Opinion ID: 2524968
Heading Depth: 4
Heading Rank: 4

Heading: Address ethical concerns

Text: Allowing litigants to keep the unassigned proceeds of section 12965 awards would amount, defendants contend, to improper sharing of legal fees by nonlawyers. With exceptions not relevant here, California attorneys are enjoined not to directly or indirectly share legal fees with a person who is not a lawyer. (Rules Prof. Conduct, rule 1-320(A).) Plaintiff argues, on the other hand, that any rule permitting payment of section 12965 fees directly to counsel would contravene conflict of interest principles barring attorneys from obtaining pecuniary interests adverse to their clients. As defendants cannot produce a written agreement entitling them to the disputed award, plaintiff argues, those proceeds cannot be paid directly to them. (See Rules Prof. Conduct, rule 3-300 (rule 3-300); State Bar Standing Com. on Prof. Responsibility and Conduct, Formal Opn. No.1994-136 (1994) pp. 1, 2 (State Bar Advisory Opn.) [in order ethically to obtain exclusive possession of the right to collect attorney's fees, and therefore to control settlement, . . . a `possessory interest' adverse to the client[,] . . . the member must comply with rule 3-300 by obtaining client consent to fair and reasonable terms after full disclosure in writing].) We agree with defendants that plaintiffs proffered construction would implicate in some measure the policy our fee-splitting prohibition is designed to advance. Plaintiffs argument premised on rule 3-300, on the other hand, is less persuasive, as the State Bar Advisory Opinion construing that rule only addresses the propriety of such agreements in the context of actions brought under 42 United States Code section 1988 (State Bar Advisory Opn., supra, at p. 1) and expressly was advisory only ( id. at p. 5), not binding on the courts, the State Bar of California, its Board of Governors, any persons or tribunals charged with regulatory responsibilities, or any member of the State Bar ( ibid. ). More fundamentally, in recognizing that counsel should, absent contract, receive the proceeds of any section 12965 award exceeding fee payments made, we would confer no exclusive possession of the right to collect attorney's fees (State Bar Advisory Opn., supra, at p. 2) such as might compromise public policy favoring client control over settlement of FEHA cases. We would merely reconcile that policy with those underlying FEHA's attorney fee provision and FEHA generally. [15] Ultimately, we are not persuaded we can dispose of the question presented solely through consideration of these somewhat competing ethical considerations. Obviously, it is not necessary that we deprive attorneys of FEHA fees in cases where they have in fact been sought and awarded in order to vindicate the principle that a civil rights plaintiff may, in order to effect settlement, agree to waive the right to seek fees. (See State Bar Advisory Opn., supra, at p. 3 [recognizing that attorneys may contract for ownership of 42 U.S.C. § 1988 fees].) The Court of Appeal opined that section 12965 ought not to be construed so that the successful litigant's attorney will own any unassigned fee award, because such a construction would risk prompting attorneys to contract with clients for a percentage of the damages without advising them about the possibility of a statutory fee award, thus undermining the public policy favoring full compensation of victims of unlawful discrimination. We do not believe such a concern need detain us. Plaintiffs own authority implies that an attorney is not permitted to proceed as the Court of Appeal theorized. (State Bar Advisory Opn., supra, at pp. 2-3 [requiring client consent to fair and reasonable terms after full disclosure in writing before an attorney can acquire interest in fee award potentially adverse to client's interest].) More fundamentally, nothing we say in this opinion concerning ownership of unassigned Government Code section 12965 proceeds alters existing rules forbidding attorneys to charge or obtain unreasonable fees, or diminishes clients' established remedies if unreasonable fees are sought or exacted. (See, e.g., Bus. & Prof.Code, § 6200 et seq. [arbitration of attorney fees].) And, even assuming the Court of Appeal identified a theoretical contracting scenario to some extent not remediable under existing rules, the court did not demonstrate that its proposed resolution has significant comparative benefits over existing incentives. [16]