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Can an attorney recieve a gift from their client? California Rules of Professional Conduct Rule 4-400

Posted by Anthony Radogna | Dec 10, 2017 | 0 Comments

CAN AN ATTORNEY RECEIVE A GIFT FROM THEIR CLIENT?

With the holidays right around the corner, you might be wondering if you have to give the keys to the Maserati back to your client. Even though it is nice to dream, more than likely you are wondering if it is ethical and proper to accept that box of chocolates from your client, or that $20 gift card, or maybe even your client gave you a nice bracelet, or the promise to give you discounts on food next time you are in their restaurant.

Before I get into this a little bit, this is definitely not an in depth discussion about testamentary gifts, it is about gifts in general. Even though California Rules of Professional Conduct 4-400 (Gifts From Clients) is not something the California State Bar usually investigates or even receives complaints about, there can be cases where this allegation can be coupled with conflict allegations. When the State Bar receives conflicts complaints, those are taken very seriously.

I will not address conflicts here either, but you should be thinking about how receiving that gift, especially if there is an on-going relationship with your client, how that may add a strain on your current relationship and can lead to certain conflicts.

Ok let's first look at the rule. California Rules of Professional Conduct 4-400 states:

“A member shall not induce a client to make a substantial gift, including a testamentary gift, to the member or to the member's parent, child, sibling, or spouse, except where the client is related to the member.”

Some Rules will also include a small discussion. Here is rule 4-400's discussion.

A member may accept a gift from a member's client, subject to general standards of fairness and absence of undue influence. The member who participates in the preparation of an instrument memorializing a gift which is otherwise permissible ought not to be subject to professional discipline. On the other hand, where impermissible influence occurred, discipline is appropriate. (See Magee v. State Bar (1962) 58 Cal.2d 423 [24 Cal.Rptr. 839].)

Let's start by focusing on the words induce and substantial.

To violate the rule, you not only have to receive a gift from your client, but it must be a substantial gift, AND you would have had to induce your client to give that gift. As a side note, because the rule states the client must make a substantial gift, seems to me as if simply inquiring about a gift is not enough: the client would have actually had to give the gift. In other words, the gift must change hands.

Next, what does it mean to induce your client to make a substantial gift?

If inducement means to call forth, or to cause, to persuade, to entice, then you're doing more than just asking for a gift, you're actually coaxing your client into giving you one. (Note: There is case law that states that if the gift that is given is substantial, then there is a presumption that undue influence exists. This means that it would be your job to prove that you did not induce the gift.) (Also note that there are formal ethics opinions that differ from my interpretation, and those opinions would find a violation for simply asking as well.)

Even though asking and inducing have totally different meanings in the English language, I don't suggest ever asking for a gift, then using the excuse that you were not applying pressure or inducing your client to give one. Even though this is something defense counsel can use on your behalf during an investigation and in negotiation, the facts would have to be very specific for this to go in your favor, if ever.

Although not authoritative in State Bar Court, ethics opinions written by the American Bar Association, local county bar associations, and especially ones written by the California State Bar, can give us a lot of insight.

In 2011 the California State Bar's standing Committee on Professional Responsibility Conduct discussed gifts in their Formal Opinion 2011-180. When discussing and analyzing the word inducement, the opinion stated:

“It follows that for purposes of rule 4-400, the attorney must intend to cause the client to make the gift. Merely complimenting or admiring a client's property, absent any intent on the part of the lawyer that the client offer its use as a gift, does not violate rule 4-400.”

This opinion touches on what I discussed earlier. The Committee's discussion has me imagining a situation where the attorney says something as…. “nice watch” to the client, and then the client gives the watch as a gift.

In this scenario, there was simply a compliment by the attorney, and then the client gave the gift. Technically I would have to say that the rule was not violated here, but again, I don't suggest trying this 😊. Even though these types of scenarios are usually saved for a law school exam instead of being argued in State Bar Court, it can still be valuable to discuss those nuances here.

Lastly, lets discuss the word substantial. Unfortunately, there is not much guidance in State Bar land on what would rise to the level of substantial, a common-sense approach to the meaning of the word would make sense here. Also, an approach that looks at the financial situation of the client would also be warranted. Where the millionaire client giving you a $500.00 gift may not be substantial, a $200.00 gift can be very substantial to the client that doesn't have a lot of money.

That is not to say that we should be only focusing on the client's financial well-being. Comment to Section 127(2) of Restatement Third of the Law Governing Lawyers does suggest that the financial situation of the lawyer is also something to be looked at when determining if the gift is substantial.

In the State Bar's formal opinion that I quoted from earlier, in their scenario the attorney induced a gift worth $5,000.00. The Committee concluded this was a substantial gift based on all factors.

Also, even though Magee v. State Bar (the case quoted in the discussion portion of Rule 4-400) is a wills case, the court's statements on modest gifts vs substantial gifts can also give us some guidance. It is important to note that Magee received no discipline ultimately, but equally important is the fact that there was much discussion on undue influence and the fact that the client must be given the opportunity to discuss the gift with another attorney, meaning, obtaining an independent attorney's advice.

In that case, the court stated that there is nothing improper with drawing up a will for clients, and giving a gift to the attorney, if that gift is a modest one. (See Orkin, Legal Ethics and See Magee v. State Bar (1962) 58 Cal.2d 423 [24 Cal.Rptr. 839])

A great conclusion to this blog was already given to us by State Bar's Standing Committee on Professional Conduct formal opinion that I quoted from earlier.

They stated:

“We conclude that an attorney who demonstrates by words or conduct an intent to cause a client to give the attorney a substantial gift violates rule 4-400. In determining whether a gift is substantial, we must examine the value of the gift from the perspective of both the client and the attorney both financially and otherwise, as well as general standards of fairness.”

For further information please call me at 949-852-7312 or visit https://www.statebardefenseattorney.com/

Please refer to the following:

California Rules of Professional Conduct 3-310

California Rules of Professional Conduct 4-400

ABA Model Rule 1.8(c)

Rest.3d Law Governing Lawyers § 127

Probate Code. § 16004

Magee v. State Bar (1962) 58 Cal.2d 423 [24 Cal.Rptr. 839])

Maltaman v. State Bar (1987) 43 C3d 924, 239 CR 687

The State Bar of California Standing Committee on Professional Conduct on Professional Responsibility and Conduct Formal Opinion No. 2011-180

About the Author

Anthony Radogna

Anthony Radogna worked for over 5 years as an Investigator for the State Bar of Californias Office of Chief Trial Counsel (OCTC), investigating a wide-range of ethical complaints brought against attorneys. In addition, he served on specialized task force teams and has experience investigating...

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