Opinion ID: 386114
Heading Depth: 3
Heading Rank: 3

Heading: The Fraud on the Client

Text: 56 Bailey admits the book contract; the covenant is in the record. The allegations suggesting fraud are not so well established. However, if proved, they would tend to show that Bailey and Johnson misled Randolph Hearst and appellant regarding the finality of the agreement for a book, the subject of the book, the duration of the covenant, the application of the proceeds, and appellant's obligation to sign the covenant. The allegations regarding the background, manner and timing of the presentation of the covenant to appellant for signing indicate overreaching. 57 If all this is true, Bailey and Johnson may have violated ABA CPR Disciplinary Rule 1-102(A)(4): 58 A lawyer shall not engage in conduct involving dishonesty, fraud, deceit, or misrepresentation. 59 Other Disciplinary Rules might also be involved. Attention should also be directed to California Rule of Professional Conduct 5-101:A member of the State Bar shall not enter into a business transaction with a client or knowingly acquire an ownership, possessory, security or other pecuniary interest adverse to a client unless (1) the transaction and terms in which the member of the State Bar acquires the interest are fair and reasonable to the client and are fully disclosed and transmitted in writing to the client in manner and terms which should have reasonably been understood by the client, (2) the client is given a reasonable opportunity to seek the advice of independent counsel of the client's choice on the transaction, and (3) the client consents in writing thereto.