Some attorneys in California admonish their debtor audience who accept absolute claims that the debtor adeptness as able-bodied fraudulently alteration an asset that they are activity to lose anyway, with the abstraction actuality that conceivably the debtor can get a bigger adjustment out of the creditor. This, of course, has annihilation to do with accepted asset aegis planning and is little added than — to be edgeless — a anatomy of able scumbaggery.
Until November 1, 2018, the California Rules of Able Conduct (“CRPC”) provided that:
Rule 3-210 Advising the Abuse of Law
A affiliate shall not admonish the abuse of any law, rule, or cardinal of a attorneys unless the affiliate believes in acceptable acceptance that such law, rule, or cardinal is invalid. A affiliate may booty adapted accomplish in acceptable acceptance to analysis the ascendancy of any law, rule, or cardinal of a tribunal.
These attorneys approved to absorber themselves from activity by the State Bar of California by advising the debtor not to accomplish a counterfeit transfer, which complied with their duties beneath CRPC 3-210, but again the advocate went advanced and (for a advantageous fee of course) helped the debtor with the counterfeit alteration itself because CRPC 3-210 said annihilation about acceptable the client. In added words, these attorneys were demography the position that “you accept to acquaint the debtor not to accomplish a counterfeit transfer, but if they adjudge to do so anyhow again you’re chargeless to advice them with it.” No cloister or ethical assessment has anytime accurate this position, but that’s what the behind attorneys intend to argue.
To admonish a applicant to accomplish a counterfeit alteration in California is a disciplinable breach activity aback to the cardinal of the California Supreme Cloister in Townsend v. State Bar, 32 Cal.2d 592 (1948), area an advocate was abeyant for three years for advising his applicant to transfers assets to her mother to abstain the accumulating of a debt. The Townsend aphorism was activated as backward as 2013 to accord an advocate who brash a counterfeit alteration a two-year affected vacation from the convenance of law, in Amount of Morris, 2013 WL 6598701 (Cal.Bar.Ct., Unpublished, Dec. 4, 2013).
In this regard, California has consistently been a alarming administering for attorneys to admonish on counterfeit transfers back California Chastening Code sections 154, 155 and 531 acknowledge that the authoritative of a counterfeit alteration in California is a crime. Although not prosecuted for abounding decades, these statutes are frequently acclimated by creditors to access contrarily arcane communications amid debtors and their attorneys beneath the crime-fraud barring to the attorney-client privilege. But these chastening statutes, activated or not, additionally accept actual austere ramifications for attorneys who admonish and abetment their audience to appoint in counterfeit transfers, back those are crimes by the debtor in California.
The new aphorism changes this, to accomplish acceptable with a counterfeit alteration a disciplinable breach in California. After November 1, 2018, the CRPC replaces Aphorism 3-210 with the afterward provision:
Rule 1.2.1 Advising or Acceptable the Abuse of Law
(a) A advocate shall not admonition a applicant to engage, or abetment a applicant in conduct that the advocate knows is criminal, fraudulent, or a abuse of any law, rule, or cardinal of a tribunal. [Emphasis added]
(b) Notwithstanding branch (a), a advocate may:
(1) altercate the acknowledged after-effects of any proposed advance of conduct with a client; and
(2) admonition or abetment a applicant to accomplish a acceptable acceptance accomplishment to actuate the validity, scope, meaning, or appliance of a law, rule, or cardinal of a tribunal.
Thus, beneath the new CPRC 1.2.1, a California advocate can neither advance to a applicant that a counterfeit alteration would be a acceptable thing, nor abetment the applicant with the counterfeit transfer. Either one may advance to able conduct per Townsend and its progeny.
Moreover, Animadversion  to CPRC 1.2.1 makes bright that this aphorism applies alike if the applicant has already started bottomward the aisle of authoritative a counterfeit transfer, i.e., alike if the applicant has already absitively to accomplish a counterfeit alteration afore walking into the attorney’s office, the advocate cannot thereafter abetment the applicant with the already-decided blameworthy advance of conduct. That aforementioned animadversion suggests that in these situations, the attorney’s advance of conduct will be bound to either crumbling the representation or abandoning from the representation if it has already started.
But CPRC 1.2.1 is aloof the start. Conceivably alike added alarming is the new Aphorism 8.4(c) and (d) which provides:
Rule 8.4 Misconduct
It is able delinquency for a advocate to:
(c) appoint in conduct involving dishonesty, fraud, deceit, or adventuresome or advised misrepresentation; [or]
(d) appoint in conduct that is prejudicial to the administering of justice;
Advising or acceptable a applicant with a counterfeit alteration is actual acceptable activity to acceleration to the akin of dishonesty, and it is absolutely prejudicial to the administering of amends because it has the accessible deleterious aftereffect of abbreviation a creditor’s adeptness to accomplish the judgment.
What makes these accoutrement so alarming is they casting a added net than artlessly acceptable a applicant with bent conduct. If the attorney’s conduct can be said to be “dishonest” or “prejudicial”, again the attorney’s admission to convenance law can be punched. We will accept to delay and see how far the California courts booty these concepts, but answer it to say that it will be actual afflictive to be a analysis case.
By this point, some attorneys may be thinking, “Hey, that sounds absolutely bad, but I don’t convenance in California so I don’t accept to anguish about it.” Well, if you don’t accept California audience or audience with acreage in California, again that is apparently right. But if you do, again you’d bigger pay absorption to the new CRPC as it relates to conflict-of-laws:
Rule 8.5 Antidotal Authority; Choice of Law
(a) Antidotal Authority. A advocate accepted to convenance in California is accountable to the antidotal ascendancy of California, behindhand of area the lawyer’s conduct occurs. A advocate not accepted in California is additionally accountable to the antidotal ascendancy of California if the advocate provides or offers to accommodate any acknowledged casework in California. A advocate may be accountable to the antidotal ascendancy of both California and addition administering for the aforementioned conduct.
(b) Choice of Law. In any exercise of the antidotal ascendancy of California, the rules of able conduct to be activated shall be as follows:
(1) for conduct in affiliation with a amount awaiting afore a tribunal, the rules of the administering in which the attorneys sits, unless the rules of the attorneys accommodate otherwise; and
(2) for any added conduct, the rules of the administering in which the lawyer’s conduct occurred, or, if the absolute aftereffect of the conduct is in a altered jurisdiction, the rules of that administering shall be activated to the conduct. A advocate shall not be accountable to conduct if the lawyer’s conduct conforms to the rules of a administering in which the advocate analytic believes the absolute aftereffect of the lawyer’s conduct will occur.
So, let’s say that a Utah advocate has applicant with California acreage who has aloof absent a balloon and now has a acumen adjoin the applicant in California. The Utah advocate advises the applicant to accomplish a counterfeit alteration to assure the California acreage from accumulating and assists with advancing the accomplishments for the transaction.
In this case, the Utah advocate will be accountable to conduct beneath CRPC 8.5(a) because he able accomplishments for filing in California. California law will administer beneath 8.5(b)(1) because the attorneys was in California, and beneath 8.5(b)(2) because the “predominant effect” of the counterfeit alteration was in California. The net aftereffect is that the Utah advocate may be accountable to conduct in California beneath CPRC 8.5.
The basal band is that if you are advising or acceptable a applicant in accomplishing commodity that adeptness be advised a counterfeit alteration in California, again maybe you’d bigger anticipate alert and not get too comfortable about it, because the times they are a’changing.
California (New) Rules of Able Conduct, as begin at https://goo.gl/Z2MWyC
*Hat tip to California creditor rights advocate Paul Young for pointing out this affair to me.
This commodity at https://goo.gl/73m7nV
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