a “consumer” and is appointed by the Governor. BDE at section I.A.

So what did the Board do?  Dentists do teeth whitening and command pretty large fees for doing so.  Dentists began to complain that nondentists were teeth whitening and charging lower prices.   The Board investigated and began issuing cease-and-desist letters, warning that the unlicensed practice of dentistry is a crime and strongly implying (or expressly stating) that teeth whitening constituted “the practice of dentistry.”  They issued at least 47 such letters and nondentists stopped offering teeth whitening services in North Carolina.   BDE at section I.B.

At this point, the FTC got into the act and filed an administrative complaint charging the Board with anticompetitive conduct in violation of the FTC Act, 15 USC 45.   An ALJ sustained the charges and this was affirmed by the FTC and the 4th Circuit.   717 F.3d 359 (2013).

There is little question that the Dental Examiners Board was seeking to exclude nondental service providers from the business of teeth whitening.  The question, rather, was whether the Board qualified for state action immunity from the antitrust laws.   See Parker v. Brown, 317 U.S. 341 (1943).   The Supreme Court held that it did not.

State action immunity from the antitrust laws is available to a state acts in its “sovereign capacity.”   Essentially, the Court held that the Dental Examiners Board failed to qualify for such immunity because it was not actively supervised by the State:

A nonsovereign actor controlled by active market participants—such as the Board—enjoys Parker immunity only if it satisfies two requirements: “first that ‘the challenged restraint … be one clearly articulated and affirmatively expressed as state policy,’ and second that ‘the policy … be actively supervised by the State.’ ” …Here, the Board did not receive active supervision by the State when it interpreted the Act as addressing teeth whitening and when it enforced that policy by issuing cease-and-desist letters to nondentist teeth whiteners…..Immunity for state agencies…requires more than a mere facade of state involvement, for it is necessary in light of Parker ‘s rationale to ensure the States accept political accountability for anticompetitive conduct they permit and control….The active supervision requirement demands, inter alia, “that state officials have and exercise power to review particular anticompetitive acts of private parties and disapprove those that fail to accord with state policy.” 

BDE at section III.A (citations omitted).  It is not enough, said the Court, that a state formally designates a Board as a state agency.  Id. at III.C.

The similarities between agencies controlled by active market participants and private trade associations are not eliminated simply because the former are given a formal designation by the State, vested with a measure of government power, and required to follow some procedural rules. …. Parker immunity does not derive from nomenclature alone. When a State empowers a group of active market participants to decide who can participate in its market, and on what terms, the need for supervision is manifest.The Court holds today that a state board on which a controlling number of decisionmakers are active market participants in the occupation the board regulates must satisfy Midcal ‘s active supervision requirement in order to invoke state-action antitrust immunity.

Id.   The North Carolina Board did not argue it had been actively supervised by the state.   So it lost the case and the injunction against the Board was affirmed (Alito, Scalia & Thomas, dissenting).   But what would such supervision look like?

The Court has identified only a few constant requirements of active supervision: The supervisor must review the substance of the anticompetitive decision, not merely the procedures followed to produce it, …; the supervisor must have the power to veto or modify particular decisions to ensure they accord with state policy,…; and the “mere potential for state supervision is not an adequate substitute for a decision by the State,” …. Further, the state supervisor may not itself be an active market participant. In general, however, the adequacy of supervision otherwise will depend on all the circumstances of a case.

Id. section IV.

By now, readers will understand why this decision about the dental profession has relevance to the legal profession.   Indeed, it has caused a lot of consternation both locally and nationally for the legal profession.   to what extent are “unauthorized practice of law” committees immune from the antitrust laws after this decision?  To what extent are “professional ethics” committees operated by Bar Associations immune?

Here in Washington, the state supreme court created the Practice of Law Board back in 2001.  See GR 25.   It has had several missions:  (1) promote expanded access to legal services; (2) increase public confidence in the administration of justice; (3) make recommendations regarding the provision of law related services by nonlawyers; (4) enforce rules prohibiting the unauthorized practice of law (UPL); and (5) ensure those engaged in the delivery of legal services have the requisite skills and competencies.  GR 25(a).  The members of the POLB are appointed by the court rather than by the legal profession, and at least 4 of the 13 members must be nonlawyers.  More could be nonlawyers: there is no minimum number of lawyers required, nor any requirement that members be “active market participants.”   GR 25(b).  (For example, the author, an academic lawyer licensed in Washinton, but not in active practice, served on the POLB for six years.)

Does the court’s role in appointment members to the POLB make the POLB a sovereign actor and eliminate the requirement of “active supervision” altogether?  See BDE at section III.C.   No one really knows, although i think our state supreme court thought so when it established the POLB the way it did.  It is my understanding that the court’s specification that there be at least four nonlawyers, with no minimum number of lawyers, and the court’s involvement in the appointment process, were intended, in part, to ensure that the activities of the Board would have antitrust immunity.  If the composition of the POLB is not enough to remove the POLB from the category of “nonsovereign actors,”  “active supervision” might still suffice to confer state action immunity.  Again, for this reason, the court also put in place a process for review of the POLB’s actions.   GR 25(g).   Does this right of supreme court review of POLB action satisfy the “active supervision” component?   Again, we do not know.   But I believe that this was partly its purpose.   These questions about the POLB may be moot at this point.   After the POLB was temporarily suspended pending a review of its efficacy last fall to spring, it was reactivated by order of the court on July 8; but it has been instructed to refrain from enforcement activities beyond initial investigations:  “[T]he Practice of Law Board shall cease all of its enforcement activities except for receiving complaints alleging the unauthorized practice of law, determining whether such complaints are frivolous, and referring non-frivolous complaints to appropriate authorities.”  Washington Supreme Court: Order Reconstituting the Practice of Law Board (July 8, 2015) at (c).

It is unlikely that this decision was significantly influenced by the North Carolina BDE case, since the supreme court could easily have tightened up its supervision of the POLB’s enforcement activities had it wanted to further protect its original mission.  Conspicuously the court did not cut back on the POLB’s advisory opinion activities.  Id. at (d).   So it presumably concluded that these activities were not vulnerable under the BDE case.  Instead, it seems to me that the decision to cut back on the POLB’s activities had more to do with whether the Court thought the limited success of POLB enforcement activities was worth the cost that it had imposed on the WSBA.  But the decision to cut back on the POLB’s enforcement activities does mean that we must now rely, in Washington, on the willingness of local and state law enforcement agencies to police UPL — a task that they have generally been unable or unwilling to do in any robust way.

But the BDE case may have different implications for some of the WSBA’s Committees.   Is the issuance of ethics advisory opinions by the Committee on Professional Ethics vulnerable under the BDE case?   One of the earliest state action immunity cases involved the Virginia Bar Association.   Goldfarb v. Virginia Bar Association,  421 U.S. 773 (1975).   As many will remember from law school, that case struck down minimum attorney fee schedules as an antitrust violation to the extent that they are not mandated by a sovereign actor.

Interestingly, the fee schedules at issue in Goldfarb were published by the Fairfax County Bar Association, and not the Virginia State Bar, and they they were not mandatory.  But they were carefully adhered to by Virginia lawyers, in part because of Virginia State Bar ethics opinions stating that “evidence that an attorney habitually charges less than the suggested minimum fee schedule adopted by his local bar Association, raises a presumption that such lawyer is guilty of misconduct.”  421 U.S. at 777-8.  The Court held that “[a] purely advisory fee schedule issued to provide guidelines, or an exchange of price information without a showing of an actual restraint on trade, would present us with a different question.”  Id.  at 781.  But in Goldfarb, “a fixed, rigid price floor arose from respondents’ activities: every lawyer …adhered to the fee schedule ….[and] The fee schedule was enforced through the prospective professional discipline from the State Bar.”  Id.  This constituted a “classic illustration of price fixing.”  id. at 783.

As for state action immunity, the fee schedules simply did not have the imprimatur of state sovereign:

The threshold inquiry in determining if an anticompetitive activity is state action of the type the Sherman Act was not meant to proscribe is whether the activity is required by the State acting as sovereign. ….Here we need not inquire further into the state-action question because it cannot fairly be said that the State of Virginia through its Supreme Court Rules required the anticompetitive activities of either respondent. Respondents have pointed to no Virginia statute requiring their activities; state law simply does not refer to fees, leaving regulation of the profession to the Virginia Supreme Court; although the Supreme Court’s ethical codes mention advisory fee schedules they do not direct either respondent to supply them, or require the type of price floor which arose from respondents’ activities. Although the State Bar apparently has been granted the power to issue ethical opinions, there is no indication in this record that the Virginia Supreme Court approves the opinions. Respondents’ arguments, at most, constitute the contention that their activities complemented the objective of the ethical codes. In our view that is not state action for Sherman Act purposes. It is not enough that, as the County Bar puts it, anticompetitive conduct is ‘prompted’ by state action; rather, anticompetitive activities must be compelled by direction of the State acting as a sovereign.
The fact that the State Bar is a state agency for some limited purposes does not create an antitrust shield that allows it to foster anticompetitive practices for the benefit of its members. … The State Bar, by providing that deviation from County Bar minimum fees may lead to disciplinary action, has voluntarily joined in what is essentially a private anticompetitive activity, and in that posture cannot claim it is beyond the reach of the Sherman Act. … Its activities resulted in a rigid price floor from which petitioners, as consumers,  could not escape if they wished to borrow money to buy a home.
Id. at 790-91.
As can be seen from the description of the Goldfarb case, it involved classic price fixing activity and so is a far cry from what the WSBA CPE does in issuing advisory ethics opinions.   But state bar ethics opinions were also at issue in Goldfarb.  Those Virginia ethics opinions stated that failure to observe the fee schedules would raise a presumption of misconduct, for discipline purposes.  There is no equivalent presumption that attaches to WSBA Ethics Advisory Opinions.   The WSBA Website where advisory opinions are published notes that:
In September 2010, the Board of Governors eliminated the distinction between Formal and Informal Ethics Opinions and adopted the nomenclature of “Advisory Opinions.” In doing so, the Board recognized the Washington Supreme Court’s opinion in In re Disciplinary Proceeding Against DeRuiz 152 Wn.2d 558, 99 P.3d 881 (2004), which emphasized that ethics opinions issued by the Bar Association are advisory only, and that the Court is the ultimate arbiter of the Rules of Professional Conduct.  Nonetheless, some of the CPE Advisory Opinions do contain advice about assisting unauthorized practice, and about permissible fee and marketing practices.  (The advisory opinion website provides a search engine that enables users to search by topic and rule number. )  Stated differently, the opinions, if followed, have a potential economic impact on the marketplace for legal services.   Is the issuance of such opinions vulnerable under the antitrust laws after the BDE decision?
There are those that are worried that it is.   Unlike the POLB, the CPE may, but need not, be composed entirely of active market participants.  (For example, the author is currently a member of the CPE, but is an academic lawyer licensed in Washington, and not in active practice apart from one pending pro bono matter.)  The members of the CPE, unlike the POLB, are not appointed by the court, but rather by the Board of Governors.   Nor does the state supreme court actively supervise the opinions issued by the CPE.  Indeed, they are not even approved by the Board of Governors.
But I do not share the worry that the CPE’s opinions are vulnerable under the antitrust laws, as long at they are limited to interpreting the RPCs, as is the CPE’s mission.   The Goldfarb case involved ethics opinions that were (a) interpreting recommendations not promulgated by a state actor (but rather by the Fairfax County Bar Association), and (b) threatened disciplinary action for lawyers that did not follow the fee schedules.    In comparison, the CPE interprets rules promulgated by the state Supreme Court.   It is clear that the rules, themselves, are entitled to state action immunity.

The disciplinary rules reflect a clear articulation of the State’s policy with regard to professional behavior. Moreover, as the instant case shows, the rules are subject to pointed re-examination by the policymaker the [state] Supreme Court in enforcement proceedings. Our concern that federal policy is being unnecessarily and inappropriately subordinated to state policy is reduced in such a situation; we deem it significant that the state policy is so clearly and affirmatively expressed and that the State’s supervision is so active.

Bates v. State Bar of Arizona, 433 U.S. 350, 362 (1977)(holding that Arizona’s advertisign ethics rules were immune from attack under the antitrust law, even though they were vulnerable under the first amendment of the Constitution).
 The CPE is charged with interpreting Washington’s rules, not with elaborating and expanding on them.  Moreover, the CPE has no power to enforce the rules and its opinions are, at best, persuasive rather than authoritative when considered by the Court.   In short, what the CPE is a far cry from what the Virginia Bar Association opinions were doing in Goldfarb.  Accordingly, I think the situations are quite distinct.


Cannabis and Washington Lawyering

In December 2014, the Washington Supreme Court added a new comment [18] to Washington RPC 1.2 in order to give some comfort to Washington lawyers who want to assist clients who wish to engage in legal marijuana projects.  The comment, in its entirety, states:

The court’s new comment does not go as far as some advocated it should.   The King County Bar, for example, proposed a much more specific rule.   And the WSBA Committee for Professional Ethics (CPE), asked to comment on the King County proposal, also advocated for a more specific and robust rule.   But this is what we got.   As a consequence, the CPE issued a much more far reaching opinion in 2015.   The opinion can be found behind the following link:  WSBA Advisory Opinion 201501 .   Here are the questions the opinion addresses and the short answer:


1. May Lawyer A advise Client A about the interpretation of and compliance with I-502 and the CPPA without violating the Washington Rules of Professional Conduct (the “RPCs”)?  Short Answer:  Yes, qualified.

2. May Lawyer B provide legal advice and assistance to Client B in the formation and operation of a business entity so as to comply with I-502 and the CPPA without violating the RPCs?  Answer:  Yes, qualified.

3. May Lawyer C own and operate an independent business in compliance with I-502 and the CPPA without violating the RPCs?  Answer:  Yes, qualified.

4. Assuming that Lawyer D’s need for and consumption of medical or retail marijuana do not otherwise affect Lawyer D’s substantive competence or fitness to practice as a lawyer, may Lawyer D purchase and consume marijuana in compliance with I-502 and the CPPA without violating the RPCs?  Answer:  Yes, qualified.

5. May Lawyer E engage in the implementation of I-502 the CPPA and, if Lawyer E’s competence and fitness to practice as a lawyer is not affected, purchase marijuana subject to I-502 and the CPPA without violating the RPCs?  Answer:  Yes, qualified.

As you might suppose, the CPE’s opinion goes into considerable detail about the history of the issue and its reasoning.   Footnote 17 to the opinion, for example, also provides references to what other states have done about this issue.   Anyone whose practice (or interest) is impacted by this issue should read the opinion.

Update (November 9 2020):

In 2018, the Court amended the relevant comments to the Rules of Professional Conduct to read as follows:

RPC 1.2, comment [18]

“Under Paragraph (d), a lawyer may counsel a client regarding Washington’s marijuana laws
and may assist a client in conduct that the lawyer reasonably believes is permitted by those laws.   If Washington law conflicts with federal or tribal law, the lawyer shall also advise the client regarding the related federal or tribal law and policy.”

“[Comment [18] adopted effective December 9, 2014; Amended effective September 25, 2018.]”

RPC 8.4, comment [8]

“A lawyer who counsels a client regarding Washington’s marijuana laws or assists a client in
conduct that the lawyer reasonably believes is permitted by those laws does not thereby violate RPC 8.4. See also RPC 1.2 Washington Comment [18].”

“[Comment 8 adopted effective September 25, 2018.]”

Since the Court revised these marijuana-related comments, the WSBA Advisory Opinion has not been revised or withdrawn.  Nonetheless, some of its conclusions are even more problematic than they were before the Rule comments were revised.  The problem arises principally because the new comment [8] added to RPC 8.4 fails to address, entirely, whether a Washington lawyer may, without putting himself/herself in ethical jeopardy, actively engage in a marijuana business personally or personally purchase and/or consume marijuana even though it violates federal law.  The  Advisory Opinion conclusions (3)-(5) give a “qualified” answer to the questions raised there and state that a lawyer may personally do so (quite apart from assisting a client), so long as the lawyer’s competence and fitness to practice are not affected.   The Court’s silence on the question of personal use, purchase and consumption in 2018, or since, is deafening.

U.S. v. Wunsch, 84 F.3d 1110 (9th Cir. 1996)

The oath that Washington attorneys take to get licensed is archaic to say the least.  One of the things that Washington attorneys must do is swear to “abstain from all offensive personalities.”  APR 5(d), Item 7.

I recently came across a ninth circuit case that found the prohibition of “offensive personalities” as found in a California statute to be unconstitutionally vague.  U.S. v. Wunsch, 84 F.3d 1110, 1119-20 (9th Cir. 1996).  While the case dealt with a California statute, not the Washington oath, the California statute is equivalent to our oath and the reasoning of the court would seem to apply to the Washington oath.

In that case, a lawyer named Swan had been disqualified by the federal district court –based on a conflict of interest — from representing both parents and their daughter in a criminal tax prosecution.   Swan was sufficiently unhappy that the AUSA had gotten him and his partner disqualified that he sent her a letter expressing his belief that “Your disqualification of Wilson and me was neither just nor fair to the defendants. Surely, it serves your interests because now it will be easy for you.”   More to the point, he “[a]ppended to the letter …a single sheet of paper with the following photocopied words, all enlarged and in capital letters:  `MALE LAWYERS PLAY BY THE RULES, DISCOVER TRUTH AND RESTORE ORDER. FEMALE LAWYERS ARE OUTSIDE THE LAW, CLOUD TRUTH AND DESTROY ORDER.'”  The federal district court found that this letter violated several local rules, including one that incorporated by reference a California statute,  (then) Section 6068(f) of California’s Business and Professions Code, which read, in relevant part: “It is the duty of an attorney … [t]o abstain from all offensive personality[.]”  The court ordered Swan to apologize to the AUSA and referred the matter to disciplinary authorities. Swan appealed the trial court’s order and the ninth circuit reversed.    It upheld Swan’s facial challenge to the “offensive personalities” statute (which has since been amended by deleting the offending offensive personalities).   According to the court:

Clearly, “offensive personality” is an unconstitutionally vague term in the context of this statute. … As “offensive personality” could refer to any number of behaviors that many attorneys regularly engage in during the course of their zealous representation of their clients’ interests, it would be impossible to know when such behavior would be offensive enough to invoke the statute. For the same reason, the statute is “so imprecise that discriminatory enforcement is a real possibility[,]” …., and is likely to have the effect of chilling some speech that is constitutionally protected, for fear of violating the statute.

Id. at 1119 (citations omitted).   Judge Farris dissented from this conclusion, believing that “offensive personalities” could be saved by giving it a limiting interpretation to “conduct that affects the administration of justice.”