The Use of Breaches of Rules of Professional Conduct

THE USE OF BREACHES OF RULES OF PROFESSIONAL CONDUCT

IN LEGAL MALPRACTICE ACTIONS

PLDF Annual Meeting September 17-19, Washington, D.C.

PRESENTERS:

82

Andrew W. Countryman

Carlock, Copeland & Stair LLP

40 Calhoun St., Ste. 400

Charleston, SC 29401

843-266-8225 (direct)

843-727-0307

843-727-2995 (fax)

Doug Holthus

Poling Law

300 East Broad Street, Ste. 350

Columbus, OH 43215

(614) 737-2927 (direct)

(614) 737-2900

(614) 737- 2929 (fax)

82

Violations of ethical rules or rules of professional conduct can certainly taint a lawyer’s image and serve as motivating factors behind a malpractice claim, but are they evidence of malpractice? While a lawyer’s breach of an ethical rule may speak to his character, does it necessarily mean the lawyer breached the standard of care? Is an ethical violation negligent or indicative of negligence in and of itself? If ethical violations speak to negligence, must a plaintiff use expert testimony to establish ethical standards and breaches? Can jury charges include instructions regarding rules of professional conduct and ethical violations? Can material from disciplinary proceedings be evidence in a malpractice claim?

Generally, most jurisdictions permit discussion of an ethical violation[1] as some evidence of a breach of the duty of care, as opposed to a per se breach. However, some courts hold an ethical standard conclusively establishes the duty of care, and any violation is basically negligence per se. Interestingly, others provide a violation of the rules of professional conduct establishes a rebuttable presumption of legal malpractice. Finally, a few courts completely preclude ethics and violations from being used as evidence in a legal malpractice action.

I. BACKGROUND

Ethical rules and standards, as well as codes and regulatory provisions have long governed professional responsibility of lawyers. The Model Rules of Professional Conduct similarly provide boundaries of the use of the rules, and many states’ rules of professional conduct follow the Model Rules. In the Preamble to the Model Rules, the American Bar Association states:

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 non-disciplinary 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 ABA recognizes a lawyer’s violation of an ethical rule may be evidence of breach of the standard of care, but a violation does not in and of itself give rise to a cause of action.

Many states copy the ABA’s scope of its Model Rules, including the comment that ethics rules are not meant to be enforced outside of legal discipline. However, courts have consistently relied on ethics codes to establish the standard of care, especially with respect to conflicts of interest. See Harrison v. Fisons Corp., 819 F.Supp. 1039, 1041 (M.D. Fla. 1993). Despite the ABA’s position, jurisdictions disagree as to whether a violation of an ethics rule may be used as evidence of malpractice.

II. MAJORITY VIEW

The majority of states[2] take the view that violations of ethical standards do not create a basis for liability themselves, but may be admitted as evidence relevant to the standard of care applicable to lawyers. These courts generally hold that pertinent ethical standards contained in the Code of Professional Responsibility or Rules of Professional Competence, while not themselves a basis for civil liability, are relevant to establishing the standard of care, and thus can be admissible to proving negligence in a malpractice case. See Kathleen J. McKee, Admissibility and Effect of Evidence of Professional Ethics Rules in Legal Malpractice Action, 50 A.L.R. 5th 301 (1997). However, even if a plaintiff proves an ethical breach occurred, he still must prove the lawyer breached the standard of care to prevail in a malpractice claim.

In Georgia, ethical rules are relevant and admissible to establishing the standard of care because it would be “unreasonable” to say the rules play no role in shaping the care and skill ordinarily exercised by attorneys in the jurisdiction. Allen v. Lefkoff, Duncan, Grimes & Dermer P.C., 265 Ga. 374, 453 S.E.2d 719 (1995). The Allen Court stated rules of professional conduct shape the practice of law and therefore help shape the standard of care applicable to lawyers. Accordingly, ethical violations can be admissible as evidence of breaches in the standard of care. Id. However, the failure to comply with the ethical rules will not ordinarily constitute negligence per se, but the jury can consider along with other facts and circumstances to determine whether a lawyer acted with due care.

The Allen opinion discusses relevance as a key consideration when determining the admissibility of ethical rules and breaches. All ethical rules (including rules of professional conduct) are not necessarily relevant to determining the standard of care. In order to be admissible, an ethical rule must be intended to protect a person in the plaintiff’s position or be relevant to the particular harm the plaintiff suffered. Id. at 377.

South Carolina treats this issue similarly and specifically adopted the Allen Court’s holding. In Smith v. Haynsworth, Marion, McKay & Guerard, real estate developers sued their closing lawyers when a deal fell through. 322 S.C. 433, 472 S.E.2d 612 (1996). The Court referred to the preamble to the South Carolina Rules of Professional conduct provides the “[v]iolation of a Rule should not give rise to a cause of action nor should it create any presumption that a legal duty has been breached.” SCACR 407. However, the South Carolina Rules are silent as to whether the Rules of Professional Conduct are relevant to assessing the duty of care. The South Carolina Supreme Court determined in appropriate cases, Rules of Professional Conduct (RPC) may be relevant and admissible in assessing legal duty of attorney in malpractice action. However, in order to relate to standard of care in a particular case, the rule must be intended to protect person in plaintiff's position or be addressed to the particular harm. Id.

The South Carolina Court of Appeals clarified this in McNair v. Rainsford, stating “the failure of a lawyer to comply with a Rule of Professional Conduct is not evidence of negligence per se, but rather, is merely a circumstance that, along with other facts and circumstances, may be considered in determining whether attorney acted with reasonable care in fulfilling his or her legal duties to client.” 330 S.C. 332, 499 S.E.2d 488 (Ct. App. 1998). So, a lawyer defending a malpractice claim in a jurisdiction with the majority view should be ready to raise relevance as an argument to keep out evidence of a breach of an ethical rule. Because a breach of an ethical violation is not per se negligence, an ethical breach may have no bearing on whether the lawyer breached the standard of care, and the introduction of the ethical breach into evidence could be unfairly prejudicial.

III. MINORITY VIEW: VIOLATION AS A PRESUMPTION OF MALPRACTICE

A minority of courts hold that a violation of an ethical standard establishes a rebuttable presumption of legal malpractice. In Lipton v. Boesky, a legal malpractice action arose from a lawyer’s representation of a client in connection with construction of an office building. 110 Mich. App. 589, 313 N.W.2d 163 (Ct. App. 1981). The Michigan Court of Appeals applied a negligence per se analysis and held, as with statutes, a violation of an ethical rule creates a rebuttable presumption of malpractice. According to the opinion, ethical rules create a standard of practice for lawyers and express the standards of professional conduct expected of lawyers in their relationships with the public, the legal system, and the legal professions. It would be unfair not to allow a lawyer’s client to rely on his or her lawyer to abide by those standards. Id.

New Jersey also considers the violation of an ethical standard as an inference of malpractice shifting the burden of proof from the plaintiff client to the defendant lawyer. Albright v. Burns, 206 N.J. Super 625, 503 A.2d 386 (Ct. App. 1986). While violations of ethical standards do not per se give rise to tortious claims, standards set a minimum level of competency which all lawyers must display. Id. Where a lawyer fails to meet minimum standard of competence governing the profession, such failure can be considered evidence of legal malpractice. Id.

IV. MINORITY VIEW: VIOLATION AS CONCLUSIVE OF MALPRACTICE

Some California courts have held ethical standards conclusively establish the duty of care, and any violation is negligence per se. Marc R. Greenough, The Inadmissibility of Professional Standards in Legal Malpractice After Hizey v. Carpenter, 68 Wash.L.Rev. 395 (1993). In California, the violation of an ethical standard is conclusive evidence a lawyer breached the standard of care. See Ishmael v. Millington, 241 Cal.App.2d 520, 50 Cal. Rptr. 592 (Ct. App. 1966). The California Court of Appeals in Day v. Rosenthal, held the state ethical rules conclusively established the lawyer’s duty of care, and any expert testimony contrary to the rules would be disregarded. 170 Cal.App.3d 1125, 217 Cal. Rptr. 89 (Ct. App. 1985) (superseded by statute on a different point of law).

Courts taking this position rationalize the ethical rules firmly establish the duty of care, and violation of an ethical duty is negligence in and of itself. In other words, any failure to meet the standards the ethical rules impose is conclusive evidence of malpractice. This effectively removes any relevance argument for keeping out evidence of ethical breaches. Besides a few California courts, no other state has expressly held violation of an ethical rule is conclusive evidence of negligence. However, some have indicated in dicta they might also choose this route.

V. MINORITY RULE: COMPLETE INADMISSIBILITY

Appellate courts in two states, Arkansas and Washington, have held the violation of an ethical rule is completely inadmissible in a legal malpractice action. In Orsini v. Larry Moyer, 310 Ark. 179, 833 S.W.2d 366 (1992), the Supreme Court of Arkansas upheld the trial court’s exclusion of the ethical rules without much discussion of its rationale. The Court simply stated the rules were designed for discipline and not civil liability.

The Supreme Court of Washington provided a detailed rationale for its similar conclusion in Hizey v. Carpenter, 119 Wash. 2d 251, 830 P.2d 646 (1992). In Hizey, plaintiff sued a lawyer for malpractice arising out of a real estate transaction. Plaintiff claimed the lawyer wrongly represented both the buyers and sellers, which was a conflict of interest. At trial, the lawyer moved to exclude the testimony of the plaintiffs’ expert witness on the ground it would be improper to admit evidence regarding the professional ethical standards governing lawyers. The trial court granted the motion. The Washington Supreme Court unanimously upheld the trial judge’s decision, holding a plaintiff may not inform the jury of the existence of the ethical rules in a legal malpractice action, either directly through jury instructions or by the expert testimony. Id.

The Hizey opinion relied on public policy as rationale and noted plaintiff had other common law remedies available and could support a malpractice action. The opinion held the use of the ethical rules as a basis for civil liability would defeat the purpose of the rules, which is to aid the legal system by protecting the public and the integrity of the profession. The opinion also expressed concern the use of the rules as a basis for civil liability would remove the motivating force behind them.

The Hizey Court also indicated the ethical rules establish the minimum level of conduct a lawyer must demonstrate to avoid disciplinary action. However, in a malpractice action, the duty the lawyer owes to the client is dependent upon the type of representation and particular circumstances. This duty may vary and may not the same as the duty under the ethical rules.

VI. JURY INSTRUCTIONS

Courts occasionally allow the quotation of ethics rules in jury instructions in breach of fiduciary duty and legal malpractice cases. As an Illinois court explained:

Like most statutes and ordinances, attorney disciplinary rules establish minimum standards of conduct and are intended to protect the general public. For these reasons . . . jury instructions may quote attorney disciplinary rules in legal malpractice cases to the same extent as they may quote statutes and ordinances in instructions in other types of negligence cases. This is a debatable practice, however, and not all courts endorse it. Mayol v. Summers, Watson & Kimpel, 223 Ill. App. 3d 794, 585 N.E.2d 1176 (App. Ct. 1992).

This practice is debatable because, as discussed above, the violation of an ethical rule maybe irrelevant to whether the lawyer violated the standard of care. In this situation, quoting an ethical rule in a jury instruction could lead to a verdict against a lawyer based on something other than a breach in the standard of care. Massachusetts addressed this issue in Fishman v. Brooks, 396 Mass. 643, 487 N.E.2d 1377 (1986). The Court provided that a violation of an ethics canon or disciplinary rule is not itself an actionable breach of duty to a client. The Court further reasoned if a plaintiff can demonstrate a disciplinary rule was intended to protect one in his position, a violation of that rule may be some evidence of the lawyer’s negligence. Id.