State Bar Gets Serious About Conflicts

In the Matter of Thibault, Review Department, State Bar Court, case no. SBC-22-O-30033, filed 10/17/23.

There was a time when conflicts of interest, even conflicts leading to disqualification of a lawyer in litigation, seldom led to professional discipline. The trend began to change a few years ago. Increasing awareness of conflicts led to a recognition that disqualification was not always an adequate remedy. In 2015, despite a lack of Supreme Court discipline case law addressing discipline for conflicts of interest, the State Bar added new Standard 2.5, specifically addressing conflicts of interest. The Standard recommends actual suspension where a violation of the conflict rules, chiefly Rules of Professional Conduct 1.7 and 1.8, leads to harm and lesser discipline, stayed suspension or reproval, in cases where no harm resulted.

“Stand-alone” discipline for conflict of interest seems to be relatively rare, although it is difficult to gauge since the State Bar Court stopped publishing Hearing Department decisions in 2019. The published discipline cases from the Review Department involve multiple violations of the Rules of Professional Conduct or statutes from the State Bar Act. So it is with the Thibault decision. The hearing judge found Thibault culpable of (1) failing to obey a court order under section 6103 of the Business and Profession Code; (2) accepting employment adverse to another individual who respondent’s employer previously represented without informed written consent under former rule 3-310(E) of the Rules of Professional Conduct; and (3) failing to timely report a judicial sanctions order to the State Bar under section 6068, subdivision (o)(3). On review, the Review Department upheld these culpability determinations and evidently published the opinion for the reasons stated in the opening sentence: “This case underscores the need for attorneys to understand the broad scope of our conflicts of interest rules, which require the avoidance of adverse interests. and it demonstrates the perils that can result when an attorney is not careful in following the requirements of these rules.”

The facts are a little strange. Thibault worked for another lawyer (Peshawaria) who had previously represented the wife (Rattan) in a marital dissolution proceeding despite the fact that she was not licensed in California. Years later, after Thibault began working for this lawyer, Rattan’s husband Prasad employed the lawyer to represent him in the same proceeding on pending issues in the case related to child custody, child and spousal support, and the division of marital property. She assigned the case to Thibault. Rattan’s lawyer wrote to Thibault and informed her of the conflict of interest. Thibault withdrew but, after leaving the lawyer’s employment, began to represent Prasad again as a solo practitioner, seemingly not understanding the principle of imputed conflict despite having consulted with the State Bar’s Ethics Hotline. (Maybe the most important point here is the Ethics Hotline is not a substitute for obtaining legal advice from an experienced ethics lawyer.) Rattan’s lawyer successfully moved to disqualify Thibault and obtained a $5,000 sanction against her. Thibault waited eight months to pay the sanction. She also waited almost four years to report the sanction to the State Bar as required by Business and Professions Code section 6068(o)(3). This section requires reporting within 30 days of the time the lawyer knows the sanction.

Perhaps Thibault’s initial mistakes stemmed from sheer ignorance. But both the hearing judge and the Review Department found as an aggravating circumstance that she “displayed an attitude that demonstrates she lacks a full understanding of the seriousness of [her] misconduct.” Ignorance alone can kill you. Willful ignorance can kill you more. Thibault continued to argue that she was justified in representing Prasad throughout the pendency of the discipline proceeding. Her position seems especially contumnacious given that she attempted to cross-examine Rattan while representing Prawad at the July 2018 hearing with Rattan’s confidential information provided to Thibault’s former employer, Peshawaria, in 2008! The Review Department carefully noted that an attorney has a right to defend herself vigorously in discipline proceedings (citing In re Morse (1995) 11 Cal.4th 184, 209). Still, discipline proceedings are qualitatively different than other kinds of proceedings where a vigorous defense might not cross the line into a fatal failure to appreciate the nature of the attorney’s duties.

The basis of the section 6103 charge was Thibault’s failure to pay the sanction for eight months. In analyzing the appropriate discipline, the Review Department cited Standard 2.12(a), which prescribes actual suspension or disbarment as the harshest applicable Standard. But the statutory violations, including the failure to report the sanction, seem to be the tail and not the dog here, with the entire course of misconduct really arising from the respondent’s spectacular failure to recognize and avoid the successive representation conflict. The thirty-day actual suspension is all the more damaging because the Supreme Court has now mandated compliance with California Rule of Court 9.20 for every suspension, even a short one. The actual suspension also subjects Thibault to a $2,500 sanction.

Thibault is a significant case that is meant to convey a serious message. Discipline for conflicts of interest is a real possibility now.

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