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PlannedPlanned ParenthoodParenthood Los Angeles lawyer Mara Berke offers alternatives to child custody litigation page 16

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Safe Harbor Mentors page 8 Section 363 Real Estate Sales page 10 Running for Assembly page 36 March2009_Master.qxp 2/12/09 10:43 AM Page c2 March2009_Master.qxp 2/12/09 10:44 AM Page 5

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FEATURES

16 Planned Parenthood BY MARA BERKE When modifying child custody arrangements, a request for a change in visitation may prove more fruitful than a battle over custody rights

23 2008 Ethics Roundup BY JOHN W. AMBERG AND JON L. REWINSKI In the current economic downturn, lawyers need to be more mindful than ever of the potential for conﬂicts of interest Los Angeles Lawyer Plus: Earn MCLE legal ethics credit. MCLE Test No. 179 appears on page 25. the magazine of the Los Angeles County Bar Association March 2009 Volume 32, No. 1

DEPARTMENTS

8 Barristers Tips 36 Closing Argument Finding a safe harbor mentor Running through the ﬁnish line BY APRIL A. CHRISTINE BY THOMAS H. VIDAL

10 Practice Tips 34 Classiﬁeds Section 363 real estate sales are still feasible after Clear Channel 34 Index to Advertisers BY KENNETH N. RUSSAK 35 CLE Preview

COVER PHOTO: TOM KELLER

LOS ANGELES LAWYER (ISSN 0162-2900) is published monthly, except for a combined issue in July/August, by the Los Angeles County Bar Association, 261 S. Figueroa St., Suite 300, Los Angeles, CA 90012, (213) 896-6503. Periodicals postage paid at Los Angeles, CA and additional mailing offices. Annual sub- scription price of $14 included in the Association membership dues. Nonmember subscriptions: $28 annually; single copy price: $4 plus handling. Address changes must be submitted six weeks in advance of next issue date. POSTMASTER: ADDRESS SERVICE REQUESTED. Send address changes to Los Angeles Lawyer, P. O. Box 55020, Los Angeles CA 90055. 03.09 March2009_Master.qxp 2/12/09 10:44 AM Page 4

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LOS ANGELES LAWYER IS THE OFFICIAL PUBLICATION OF THE LOS ANGELES COUNTY BAR ASSOCIATION 261 S. Figueroa St., Suite 300, Los Angeles, CA 90012-1881 Telephone 213.627.2727 / www.lacba.org ASSOCIATION OFFICERS BY AUTHOR’S NAME President DANETTE E. MEYERS President-Elect DON MIKE ANTHONY Senior Vice President ALAN K. STEINBRECHER Vice President ERIC A. WEBBER Treasurer LINDA L. CURTIS Assistant Vice President PATRICIA EGAN DAEHNKE Assistant Vice President ANTHONY PAUL DIAZ Assistant Vice President MARGARET P. STEVENS Assistant Vice President JULIE K. XANDERS Immediate Past President GRETCHEN M. NELSON There is no substitute for experience. Executive Director STUART A. FORSYTH Associate Executive Director/Chief Financial Officer Over 1,250 successful mediations BRUCE BERRA Associate Executive Director/General Counsel 14 years as a full-time mediator W. CLARK BROWN 92% of cases resolved BOARD OF TRUSTEES P. PATRICK ASHOURI Director, Pepperdine Law School’s SUE M. BENDAVID-ARBIV “Mediating the Litigated Case” program GEORGE F. BIRD JR. KIMBERLY H. CLANCY DUNCAN W. CRABTREE-IRELAND JEFFERY J. DAAR LEE JAY BERMAN, Mediator THOMAS J. DALY 213.383.0438 •• www.LeeJayBerman.com TANJA L. DARROW BEATRIZ D. DIERINGER DANA M. DOUGLAS PAMELA E. DUNN CAMILLA M. ENG IRA M. FRIEDMAN ALEXANDER S. GAREEB JACQUELINE J. HARDING LAURIE R. HARROLD BRIAN D. HUBEN K. ANNE INOUE MARK ANCHOR ALBERT, ESQ. LAWRENCE H. JACOBSON HELEN B. KIM RICHARD A. LEWIS IS PLEASED TO ANNOUNCE THE OPENING ELAINE W. MANDEL OF HIS DOWNTOWN LOS ANGELES LAW OFFICES ELLEN A. PANSKY ANN I. PARK EFFECTIVE JANUARY 2009 THOMAS H. PETERS LAURA S. SHIN DAVID W. SWIFT LUCY VARPETIAN NORMA J. WILLIAMS ROBIN L. YEAGER AFFILIATED BAR ASSOCIATIONS BEVERLY HILLS BAR ASSOCIATION BLACK WOMEN LAWYERS ASSOCIATION OF LOS ANGELES, INC. CENTURY CITY BAR ASSOCIATION CONSUMER ATTORNEYS ASSOCIATION OF LOS ANGELES CULVER-MARINA BAR ASSOCIATION EASTERN BAR ASSOCIATION GLENDALE BAR ASSOCIATION IRANIAN AMERICAN LAWYERS ASSOCIATION 333 So. Grand Avenue, 25th Floor ITALIAN AMERICAN LAWYERS ASSOCIATION Los Angeles, California 90071 JAPANESE AMERICAN BAR ASSOCIATION OF GREATER LOS ANGELES JOHN M. LANGSTON BAR ASSOCIATION Tel: (213) 943-1334 JUVENILE COURTS BAR ASSOCIATION Fax: (323) 878-2655 KOREAN AMERICAN BAR ASSOCIATION OF SOUTHERN CALIFORNIA LAWYERS' CLUB OF LOS ANGELES COUNTY Email: [email protected] LESBIAN AND GAY LAWYERS ASSOCIATION OF LOS ANGELES Website: www.MAALawOffices.com LONG BEACH BAR ASSOCIATION MEXICAN AMERICAN BAR ASSOCIATION PASADENA BAR ASSOCIATION SAN FERNANDO VALLEY BAR ASSOCIATION Counsel You Can Count On© SAN GABRIEL VALLEY BAR ASSOCIATION “Big Firm” Litigation Expertise & Experience SANTA CLARITA BAR ASSOCIATION SANTA MONICA BAR ASSOCIATION “Small Firm” Personalized Attention SOUTH ASIAN BAR ASSOCIATION OF SOUTHERN CALIFORNIA SOUTH BAY BAR ASSOCIATION OF LOS ANGELES COUNTY, INC. SOUTHEAST DISTRICT BAR ASSOCIATION SOUTHERN CALIFORNIA CHINESE LAWYERS ASSOCIATION WHITTIER BAR ASSOCIATION WOMEN LAWYERS ASSOCIATION OF LOS ANGELES

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barristers tips BY APRIL A. CHRISTINE

Finding a Safe Harbor Mentor

A PERFECT STORM OCCURRED in October 1991 when three storms com- productivity. This benchmark creates a buffer in a cutthroat compet- bined into one off the coast of Gloucester, Massachusetts. The combined itive environment. Insecure competitors build themselves up by tear- storm created waves 10 stories high and winds of 120 miles an hour, ing others down, but this type of competition is limiting because one whipping the sea to heights that only a few witnessed and fewer sur- only rises as high as the other falls. Keeping an internal benchmark allows vived. While the perfect storm, as memorialized in a book and recounted the protégé to rise as high as his or her capability dictates. in cinema, was a historic event, it can be compared to events that hap- A desirable protégé knows how to maintain inner peace and pen in everyday lives in the workplace. When opposing counsel appear employs a strategy for dealing with stress, which is part of the legal pro- inflexible, clients overly demanding, supervisors watching and evalu- fession. It is easy to bury stress in negative relievers such as excessive ating every move, and colleagues circling like vultures waiting for the alcohol consumption and abuse of drugs (prescription or otherwise). untutored to stumble and fail, the legal profession can seem like the per- Legal implications aside, abusing alcohol and other drugs places one’s fect storm. To stave off the potential devastation of a perfect legal storm, it is important to find a mentor who can act as a safe harbor, assisting in navigating through the politically stormy A safe harbor is effective if both parties are confident that waters of the legal profession. A safe harbor mentor serves as a trusted counselor or teacher—someone to whom the conversations will remain confidential. protégé can ask questions, seek guidance, bounce ideas, and discuss issues one would not normally discuss with a supervisor. Providing a safe harbor, however, is not to law practice at risk because it negatively affects professional performance be confused with harboring misconduct. Mutual trust in a safe harbor and can discourage a potential safe harbor mentor. relationship is essential. A safe harbor mentor should also not be put in an advocacy or mediator role between the protégé and his or her A Safe Harbor Relationship supervisor. Instead, a safe harbor mentor guides the mentee in making Most likely it will be incumbent on the protégé to recognize someone sound professional decisions. who can fulfill the need for a mentor. It is important to choose a men- A mentor can be assigned, but a safe harbor relationship is more tor that the protégé knows and to whom the mentee feels comfortable likely developed with time and familiarity. Whether the mentor is a expressing thoughts and fears, because open and candid communication former employer or more experienced colleague, effective mentors is a key factor in developing a safe harbor relationship. Holding back often counsel and guide behind the scenes. Mentors who formally con- information can inhibit a mentor from providing effective guidance. tribute to the administrative performance process may not be able to Another factor in developing an effective safe harbor relationship function as a true safe harbor because the dual function of mentor is confidentiality. A safe harbor is effective if both parties are confi- and evaluator may defeat the purpose of a safe harbor. A mentor also dent that conversations will remain confidential. Maintaining confi- need not be publicly identified and may be in a better position to facil- dentiality allows for candid dialogue and allows the mentor to freely itate introductions likely to lead to networking and other professional disclose professional and personal information without fear that opportunities by functioning behind the scenes. confidences will be disseminated. A third factor in developing a safe harbor relationship is keeping Building Desirable Protégé Traits in contact with the mentor. This often means initiating contact and Supporting a protégé’s professional endeavors reflects on the mentor suggesting meetings. This allows the mentor to guide the protégé’s pro- as well as the mentee. Therefore, it behooves the protégé to build traits fessional development and speak knowledgeably about the mentee to that make one attractive to a prospective mentor. First, a desirable others. While there may be other important factors in developing a mentee is responsive, prompt, and organized. It is true that first safe harbor relationship, the key is being flexible and adaptable and impressions are lasting. There is nothing more frustrating or off-putting allowing the relationship to grow naturally. For the mentee who than calling a protégé and not receiving a response, or receiving a shows trustworthiness and respect, the benefits in developing a suc- delayed response with no plausible excuse. A desirable protégé is also cessful safe harbor relationship are immeasurable. ■ one who is self-motivated, disciplined, and willing to take action. While a protégé is not obligated to act on the mentor’s advice, demonstrating April A. Christine is an assistant U.S. attorney for the Central District of that the advice had a meaningful impact on the protégé’s decision California, where she prosecutes gang-related violent federal crimes. She is encourages the mentor to continue providing a safe harbor. vice president of the Barristers. The views expressed in this article are the per- A desirable protégé has a strong work ethic and demonstrates sonal views of the author, and do not in any way represent the views of the internal motivation, which can come from developing a benchmark of U.S. Department of Justice or the U.S. Attorney’s Office.

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DOWNTOWN LOS ANGELES WEDNESDAY MILLENNIUM BILTMORE HOTEL MARCH 25, 2009

USC GOULD SCHOOL OF LAW 2009 REAL ESTATE LAW AND BUSINESS FORUM Learn from the Best about How to Thrive in the Worst of Times AGENDA MORNING Breakfast Session: Tips for Success for Young Lawyers • The Economy: Where it Has Been and Where it is Headed • What Happens Next: The Economy and Real Estate • Taking Advantage of Distress • Climate Change and Land Use Regulation • Important Leasing Issues in Today’s Economy AFTERNOON Three Specialized Programming Tracks: Finance, Development, Strategies for Difficult Times • Luncheon Keynote by Thomas J. Barrack, Jr. • Sources of Equity • Traffic and Southern California • Bankruptcy, Workouts and Foreclosures • Sources of Debt • Green Building and Construction • Updates on Fees, Tax Laws, High Speed Rail and Water Rights

CLOSING “Meet the Speakers” Champagne Reception

NATIONALLY KNOWN SPEAKERS INCLUDE: Thomas J. Barrack, Jr., Colony Capital, LLC JeffreyM.Gault,LandCap Partners Jonathan E. Klein, Fortress Investment Group The Honorable Quentin L. Kopp, California High-Speed Rail Authority Larry J. Kosmont, Kosmont Companies/Renaissance Community Fund M. Leanne Lachman, Lachman Associates, LLC This is the one real estate law and Dr. Malcolm Lewis, Constructive Technologies Group (CTG), Inc. business conference you can’t miss. Vance G. Maddocks, CB Richard Ellis Investors Roy March, Eastdil Secured Earn CLE/DRE/CPE Credits! Dr. Glenn R. Mueller, Denver University, F.L Burns School of Special Discount for LACBA and Real Estate & Construction Management Beverly Hills Bar Association Members! Norman Radow, RADCO Development Solutions * Glenn A. Sonnenberg, Legg Mason Real Estate Investors, Inc. For detailed information on topics, and to Dr. Christopher F. Thornberg, Beacon Economics register, exhibit or sponsor, please visit our William A. Witte, Related of California website: http://law.usc.edu/cle/realestate. and dozens of other real estate stars March2009_Master.qxp 2/12/09 10:44 AM Page 10

practice tips BY KENNETH N. RUSSAK

Section 363 Real Estate Sales Are Still Feasible after Clear Channel

ONE ICON OF THE CURRENT REAL ESTATE downturn is a partially or or pursuant to a plan of reorganization by the majority of bankruptcy recently completed housing project with a defaulted senior construc- courts issuing reported decisions on the question. No reported appel- tion loan and a fair market value lower than the amount of the liens. late decision had thoroughly addressed the issue until late last year, Sadly, as residential values continue to decline, many of these projects when the Bankruptcy Appellate Panel (BAP) of the Ninth Circuit Court are not worth enough to pay even the remaining balance of the con- of Appeals handed down Clear Channel Outdoor, Inc. v. Knupfer (In struction loan, much less the claims of junior lenders, unpaid sub- re PW, LLC).4 That decision is now widely, and prematurely, cited contractors, and suppliers. The senior construction lender, the borrower, for the proposition that a 363 sale free and clear of the lien of an object- and the guarantors of the loan—together with any others holding any ing undersecured junior lien holder can only be accomplished pursuant valuable interest in the project—are likely to want to get the project to a plan of reorganization and not before. sold and converted into cash as quickly as possible, if only to protect The 363 sale typically involves an agreement between the debtor their balance sheets from worse decline. If com- pletion of construction is elected as a means of minimizing the loss, time is of the essence with Aside from generating potential purchasers, the possibility real property collateral in a declining market. Unfortunately, given the continuing drop in residential real estate values, it usually is too of the 363 sale also creates a focal point for settlement among late for many of the junior lien stakeholders. In a downturn, what might have been at least partially secured liens become unsecured. Junior creditors and the debtor. lien holders get no advantage from consenting to a sale that gives something to the construction lender and guarantors but leaves nothing to them. Their consent—or some other lien-cleansing procedure—will and a third-party cash purchaser and usually—although not always— be required if marketable title is to be consensually conveyed to the involves an auction5 in which other prospective purchasers can over- prospective purchaser. Out-of-the-money junior creditors, thus, typ- bid the initially identified buyer (sometimes referred to as the stalk- ically adopt holdout strategies when asked to consent to a sale, ing horse).6 If the collateral is encumbered by a lien, the lien holder refusing to execute consensual lien releases unless they are paid. must be given an opportunity to bid, and if it is the successful bid- Even if the senior lender were inclined to cede some of the sale pro- der, the lien holder is authorized to offset the allowed amount of its ceeds to the juniors to buy peace, identifying, organizing, and bind- claim against the purchase price.7 This credit-bid right protects the ing everyone to a consensual agreement can be a monumental task. lender from having its collateral sold out from under its feet at a price Nonjudicial foreclosure seems the obvious procedure to over- below the lender’s perception of value. Aside from generating poten- come an obdurate, out-of-the-money junior lienor (perhaps combined tial purchasers, the possibility of the 363 sale also creates a focal point with a receivership funded by the construction lender to complete con- for settlement among creditors and the debtor. struction before foreclosure). Unfortunately, the nonjudicial fore- The objectives of each debtor vary, but some common ones are closure solution often is neither immediately available nor complete. 1) generating unencumbered funds to pay the fees and costs of the Even if a foreclosure sale is completed before it is stayed by a state trustee, the trustee’s counsel, and other administrative expenses, 2) court injunction or the filing of a voluntary or involuntary bankruptcy generating unencumbered funds to pay trade creditors, 3) minimizing petition, the successful bidder at the foreclosure sale may not buy free the deficiency that may be owed by the estate, by guarantors, or by and clear of apparently junior lien claims if the junior lien claimants other co-obligors, and 4) giving the debtor or affiliates of the properly preserve claims that the construction lender’s deed of trust debtor an opportunity to buy the collateral for a price greater than has suffered a partial or complete loss of priority.1 the lender’s perception of value. The lender’s objectives also vary Given these complexities, construction lenders and their counsel but typically will focus on speed of resolution, avoidance of liabil- have recently looked upon borrower bankruptcies more favorably, in ity to third parties, obtaining clear title, and maximization of recov- part because Section 363(f) of the Bankruptcy Code gives the debtor ery—not only from the debtor but also from guarantors and other in possession or trustee in bankruptcy2 the power to sell its assets, for co-obligors. example a housing project, “free and clear of liens”—even over the Thus, the terms that the lender may concede in exchange for objection of junior creditors—after notice and an opportunity to be speed of resolution may include: heard is afforded to the interested parties.3 Until recently, this type of sale (commonly referred to as a 363 sale) was considered permis- Kenneth N. Russak is a shareholder in Frandzel Robins Bloom & Csato, L.C., in sible over the objection of junior lienors either before plan confirmation Los Angeles and practices bankruptcy, litigation, and commercial finance law.

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• The lender agrees to set aside a specified dol- have been met, the court will then call the auc- quickly in a bankruptcy case than in a state lar amount of the net sales proceeds—or to tion. It is not uncommon for overbidders to court lawsuit. Even if the lender or debtor is separately advance funds—to be used, per- appear and actively bid up the price, although forced to file a complaint for declaratory haps, 1) to pay the debtor’s legal fees and in the current real estate market, where bot- relief,17 in a declining market the bankruptcy other administrative expenses, 2) to secure the tom feeding still seems to be more the rule court may order a very brisk pretrial calen- recovery of a junior creditor if it later proves than the exception in most parts of the coun- dar and consolidation of the adversary trial the seniority of its lien, and 3) to pay some try, debtors and lenders should not count on with the hearing on plan confirmation, portion of the claims of the out-of-the-money overbidding.12 At some point, however, a because the lien priority dispute is likely to junior claimants. highest bid will be accepted and the court will materially affect plan confirmation. When • The lender agrees to credit-bid no less than approve the sale. faced with the alternative of a relatively quick a minimum negotiated minimum price—to In addition to the general standards for a adjudication of a weak claim, the trade cred- reduce deficiency obligations owed by the sale out of the ordinary course of business,13 itor may accept a compromised payment estate, by guarantors, or by other nondebtor when a debtor seeks to sell free and clear of early in the case, rather than face a lender co-obligors. liens pursuant to Section 363(f)(3), a focus on unwilling to make any concessions, if it is put • The lender agrees to stop bidding at a nego- value of the property is mandatory, because to the burden of litigating the issue and the tiated maximum amount if a competing cash a court can only authorize a sale over the delay of a plan confirmation battle. The flip bidder outbids the cap. objection of junior lien holders if it makes a side of that coin, of course, is that the stronger The usual nonbankruptcy concerns about finding that “the price at which such property the claim of loss of priority, the more likely collusive bidding are obviated in bankruptcy, is to be sold is greater than the aggregate the lender will be to make substantial con- because the entire process is disclosed in value of all liens on such property.”14 In cessions to the “junior” trade creditor, in advance to all parties in interest, expressly bankruptcy parlance, the aggregate value of order to manage the risk of losing at trial. approved by the bankruptcy court, and typ- the liens will be equal to the value of the col- Even if negotiations to compromise the ically conducted in a live auction in open lateral if the collateral is worth less than the lien priority battle fail, the sale may nonethe- court.8 Interested parties that were not invited aggregate amount of the claims secured by less be approved, if adequate protection can to participate during the negotiation will those liens. Those claims that have become be afforded to the trade creditor claiming have an opportunity to object to the 363 sale partially or wholly unsecured will be treated priority by the posting of a fund to stand as motion and thereby effectively demand a seat as secured only to the extent of the value of alternate security for the alleged priming at the negotiating table. Once the parties the collateral available to the particular cred- claim. The lender may not be willing to be the agree to the bankruptcy and nonbankruptcy itor, with the excess “deficiency” amounts stalking horse in the 363 sale under those cir- terms of the proposed transaction, they will being treated as unsecured claims.15 cumstances, but it is at least an available seek approval from the bankruptcy court of The service of a properly drafted motion option. In the end, if the parties are unable to not only the substance of the transaction but for an order authorizing a sale free and clear resolve the lien priority dispute, an adversary also the bid procedures. of liens will flush out any unasserted claims proceeding may be the only alternative As a substantive matter, even before the that the lender’s lien has suffered a loss of pri- (unless, of course, a title insurance company tests are considered, the debtor will be ority—whether the sale is a credit-bid or cash steps up and funds a settlement). The fun- required to prove 1) there is a sound business bid sale—because the sale motion will address damental point is that the 363 sale motion, reason for selling the asset, 2) the transaction whether and to what extent sale proceeds at a minimum, will identify and quantify the is proposed in good faith, 3) notice of the sale will be impounded with the liens transferred magnitude of lien priority risks much earlier has been adequate, and 4) the terms of the to the proceeds or paid to the senior lender. than may otherwise occur and may acceler- transaction are fair and reasonable.9 One of In a cash sale to a third-party purchaser, that ate resolution of disputed claims of priority. the key issues to be considered will be whether protection usually comes in the form of an As a result of these dynamics, before Clear the value of the asset is increasing or declin- order impounding sufficient sales proceeds to Channel, the preplan 363 sale of a defaulted ing.10 Sometimes the bid procedures are the stand as security for the trade creditor’s claim, construction project emerged as an effective subject of a separate motion, set for hearing should its loss of priority claim ultimately suc- strategy to identify, organize, address, and deal before the motion to approve the sale. Parties ceed. If the senior lender is the successful with holdout, out-of-the-money junior cred- can preview with the court matters such as the bidder, the court may require the senior lender itors. The process results in the identifica- break-up fee and overbid amounts11 and to pay a sufficient portion of the purchase tion and management of junior lien claims readjust their deal if the court refuses to price in cash to be held as alternate security seeking priority. If those claims are success- approve the procedures. Whether set for hear- to protect the putative senior trade creditor, fully managed, the process also results in the ing at the same time or sequentially, all the ele- should it prevail in the lien priority dispute. conveyance of title that has been blessed with ments of the sale will be subject to the Granted, the bankruptcy court will not adju- the imprimatur of an order for sale free and approval of the court, after notice and an dicate a lien priority dispute in the context of clear of liens. The title conveyed by foreclo- opportunity to be heard has been afforded to a 363 sale motion. The filing of an adversary sure should be the equivalent, but experi- all parties in interest. complaint for declaratory relief is the proper ence teaches that it often is not. If for no The auction is set concurrently with or procedure to seek a judicial resolution,16 if one reason other than the limits of title insur- shortly after the hearing on the motion for cannot be negotiated; but the sale motion ance, the foreclosing lender may well be con- authority to sell free and clear of liens under will at least identify potential lien claimants fronted with limits on its ability to convey Section 363, at which time the debtor in pos- asserting priority and give the parties an insurable, marketable title. An order direct- session, trustee, or purchaser submits evi- opportunity to negotiate a resolution. ing a sale free and clear of liens clearly is dence of value, either in the form of appraisal The holdout strategy may rear its head in superior. evidence or by testimony as to efforts to sell this context, but the risks to the trade credi- the project and the results of those efforts. tor holding a weak claim of priority are much A Ninth Circuit Challenge Assuming the bankruptcy court rules that greater in a bankruptcy proceeding, because The growing popularity of preplan 363 sales the requirements for granting the motion the dispute is likely to be resolved much more of distressed real estate has been at least tem-

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porarily derailed in the Ninth Circuit. Clear dollars elsewhere. It made that decision long that the deficiency dollars bid by the lender Channel holds that Section 363(f) did not before and is now is locked in a battle to get are essentially cost-free to the lender. Even if permit the secured creditor in that case to a return of as many of those dollars as pos- there are creditworthy guarantors or defen- credit bid its debt and purchase estate prop- sible. Whether it is a regulated lender such as dants, the costs, delays, and uncertainties of erty free and clear of valid, nonconsenting a bank or insurance company or an unregu- collection force the lender to discount the junior liens outside of a plan of reorganiza- lated lender managing its own or its investors’ face value of the deficiency claims. Depending tion.18 The decision appears to hold that this funds, it will be under significant pressure to on the facts of the particular case, the cost of type of sale, if it is to be authorized at all, is resolve its problem loans promptly and effi- bidding deficiency dollars may be somewhere only proper if part of a plan of reorganization ciently. between zero and the par amount of the defi- that has survived the time-consuming and Of at least equal significance, only some ciency, but unless at least one secondary expensive plan confirmation process.19 To of the dollars paid by the senior lender will source of recovery is the functional equivalent the extent binding on or persuasive to other be the functional equivalent of cash, because of pledged cash in the possession of the lender courts in the Ninth Circuit or elsewhere,20 the senior lender is not really paying any and not burdened by any stay, chances are a Clear Channel would appear to raise a sig- money at all. The successful lender pays the heavy discount of those deficiency dollars nificant hurdle for lenders and borrowers successful bid price by crediting the debt will be appropriate. seeking to use the 363 sale strategy to obtain owed to the lender, not by coming out of In Clear Channel, the construction lender a prompt resolution of a loan if the collateral pocket with actual cash. The dollars of debt was the first and only bidder. There is no is burdened by the claims of out-of-the-money first bid by the construction lender—up to the mention in the reported decision whether junior creditors. lender’s perception of the fair market value of evidence of the value of the project was The hurdle, however, may not be as daunt- the project—probably equate reasonably well offered at the sale hearing. That omission, plus ing as it may appear. The BAP first analyzed to the value of a like number of dollars of the obvious conclusion that an existing senior the 363 sale in Clear Channel under Section actual cash dollars bid by a true third-party secured lender is, by definition, not free from 363(f)(3), which authorizes a sale free and bidder. Once the bidding moves above the fair compulsion, makes the BAP’s analysis of clear of liens if the “price at which such prop- market value of the project, however, the Section 363(f)(3) of limited persuasive value erty is to be sold is greater than the aggregate value equivalence breaks down. Until then, if in future cases in which appropriate evidence value of all liens on such property”21 and the lender were to let a competing cash bid- is submitted regarding project value and defi- found it wanting because the credit-bid price der win the auction, the lender would be ciency amounts. It may well be that the trustee only equaled, but did not exceed, the value of leaving value behind. After the bidding and construction lender in Clear Channel its lien, because the lender’s credit-bid was the reaches the lender’s estimation of the cur- believed that the fair market value of the first and last bid at the auction. Embedded in rent fair market value of the collateral, the project was greater than the claim of the con- this conclusion is the assumption—appar- cost of bidding additional dollars—the cost struction lender or were motivated by tax or ently urged by the parties in the proceedings of bidding “deficiency dollars”—is measured other strategies to establish a high basis in the before the bankruptcy court—that a credit by the value to the lender of preserving the asset. Whatever unique goals may have moti- price “paid” by a senior lender is the value right to seek payment of the deficiency from vated their litigation strategy, there is no rea- equivalent of a cash price paid by a third-party alternate sources of recovery.23 If the proba- son that future litigants or future courts purchaser. That is an assumption that war- bility of collecting any deficiency is low, the should conclude that Clear Channel stands for rants closer examination. true cost to the construction lender of credit- the proposition that a credit bid price is a cash It can be taken as a given—indeed as a bidding “too much” is not the same as the equivalent indicator of fair value, as a mat- matter of definition—that the price paid by cost a cash bidder suffers if it were to pay too ter of law.24 Clear Channel should be limited an all cash, third-party bidder at an open much. A lender bidding deficiency dollars to the facts of that case, as presented in that and fair auction sale is the fair market value may be bidding with funny money, depend- case, and not for a dubious valuation propo- of the collateral. The Appraisal Institute ing on how it evaluates the prospect of col- sition that was neither disputed by the par- defines “market value” as “[t]he most prob- lecting the deficiency from secondary sources ties nor resolved by the BAP.25 able price, as of a specified date, in cash, or of collection. The BAP also rejected the argument that in terms equivalent to cash, or in other pre- The lender’s decision to bid too much, in the sale qualified under Section 363(f)(5); cisely revealed terms, for which the specified this context, will depend upon the lender’s the Clear Channel bankruptcy court appar- property rights should sell after reasonable assessment of the relative value of speedy ently found that, if the objecting party’s inter- exposure in a competitive market under all acquisition of title to the project, in com- est is a lien, the bankruptcy court need not conditions requisite to a fair sale, with the parison to the opportunity cost of giving up identify a proceeding in which the objecting buyer and seller each acting prudently, knowl- the lender’s alternate sources of recovery for creditor could be compelled to accept a money edgeably, and for self-interest, and assuming the deficiency. The lender will evaluate the payment in satisfaction of its interest, because that neither is under undue duress.”22 prospect of receiving a dividend from the a lien can always be satisfied by paying the However, the conclusion that a credit-bid estate on account of its deficiency claim, as value of the lien. The BAP reversed on this price is the dollar-for-dollar equivalent of well as the prospect of obtaining and col- point, holding that Subsection (f)(5) requires such a cash bid glosses over two key com- lecting a judgment from third parties, such as proof of the existence of a proceeding in a ponents of the value definition: 1) cash equiv- nondebtor co-obligors, guarantors, alter egos nonbankruptcy forum in which the objecting alency and 2) lack of undue duress. of the borrower, and, perhaps, others. After creditor could be compelled to accept less A lender holding an undersecured claim in assessing the existence and probabilities of col- than payment in full as a full satisfaction of a bankruptcy case is hardly a free actor lection from secondary sources, it is normal the lien (or other interest) and that the inter- regarding its investment decisions for the for a lender to see the advantage of reducing, pretive error led to the bankruptcy court’s fail- failed project. It has already disbursed money, if not giving up, its prospects of recovery ure to make a finding regarding the existence typically in the millions of dollars, to make from secondary sources, if there are any, in of such a proceeding.26 Thus, the case was or acquire the loan. It does not have the lux- exchange for ready access to its collateral. remanded to the bankruptcy court so that the ury of freely deciding to take its investment In this economic environment, it may be parties could present their respective posi-

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tions and obtain a ruling from the bank- right of redemption.36 Their liens do not reat- ruptcy court on the question whether such a tach even if the mortgagor exercises its statu- proceeding existed. tory right of redemption.37 After remand, the parties elected not to Would judicial foreclosure qualify under pursue the issue farther, so there are no sub- the BAP’s reading of Section 363(f)(5)? The sequent rulings of either the bankruptcy court statutory construction methodology employed or the BAP to shed light on the question by the BAP is elaborate, but can be summa- whether such a proceeding exists. This means rized as limiting qualifying nonbankruptcy the Clear Channel decision leaves the door proceedings to be those covered by an inter- wide open for subsequent litigants in new pretation that 1) is of a breadth that com- cases to attempt to identify nonbankruptcy plements the alternative tests specified in proceedings in which a junior lien holder Section 363(1)-(4), 2) does not overlap with could be compelled to accept a money satis- those tests, and 3) is consistent with con- faction of its interest in the collateral. gressional intent.38 Judicial foreclosure would appear to sat- Judicial Foreclosure isfy at least two, if not all three, of these Judicial foreclosure would seem to be the requirements. Certainly, judicial foreclosure procedure. Judicial foreclosure is a proceed- appears to be encompassed by a literal inter- ing in equity27 brought in a nonbankruptcy pretation of the plain text of the statute. forum (typically, a California Superior Court Judicial foreclosure undeniably is a proceed- for property located in California) by a holder ing by which the objecting junior lien holder of a mortgage or deed of trust28 against the could be forced to accept a monetary payment owner of the property and all parties claim- (which may be nil, depending on the net sales ing an interest in the property under the proceeds generated) in satisfaction and extin- owner (or its predecessor in interest), such as guishment of its lien. Judicial foreclosure holders of junior consensual and mechanic’s clearly complements the other four subsec- liens.29 If the plaintiff properly pleads its tions. It is an alternative, nonbankruptcy complaint and prevails at trial or summary method for selling free and clear of liens in sit- judgment, the Superior Court will issue a uations in which an auction would not gen- judgment of foreclosure and order for sale erate a price sufficient to pay an amount that will direct the sale under a writ of sale greater than the aggregate value of all liens, at public auction. The court, alternatively, and thus complements Section 363(f)(3). may order the receiver to sell the property. The As for the absence of overlap, it bears plaintiff is entitled to credit-bid up to the noting that, unlike all the general tests for a full amount of its claim against the mort- sale free and clear of liens, a lender’s right to gagor, as determined in the judgment of fore- obtain a decree of foreclosure and order for closure and order for sale.30 sale does not depend in any fashion on proof The judgment of foreclosure and order for that the property will be sold for fair market sale will determine the relative priority of all value. No doubt, the lender is given a strong lien claimants joined in the action. It will incentive to bid up to its perception of fair also direct the application of the net pro- market value, because the amount of its defi- ceeds of sale first to the plaintiff (assuming it ciency judgment will be determined in a post- has the highest priority), with any excess to sale fair value hearing—not the bid price—but be paid first to the junior lien holders in order the debtor will be able to redeem the prop- of their judicially determined priority and erty from the sale during the following year then, if any excess remains, to the mort- by paying only the bid price, not the judicially gagor.31 The sale extinguishes the plaintiff’s determined fair market value. That being lien and the liens of all junior lien holders who said, it is the lender’s absolute right to bid have properly been joined in the action.32 what it chooses at the sale, regardless of the Even junior lien holders omitted from the fair value of the project. In this sense, there lawsuit may have their liens extinguished in is uniqueness, not overlap, in an interpreta- a subsequent foreclosure action brought by tion of Section 363(f)(5) that relies on the judi- the successful bidder.33 cial foreclosure analog.39 If the judgment of foreclosure and order When Clear Channel was first handed for sale determines that no deficiency is avail- down, it created consternation among coun- able, the successful bidder will obtain a deed sel to creditors and debtors, as it seemed to of sale at the conclusion of the sale and pay- eliminate an emerging means to resolve prob- ment of the bid price.34 If redemption is per- lem real estate loans in an efficient, rational, mitted, the successful bidder will receive a cer- and organized manner. On reflection, how- tificate of sale upon payment, which will be ever, it seems that a preconfirmation sale free replaced by a deed of sale upon expiration of and clear of liens remains a viable option, in the applicable redemption period, if the prop- an appropriate case. On the value question, erty is not redeemed before that time.35 Junior Clear Channel should be limited to the par- lien holders do not have a postsale statutory ticular facts of that case, especially if the

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stalking horse bidder is a credit-bidding senior REAL ESTATE SERVICES ARBITRATOR AND MEDIATOR secured lender. Moreover, the BAP not only Is this your client... failed to address the judicial foreclosure ana- •In the entertainment or related log but also remanded the case to the bank- WALSHSTREET INC. industry? ruptcy court so that the parties could attempt •Prefers a solution to a dispute Let Us Handle the Real Estate rather than litigation? to identify and argue potentially qualifying While you Handle the Law •Willing to arbitrate or mediate the dispute, but wants a neutral nonbankruptcy proceedings. The door is, person who knows the industry thus, left open for parties to argue the judi- REAL ESTATE VALUATIONS and understands it? PROPERTY REHABILITATION • SALES cial foreclosure analog in other cases. Rumors LEASING • MANAGEMENT • BPO Dixon Q. Dern of the death of the 363 sale are greatly exag- gerated. ■ Appraisers – Realtors – Contractors 310.557.2244 www.dixlaw.com Over 25 years www.WalshStreet.net/Estate Arbitration and mediation experience for the entertainment 1 A junior lien of any variety can gain at least partial industry and other disputes. priority over a previously recorded deed of trust if, prior 323.936.9970 Experience + Knowledge = “DERN” good results! to foreclosure, the senior lender has made so-called optional advances (see Turner v. Lytton Sav. & Loan Ass’n, 242 Cal. App. 2d 457 (1966)) or has made certain modiﬁcations to the senior loan without the consent of junior lien claimants (see Lennar Northeast Partners v. Buice, 49 Cal. App. 4th 1576 (Cal. App. 3d Dist. 1996)). Additionally, mechanic’s liens may have statutory priority—even if the claim of lien is recorded after recordation of the construction deed of trust—if, among other things, the work of improvement com- menced before recordation of the deed of trust (CIV. CODE §3134) or if site improvement loans and liens are involved (CIV. CODE §3137). Even improperly asserted claims of priority can give junior lien claimants the power to impose signiﬁcant delay and, thus, give them leverage to extort payments from those holding interests that actually have value. (949) 388-0524 2 As a general proposition, a debtor in possession in a chapter 11 bankruptcy case has the powers of a trustee. www.dmv-law.pro 11 U.S.C. §1107. For the sake of simplicity, the term “trustee” in this article applies also to a debtor in possession if no trustee has been appointed in a chapter 11 case. 3 11 U.S.C. §363(f). 4 Clear Channel Outdoor, Inc. v. Knupfer (In re PW, LLC), 391 B.R. 25 (9th Cir. BAP 2008). 5 Usually the auctions are live, open auctions in which the bankruptcy judge acts as the auctioneer for an all cash sale. Occasionally, sealed bid auctions and partially deferred or noncash consideration may be approved if that is more likely to generate the best recovery. 6 The sale is advertised or otherwise marketed so that others interested in the property will have an opportunity to bid—and possibly bid higher than the opening bid of the stalking horse. The stalking horse will often insist upon 1) a break-up fee to be paid to the stalking horse if it is outbid at the auction, to com- pensate for the fees, expenses, and time it expended on preparing for the transaction, and 2) a minimum overbid amount in addition to the break-up fee, set high enough to give the stalking horse an advantage but not so high as to discourage competitive bidding. 7 11 U.S.C. §363(k) permits a lender to credit bid at a sale. 8 This is not to say that participants can conceal material arrangements or agreements affecting the sale from the Bankruptcy Court. Such concealment would likely be a felony under 28 U.S.C. §152(6). Bidding arrangements that may invalidate a sale outside of bankruptcy can be agreed to without jeopardy if fully disclosed to and approved in advance by the Bankruptcy Court in the context of a Section 363 sale. 9 See Law Debenture Trust Co. v. Calpine Corp. (In re Calpine Corp.), 356 B.R. 585, 594 (S.D. N.Y. 2007) (citing Official Comm. of Unsecured Creditors of LTV Aerospace and Def. Co. v. LTV Corp. (In re Chateaugay Corp.), 973 F. 2d 141, 143 (2d Cir. 1992); In re Lionel Corp., 722 F. 2d 1063, 1071 (1983), Official Comm. of Unsecured Creditors of Enron Corp. v. Enron Corp. (In re Enron Corp.), 335 B.R. 22, 27 (S.D. N.Y. 2005)).

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10 Id. cuit that cite the Bank of Maui decision state they are §675 at 99 (5th ed. 2008). 11 See note 6, supra. not bound by the BAP; the remainder state the contrary. 28 The remedy is not limited to holders of consensual 12 Overbidders sometimes appear even when the sale Those that deem themselves not bound nonetheless liens. Mechanic’s lien claimants can also bring lien is not set up for auction. characterize BAP decisions as highly persuasive. See, foreclosure actions. 44 CAL. JUR. 3D MECHANICS’ LIENS 13 See text and notes at note 14, infra. e.g., In re Akram, 259 B.R. 371 (Bankr. C.D. Ca. §§134 et seq.; CIV. CODE §3144. 14 11 U.S.C. §363(f). 2001); In re Enriquez, 244 B.R. 156 (Bankr. S.D. Ca. 29 CALIFORNIA MORTGAGE AND DEED OF TRUST PRACTICE 15 Cf. 11 U.S.C. §1111(b). 2000). §3.32 (3d ed. CEB 2000) [hereinafter CAL. MTG. & 16 Rule 7001(2) of the Federal Rules of Bankruptcy 21 11 U.S.C. §363(f)(3). DEED OF TRUST]. Procedure provide that a “proceeding to determine 22 APPRAISAL INSTITUTE, THE DICTIONARY OF REAL 30 Id. at §3.74. See also 55 CAL. JUR 3D, RECEIVERS §75 the validity, priority or extent of a lien” is an adver- ESTATE APPRAISAL (4th ed. 2002). (2004); CIV. CODE §568. sary proceeding. 23 Tax and accounting issues may also play a role in the 31 Id. at §3.77. 17 See SLW Capital, LLC v. Mansaray-Ruffin (In re lender’s bidding strategy, making comparison to the 32 Id. at §3.32; CODE CIV. PROC. §§729.010, 729.070, Mansaray-Ruffin), 530 F. 3d 230, 237 (3d Cir. Pa. prices paid by cash bidders all the more problematic. 706.020, 701.630. 2008) (Lien invalidation may be accomplished only 24 Traditional appraisal methodology requires an 33 CAL. MTG. & DEED OF TRUST, supra note 29, at through litigation in an adversary proceeding and not appraiser to adjust a financed purchase price to its all §3.33. The foreclosed deed of trust and the debt it through a provision in a plan.). cash equivalent when the financed transaction is used secured are deemed revived and held by the successful 18 Clear Channel Outdoor, Inc. v. Knupfer (In re PW, as a comparable sale in the valuation. See APPRAISAL bidder at the first sale, for the limited purpose of con- LLC), 391 B.R. 25 (9th Cir. BAP 2008). INSTITUTE, THE APPRAISAL OF REAL ESTATE 373-380 ducting a new sale at which the previously omitted 19 See id. (10th ed. 1992). junior lien holder can bid cash up to the amount of the 20 The BAP decision in Clear Channel has become 25 See id. The price paid by a successful bidder may previously foreclosed debt or suffer lien extinguishment. final. Even those bankruptcy courts in the Ninth Circuit exceed fair value if it is paying for a control premium 34 Id. at §3.78. that do not deem themselves bound by the BAP or other nonmarket value. 35 Id. at §3.79. nonetheless characterize BAP decisions as highly per- 26 Clear Channel Outdoor, Inc. v. Knupfer (In re PW, 36 Id. at §3.85. suasive. See Bank of Maui NA v. Estate Analysis, Inc., LLC), 391 B.R. 25, 45-47 (9th Cir. BAP 2008). The 37 Id. at §3.90. 904 F. 2d 470 (9th Cir. 1989) (stating, in dictum, that BAP ruled that the qualifying legal or equitable pro- 38 Clear Channel Outdoor, Inc. v. Knupfer (In re PW, BAP decisions are not binding on district courts, ceeding cannot include a cramdown under Section LLC), 391 B.R. 25, 37-39 (9th Cir. BAP 2008). acknowledging that the Ninth Circuit had not decided 1129(b) of the code, because that would either gut or 39 This is not to say that a bankruptcy court will allow whether BAP decisions were binding on bankruptcy render superfluous the protections afforded by the dis- the debtor to abandon its fiduciary duty to exercise rea- courts, and declining to decide the issue). See also closure and confirmation tests attending the plan con- sonable business judgment in negotiating a minimum Zimmer v. PSB Lending Corp., 313 F. 3d 1220 (9th Cir. firmation process. Id. The lower court’s interpreta- opening bid. It is merely to address the BAP’s require- 2002) (acknowledging, without resolving, the unsettled tion was rejected in part because it would render ment for an absence of overlap. Even if there were over- law in this area). Not surprisingly, the BAP has held that Subsection (3)’s requirement for payment in full super- lap, it is important to remember that “[s]urplusage its decisions are binding on the bankruptcy courts. In fluous and because it was inconsistent with the more does not always produce ambiguity and our preference re Windmill Farms, Inc., 70 Bankr. 618 (9th Cir. narrow requirements of a related provision in chapter for avoiding surplusage constructions is not absolute.” 1987). Approximately two-thirds of the published and 12 of the Bankruptcy Code. Id. at 44. Lamie v. United States Treasury, 540 U.S. 526, 535 unpublished decisions of bankruptcy courts in this cir- 27 5 B. WITKIN, CALIFORNIA PROCEDURE, PLEADING, (U.S. 2004).

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by Mara Berke PLANNED PARENTHOOD The acrimony of continued litigation over child custody arrangements can be alleviated through a parenting plan coordinator

A significant percentage of divorcing parents continue their con- given children’s need for stability and the negative impact of flicts over custody well after obtaining a judgment on custody parental conflict,6 parents should not only have a clearly defined and visitation.1 While this percentage declines over time, many so- parenting plan but also should avoid unnecessary tinkering with called high-conflict parents remain mired in adversarial litigation their time-sharing arrangements and the myriad other details for years after divorce.2 These parents utilize much of the court’s related to parenting. When changes are necessary, parents may con- resources and entangle their children in a process that makes them sult with mental health professionals, mediators, and attorneys to more likely to develop emotional and behavioral problems.3 work out the details and avoid litigation. In addition to the grave emotional costs, the financial burden However, if a return to court is necessary, parents can still try on the family can be ruinous, since these ongoing disputes incur to avoid a new, protracted struggle for custody. One avenue to extraordinary legal fees as well as the costs of custody evaluations, explore involves refocusing a request for a change in custody to a psychological testing, therapy, supervised visitation, and drug and change in visitation. Another method is to engage the assistance of alcohol monitoring. These conflicts also can result in loss in a parenting plan coordinator (formerly a special master). employment productivity due to emotional stress and the time An initial custody determination, which is based upon the required to attend and prepare for court hearings.4 child’s best interest, mandates the physical and legal custody of a Custody and visitation can be modified after the judgment as child and allocates custodial time between the parents.7 Parents may the needs of the children and parents change.5 Ironically, this abil- still be able to change this arrangement through modification pro- ity to modify custody or visitation orders can become a vehicle for additional battles for those parents inclined to prolong the litiga- Mara Berke is a family law attorney, social worker, and child advocate. She tion war. As children develop, the parenting plan approved by the is an associate at the Law Offices of Marshall S. Zolla, APC. Berke has spe- court may need to change accordingly. Thus some flexibility is ideal. cialized training by the Family Court Services of the Los Angeles Superior Court Indeed, case law allows for the modification of parenting plans. Still, in child custody mediation. KEN CORRAL

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ceedings.8 The general and oft-cited rule is that once the trial court the children’s residential timetable.25 The court held that “when par- has entered a final or permanent custody determination, modification ents have joint physical custody of their children, an order modify- of custody is appropriate only if the parent seeking modification ing the co-parenting residential arrangement does not constitute a demonstrates a “significant change in circumstances” so that a different change in custody.”26 Absent the change of custody, a showing of a custody arrangement would be in the child’s best interest.9 However, change of circumstances was not required.27 this change of circumstances rule does not apply when a parent is seek- In Enrique M. v. Angelina V.,28 a father sought additional time ing to change the time-share arrangement only, not physical cus- with his children after a final judicial custody determination. Relying tody,10 and does not apply when parents share joint custody.11 on Birnbaum, the appellate court reversed the trial court because it Careful reading of the developments in case law regarding mod- had applied the incorrect standard of proof: change of circum- ification of child custody arrangements reveals opportunities for stances.29 The father had requested a modification of visitation, not avoiding the stringent change of circumstances test. In In re Marriage a change in custody.30 Following Birnbaum, the appellate court held of Carney, the California Supreme Court placed extreme impor- that for a change in the custodial or visitation schedule, the applic- tance on existing custodial arrangements and held that parents seek- able standard of proof is the best interests test, not the change of cir- ing to change established parenting plans must establish a “persua- cumstances test.31 The court also noted that Birnbaum is echoed in sive” and “substantial” change of circumstances to warrant a In re Marriage of Burgess, in which the California Supreme Court modification of the existing parenting plan.12 The Carney court held observed that even if a parent could not establish a change of cir- that even with an initial custody determination, a child should not cumstances to justify a change in custody, the trial court had broad be removed from the de facto and long-term custody of one parent discretion to modify orders concerning contact and visitation.32 and given to the other unless the material facts and circumstances are In 2008, in In re Marriage of Lucio,33 the appellate court followed of “a kind to render it essential or expedient for the welfare of the the line of reasoning in Birnbaum34 and Enrique M.35 regarding the child that there be a change.”13 The rationale for this rule was the distinction between a change of custody and a change of parenting desire for litigation to cease and the undesirability of changing a child’s schedule. The Lucio court held that the change of circumstances established mode of living.14 rule does not apply to a modification request seeking only a change In Burchard v. Garay, the California Supreme Court narrowed the in the parenting or visitation schedule.36 application of the change-of-circumstances standard of proof, hold- The dissolution judgment awarded the mother sole physical cus- ing that it only applied if there is a prior judicial determination of custody of the children and granted the father monitored visits on tody.15 Under Burchard, a stipulated parenting plan—one that is Sundays.37 The father requested a change in the parenting and vis- not court imposed—did not qualify as a prior judicial determination, itation schedule to permit him unmonitored visits from Friday night and thus the change-of-circumstances standard of proof did not to Sunday night on alternate weeks.38 The trial court effectively denied apply.16 A decade later, in Montenegro v. Diaz, the supreme court revis- the father’s request because the father had not shown a change of ited the impact of stipulated custody plans and held that a stipulated circumstances. The appellate court reversed, concluding that the best custody order will be deemed a final adjudication if it expressly interests test governed because the father’s requested changes to states the parties’ intention for it to be the final determination of cus- the visitation schedule would not result in either an actual or a de tody.17 However, if the stipulation does not contain a “clear, affirmative facto change in custody.39 Furthermore, the requested alteration in indication” of the parties’ intent that it is their final custody agree- the visitation schedule would not have disrupted the established pat- ment, the change-of-circumstances standard of proof does not apply,18 terns of care and emotional bonds between the children and their and the party seeking a change of custody need only show that the mother and would not have destabilized the arrangement for sole change is in the best interests of the child.19 physical custody.40 Thus, the change of circumstances rule does not apply when a par- The Birnbaum Standard ent requests only a change in the parenting or visitation arrangement Separate from Carney and its progeny addressing a change of custody that is neither a change in custody nor disrupts the established pat- is a line of cases in which the courts changed only the custodial time terns of care.41 In such cases, the best interests test applies.42 allocation, not custody itself. This shift in focus brought a significant Arguably, most parents have joint physical or joint legal custody alteration in the applicable standard of proof. When a parent seeks orders. Though changes in the parenting plan may occur frequently, a change in the parenting schedule but does not seek to change the as noted in Burgess and Enrique M., modifications of time allocation physical custody arrangement (sole to joint and joint to sole), only can obviate time-consuming and costly custody litigation, which the best interests standard applies. Specifically, the parent need not may itself “be detrimental to the welfare of minor children because establish a change of circumstances. of the uncertainty, stress, and even ill will such litigation tends to gen- The first in this line of cases was In re Marriage of Birnbaum,20 erate.”43 Thus, parents should carefully consider the focus and intent in which a stipulated judgment awarded the parents joint legal and of their modification requests. physical custody of their three minor children, with the children living with the mother on weekdays and with the father on weekends Parenting Plan Coordinators and Wednesday afternoons during the school year.21 In modification In addition to more carefully tailoring requested modifications, par- proceedings based on the mother’s relocation to a different part of ents also can reduce conflict by considering a number of alternatives the county, the mother sought sole custody of the children and to limit to litigation. These include mediation, which is free through court con- the father’s visitation time to alternate weekends. The father responded ciliation services or at a cost with private mediators; collaborative fam- by seeking sole custody and reasonable visitation for the mother.22 ily law;44 coparent counseling and education courses;45 and parent- The trial court changed the custodial time, awarding the greater ing plan coordinators.46 time to the father, but denied all requests for a change in custody.23 The Association of Family and Conciliation Courts (AFCC) Task The court of appeal affirmed, holding that there had been no change Force on Parenting Coordination explains that “[p]arenting coordi- in custody because the parents continued to share joint legal and phys- nation is a child-focused alternative dispute resolution process in which ical custody.24 a mental health or legal professional with mediation training and expe- The appellate court reasoned that the change was only in the “co- rience assists high-conflict parents to implement their parenting plan parenting residential arrangement,” resulting in a rearrangement of by facilitating the resolution of their disputes in a timely manner, [by]

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educating parents about children’s needs, and, with prior approval In addition to setting forth the issues that will be within the scope of the parties and/or the court, [by] making decisions within the scope of the coordinator’s decision-making authority, the stipulation des- of the court order or appointment contract.”47 A parenting plan ignates each issue as a Level 1, 2, or 3 decision.58 Level 1 decisions coordinator is not the parties’ therapist but acts in “an ADR [alter- involve short-term practical matters and are typically time-sensitive, native dispute resolution] activity, a legal-psychological hybrid role.” such as holiday schedule changes or the interpretation or clarification The coordinator establishes “a strong, positive therapeutic and psy- of the parenting plan.59 Level 1 decisions are reviewed by the court cho-educational alliance” that focuses on the children’s best interests only if a parent files for a hearing within 30 days after entry of the and a reorganized family.48 Instead of litigating parenting issues and Notice of Decision.60 If a parent does not timely file for review, the having the courts act as “super-parents,”49 the parenting plan coordinator—a neutral who specializes in custody and visitation issues—takes the time to get to know the family and makes decisions quickly to resolve conflicts.50 A wide range of issues can lead to disputes in need of resolution, including psychother- apy, religion, summer camp choice, and even a child’s clothes or appearance. The AFCC provides the Model Standards and Guidelines for the parenting plan coordinator’s role, practice, and training as well as the Model Standards for Divorce Mediation.51 California has no statutory authority for appointing parenting plan coordinators or for their training. Absent an agreement by the parties, the court cannot appoint a coordinator. When the parties agree, California mandates that the appointment be by a written stipulation and order.52 Contractual arbitration law may be the right to challenge the coordinator’s decision is waived.61 If con- most applicable legal authority for appointment of a coordinator.53 tested, the court may reverse or modify a Level 1 decision if the chal- A sample Stipulation and Order Appointing Parenting Plan lenging parent shows that the decision exceeds the authority of the Coordinator has been developed by the Family Law Section of the Los coordinator, exceeds the jurisdiction of the court, or is erroneous as Angeles County Bar Association.54 The types of decisions set forth a matter of law, or proves by a preponderance of the evidence that in the stipulation include: the decision is not in the best interests of the child.62 1) The clarification of ambiguous or uncertain provisions in the Level 2 decisions typically have a long-term effect but do not court-ordered parenting plan. make major changes to the roles of parents as decision makers or 2) Establishing times, places, and conditions for exchanges of a child significantly change the percentage of time that the child is in each under a court-ordered parenting plan. parent’s home.63 Parents may designate Level 2 decisions as Level 3) Occasional changes to the visitation or parenting time schedule for 1 decisions.64 The same review process for Level 1 decisions applies holidays, vacations, or special days. to Level 2 decisions.65 4) Permanent changes, minor or significant, to the parenting schedule. Level 3 decisions involve major changes to the parenting plan. Only 5) Determining the child’s participation in school or extracurricular certain types of decisions are customarily designated as Level 3 deci- activities or programs. sions. These are decisions based upon a stipulation of the parents, or 6) Information exchanges between households. a court order made at a trial, or after a hearing on an order to show 7) Travel orders. cause, or a motion. If the parties do not stipulate to a resolution, the 8) Childcare decisions. parenting plan coordinator may make recommendations concerning 9) Medical decisions, including services for special needs children. Level 3 issues, but the coordinator cannot make any decisions or file 10) Choice of schools.55 and serve a Notice of Decision for Level 3 issues.66 The coordinator Parents must agree on the scope and authority of the appointment may make written recommendations to the court about a Level 3 deci- of a parenting plan coordinator. The agreement is set forth in the stip- sion after giving the parents a reasonable opportunity to state their ulation. The coordinator makes parenting decisions after consulting views.67 As set forth in the Association’s stipulation, a court must admit with the parents (and others, if needed) and gives the parents notice the findings and recommendations of the coordinator into evidence of his or her decisions. The coordinator typically sends a written as an expert opinion, subject to cross-examination. Hearsay objec- decision briefly explaining his or her recommendations and findings. tions are waived in the stipulation.68 This decision will then be formally submitted on a Judicial Council In determining what level of decisions to submit to the parenting form—a Notice of Decision—and submitted to the court for adoption plan coordinator in the stipulation, the parents should weigh the value as an order of the court. A party may contest the Notice of Decision of reduced conflict against the cost of continued litigation. To reduce within 30 days after the court’s entry of the Notice of Decision.56 A conflict, parents may choose to carefully confine the scope of the coor- party begins this process by filing an order to show cause.57 dinator’s authority to specific issues, make all of those issues Level 1

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decisions, and not contest the decisions even 10 Enrique M. v. Angelina V., 121 Cal. App. 4th 1371, if they disagree. If the coordinator assists the 1376 (2004); Lucio, 161 Cal. App. 4th at 1073. CHILD CUSTODY 11 See FAM. CODE §3087, which directs: “An order high-conflict parents with disengaging from MEDIATION for joint custody may be modified or terminated upon their ongoing battle, the parents have a the petition of one or both parents or on the court’s own “greater likelihood of succeeding and having motion if it is shown that the best interest of the child a positive impact on the children’s adjust- requires modification or termination of the order. If ment in these [reformulated] families.”69 The either parent opposes the modification or termination order, the court shall state in its decision the reasons goal of the parenting plan coordinator is to for modification or termination of the joint custody move parents away from adversarial litigation order.” See also In re Marriage of Burgess, 13 Cal. 4th into a relationship or process that establishes 25, 40, n.12 (1996) (The California Supreme Court new rules for coparenting, enables parallel “suggested that the change in circumstance rule does Mary Ann Aronsohn, LMFT parenting,70 creates more stability for the not apply when the parents have joint custody.”). 626.441.5131 parenting plan, allows greater exchange of Accord In re Marriage of LaMusga, 32 Cal. 4th 1072, 1089, nn.3, 12 (2004). 71 www.aronsohntherapy.com information between the parents, and moves 12 In re Marriage of Carney, 24 Cal. 3d 725, 730 quickly toward decisions in the child’s best (1979) (Appellate court reversed the trial court order interests.72 changing physical custody from the father, who had had Given the decision-making power of the sole de facto custody of his children for five years, to Custody Care, Inc. parenting plan coordinator, careful consid- the mother, who had had little contact with the children during those years. The trial court made its order FORENSIC & CLINICAL eration must be given to the choice of the after the father had suffered a severe injury, leaving him PSYCHOLOGY coordinator. A coordinator should have expe- paraplegic.). David J. Jimenez, ed.d. rience in drafting clear orders, resolving prob- 13 Id. LIC. # PSY 10629 lems, and understanding the needs of children. 14 Id. at 730-31. 15 SPECIALTIES IN: ‘Solution-Focused,’ The effects of sustained conflict on children Burchard v. Garay, 42 Cal. 3d 531, 534 (1986). The court explained that the change of circumstances rule ‘Full’, & ‘Move-Away’ child custody and on parents are demonstrably negative. A evaluation since 1991/Expert cannot apply: Testimony/Criminal and Dependency decision by a parenting plan coordinator may It requires that one identify a prior custody Court Matters/Sexual Abuse/DV be the best outcome for everyone, even if the decision based upon circumstances then exist- Child pornography & the INTERNET decision contains some disappointing ele- ing which rendered that decision in the best interest of the child. The court can then inquire BILINGUAL/SPANISH ments for both parents. Parents in conflict can act in the best interests of their children and whether alleged new circumstances represent 310.766.7500 • [email protected] a significant change from preexisting circum- www.custodycareinc.com themselves by avoiding custody litigation and stances, requiring a reevaluation of the child’s stipulating to a parenting plan coordinator. custody. Here there is no prior determina- Alternatively, parents can narrowly focus tion; no preexisting circumstances to be com- their requests for additional time with their pared to new circumstances. The trial court has – EXPERT WITNESS – children as a modification for visitation and no alternative but to look at all the circumstances bearing upon the best interests of the not seek a modification for custody. ■ CONSTRUCTION child. 16 Id. at. 534-35. 41 YEARS 1 JANET R. JOHNSTON & LINDA CAMPBELL, IMPASSES OF 17 Montenegro v. Diaz, 26 Cal. 4th 249, 258 (2001). DIVORCE: THE DYNAMICS AND RESOLUTION OF FAMILY 18 Id. CONSTRUCTION EXPERIENCE CONFLICT (1999). See also JANET R. JOHNSTON & 19 Id. See also FAM. CODE §3111, which defines chil- VIVIENNE ROSEBY, IN THE NAME OF THE CHILD (1997); dren’s “best interests.” 20 SPECIALTIES: Matthew J. Sullivan, Coparenting and the Parenting In re Marriage of Birnbaum, 211 Cal. App. 3d 1508, Lawsuit Preparation/Residential Coordination Process, 5.5 J. CHILD CUSTODY 4, 5 1510-11 (1989). 21 Construction, Single and Multi-family, (2008). Id. Hillside Construction, Foundations, 2 ELEANOR E. MACCOBY & ROBERT H. MNOOKIN, 22 Id. at 1511, 1513. Vibration Trespass, Concrete, Floors, Tile, DIVIDING THE CHILD: SOCIAL AND LEGAL DILEMMAS OF 23 Id. at 1512. Stone, Retaining Walls, Waterproofing, CUSTODY 270 (1992). See also Mary A. Duryee, 24 Id. at 1510, 1513. Water Damages, Roofing, Sheet Metal, Expected Controversies of Divorce, J. CENTER FOR 25 Id. at 1513. Carpentry/Rough Framing, Stairs, FAM., CHILD. & CTS. 149, 153 (2003). 26 Id. at 1510. Materials/Costs, Building Codes, 3 JOHNSTON & ROSEBY, supra note 1, at 22; Lynn R. 27 Id. at 1513. Construction Contracts. Greenberg et al., Effective Intervention with High- 28 Enrique M. v. Angelina V., 121 Cal. App. 4th 1371, Conflict Families, J. CENTER FOR FAM., CHILD. & CTS. 1376 (2004). CIVIL EXPERIENCE: 49, 50 (2003); Melissa J. Schoffer, Bringing Children 29 Id. at 1379-80. Construction defect cases for insurance to the Mediation Table: Defining Child’s Best Interest 30 Id. at 1376, 1382. companies and attorneys since 1992 in Divorce Mediation, 43(2) FAM. CT. REV. 323, 325- 31 Id. at 1382. 27 (2005). 32 Id. at 1380-81 (citing In re Marriage of Burgess, 13 4 Id. Cal. 4th 25, 40, n.12 (1996)). COOK 5 FAM. CODE §3022. 33 In re Marriage of Lucio, 161 Cal. App. 4th 1068 CONSTRUCTION COMPANY 6 Burchard v. Garay, 42 Cal. 3d 531, 534 (1986). See (2008). STEPHEN M. COOK also Mary A. Duryee, supra note 2; Mara Q. Berke, In 34 In re Marriage of Birnbaum, 211 Cal. App. 3d 1508, California Contractors License B431852 re Marriage of Birnbaum: Modifying Child Custody 1510-11 (1989). Nevada Contractors License B0070588 Arrangements by Ignoring the Rules of the Game, 24 35 Enrique M., 121 Cal. App. 4th at 1376. OY EV 36 Lucio, 161 Cal. App. 4th at 1077. Graduate study in Construction L . L. R . 2 (1991) (discussing case law and psy- 37 L.A. Business College, 1972 chological literature). Id. at 1073. 7 FAM. CODE §§3011, 3020, 3022, 3040. 38 Id. at 1073-74, 1080. 8 39 Tel: 818-438-4535 Fax: 818-595-0028 FAM. CODE §§3022, 3027. See also Berke, supra note Id. at 1080. 40 Id. Email: [email protected] 6. 9 In re Marriage of Brown & Yana, 37 Cal. 4th 947, 41 Id. at 1072, 1077, 1080. 7131 Owensmouth Avenue, Canoga Park, CA 91303 956 (2006); In re Marriage of Lucio, 161 Cal. App. 4th 42 Id. 1068, 1073 (2008). 43 In re Marriage of Burgess, 13 Cal. 4th 25, 40 (1996);

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Enrique M. v. Angelina A., 121 Cal. App. 4th 1371, 1380-81 (2004). 44 For more information, see Los Angeles Collaborative Law Association: http://www.lacfla.org. See also FORENSIC International Academy of Collaborative Professionals, http://www.collaborativepractice.com. A collabora- APPRAISALS tive practice or collaborative divorce (also called no- court divorce) offers divorcing couples the support, pro- Our appraisals have tection, and guidance of lawyers working with child and been reporting financial specialists, divorce coaches, and other professionals with the expectation that the case will not go “Truth About Value to court. Since 1979” 45 See Los Angeles Superior Court, http://www for Family Law & .lasuperiorcourt.org/familylaw/pdfs/referrallistforparents .pdf, for a list of parent education courses. Estate Planning 46 Sullivan, supra note 1. 47 Foreword, Guidelines for Parenting Coordination Developed by the AFCC Task Force on Parenting Coordination, 44(1) FAM. CT. REV. 164, 165 (2006). 48 Karl Kirkland & Matthew Sullivan, Parenting Coordination (PC) Practice: A Survey of Experienced Professionals, 46(4) FAM. CT. REV. 622, 633 (2008). 49 In re Marriage of Birnbaum, 211 Cal. App. 3d 1508, 1518 (1989). 50 The parenting plan coordinator is useful for 1) “parents with severe personality disorders who become locked in immutable impasses and are chronically litigating”; 2) parents “where there is less character pathology but great difficulty making important mutual and timely decisions” (regarding, for example, infants and young children who require reworking of the par- Toll-Free 888.222.8999 enting plan due to their “rapidly changing develop- mental needs” or special needs); and 3) abusive parents Calmarketvalues.com or intermittently mentally ill parents who require monitoring. JOHNSTON & ROSEBY, supra note 1, at 246. 51 See Association of Family and Conciliation Courts, 30th Anniversary http:// www.afccnet.org. — 1979-2009 — 52 See CAL. CONST. art VI, §1; In re Marriage of Olson, 14 Cal. App. 4th 1, 3 (1993); Ruisi v. Thieriot, 53 Cal. App. 4th 1197 (1997) (court cannot be divested of its judicial power); FAM. CODE §3160; EVID. CODE §730; CODE CIV. PROC. §§1280 et seq. (authority for parties’ agreement). See also Christine A. Coates, Parenting DepoSums Coordination for High-Conflict Families, 41 FAM. CT. REV. 1, 3 , 6 (2004). 53 Leslie Ellen Shear, In Search of Statutory Authority DEPOSITION SUMMARIES for Parenting Coordinator Orders in California: Using a Grass-roots, Hybrid Model Without an Enabling ➤ Experienced ➤ 3-step proof-reading ➤ E-mailed direct to Statute, 5 J. CHILD CUSTODY 88, 94-95 (2008); see summarizers process your computer CODE CIV. PROC. §§1280 et seq. Shear notes that contractual arbitration has the advantage of offering statutory civil immunity under Code of Civil Procedure Los Angeles’ Finest Digesting Service §1280.1 and common law civil immunity. Although Evidence Code §703.5 bars testimony by the arbitrator, the Los Angeles County Bar Association’s parenting FOR MORE INFORMATION: plan coordinator stipulation (see text and notes, infra) expressly allows the admissibility into evidence of the 800.789.DEPO • www.deposums.biz written findings and recommendations of the coordinator as expert opinion testimony subject to the right of cross-examination. In the stipulation, the parents waive both the right to object to the coordinator’s report as being hearsay and the right to object to the hearsay statements contained therein, but they retain the right to attack the weight, sufficiency, and reliability of the evidence. The stipulation preserves the jurisdiction of the family court to review and reverse decisions of the coordinator, which may help insulate the orders adopting the coordinator’s decisions against reversal. Shear at 96. 54 Sample stipulation, Los Angeles County Bar Associ- ation, http://www.lacba.org/Files/Main%20Folder /Sections/Family%20law/Files/PPC-1Stipulation2007 .pdf. See also PHILLIP STAHL, PARENTING AFTER DIVORCE: A GUIDE TO RESOLVING CONFLICTS AND MEETING YOUR CHILDREN’S NEEDS (2003). 55 Other issues for inclusion in the stipulation for a par-

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enting plan coordinator include: special education services, parent education and counseling, psychological testing of parents and children, appointment of minor’s “Industry Specialists For Over 22 Years” counsel, permanent modification of legal custody or tWitkin & Eisinger we specialize in the Non-Judicial decision-making authority, supervised visitation, and AForeclosure of obligations secured by real property parent participation in alcohol or drug testing or mon- or real and personal property (mixed collateral). itoring. When your client needs a foreclosure done profession- 56 See Parenting Plan Coordination Stipulation, ally and at the lowest possible cost, please call us at: Special Needs Coordinator, available at http://www .specialneedscoordinator.com/docs/PPC1Stipulation2007 .pdf; see also the Los Angeles County Bar Association’s sample stipulation, supra note 54. Since parents are stipulating to the appointment of the parenting plan coordinator, the coordinator does not violate the mandate that judicial officers cannot delegate decision-making authority on child custody issues. The Association’s stipulation includes language that the court retains jurisdiction to review decisions of the coordinator and all other issues related to the parenting plan. 57 The Los Angeles County Bar Association’s sample stipulation, supra note 54. It is important that a par- Seeking an Experienced Arbitrator/Mediator? enting plan coordinator submit the Notice of Decision and provide the parents’ with a conformed copy of the Notice. In practice, some coordinators do not follow these rules, so parents should carefully choose a coor- STEVEN RICHARD SAUER, ESQ. dinator who knows the rules and follows the COUNSELOR AT LAW • SINCE 1974 Association of Family and Conciliation Court guidelines. “He is truly a master in his art.” 58 The Los Angeles County Bar Association’s sample stipulation, supra note 54. 6,000 59 Id. Settled over 5,000 Federal and State Litigated Cases 60 Id. The stipulation refers to the time in which a parent may contest the Notice of Decision as com- 323.933.6833 TELEPHONE ■ [email protected] E-MAIL mencing from the date of “entry of the order.” Parties may seek to clarify this as the date when the order is 4929 WILSHIRE BOULEVARD, SUITE 740, LOS ANGELES, CALIFORNIA 90010 filed by the court. They may even wish to change the time period so that it begins when they are given notice by facsimile, mail, or whatever method the parties specifically and clearly identify. 61 The Los Angeles County Bar Association’s sample stipulation, supra note 54. 62 Id. 63 Id. 64 Id. Level 1 decisions involve rapid communication between the coordinator and the parents. In Level 2 decisions, the coordinator must provide the parents with JACK TRIMARCO & ASSOCIATES opportunities to state their views and provide information before the coordinator makes a decision. POLYGRAPH/INVESTIGATIONS, INC. 65 The Los Angeles County Bar Association’s sample stipulation, supra note 54. 66 Id. Level 3 decisions include: relocation of the child, travel to countries that are not signatories to the Hague Convention on the Civil Aspects of International Child Abduction, major medical decisions, school selection, 9454 Wilshire Blvd. counseling, participation in custody evaluations for modification of the custody plan, or permanent mod- Sixth Floor ification of legal custody. 67 Id. Beverly Hills, CA 90212 68 Id. 69 Sullivan, supra note 1, at 4, 11. TEL 310.247.2637 70 “Parallel parenting” is a term for parenting in which the parents have little or no interaction with each other. In this circumstance, the parenting plan should FAX 805.984.7042 be written in detail, with no loopholes subject to inter- Jack Trimarco - President email: [email protected] pretation. The parents do not engage in flexible sched- Former Polygraph Unit Chief www.jacktrimarco.com uling and work independently for their child’s best Los Angeles F.B.I. (1990-1998) interests. Both households function independently. Id. See also STAHL, supra note 54. # CA. P.I. 20970 71 “E-mail communication can be monitored by the Parenting Plan Coordinator, either by copying the Member Society of Former Special Agents Former Polygraph Inspection Team Leader Coordinator on the e-mail or by e-mailing the Federal Bureau of Investigation Office of Counter Intelligence Coordinator for editing before the e-mail is sent to the U.S. Department of Energy other parent, or by using the Coordinator as an inter- mediary for forwarding the e-mail to the other parent.” Sullivan, supra note 1, at 4-24, 18. 72 Id. at 12.

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MCLE ARTICLE AND SELF-ASSESSMENT TEST By reading this article and answering the accompanying test questions, you can earn one MCLE legal ethics credit. To apply for credit, please follow the instructions on the test answer sheet on page 25.

2008 EthicsRoundup The punishment of several prominent members of the bar in 2008 offers a reminder to all attorneys of the duties owed to clients

was a year of great ciates had filed suit to enforce a $489.4 mil- highs and lows in legal lion Nicaraguan court judgment against two 2008 ethics. Venerable Cali- nonparties based on false and incomplete fornia law firms were not immune from the col- translations of the foreign court records, lapse of the economy, as 118-year-old Heller ghost-written expert declarations, and mis- Ehrman and 84-year-old Thelen voted to dis- leading briefs, and recommended sanctions.4 solve and other firms announced mergers, After Judge Tashima made his findings, the defections, layoffs, delayed employment starts, Ninth Circuit Court of Appeals opened a cancellations of bonuses, and salary freezes.1 disciplinary matter and appointed Hastings Moreover, prominent lawyers were pun- College of Law Professor Rory Little as an ished for serious misconduct. Convicted of independent prosecutor. conspiring to wiretap his client Kirk Beleaguered U.S. District Judge Manuel Kerkorian’s former wife, Terry Christensen Real was removed from five cases in 2008 by was sentenced to three years in prison and the Ninth Circuit, the Federal Circuit, and the fined $250,000 by U.S. District Judge Dale U.S. Supreme Court.5 However, the Ninth Fischer, who excoriated Christensen for “deliberately, repeatedly and happily vio- John W. Amberg is a partner in the Los Angeles lat[ing] the law” and failing to show remorse.2 office of Bryan Cave LLP, and Jon L. Rewinski is a U.S. District Judge John Walter sentenced partner in the Los Angeles office of Locke Lord Melvyn Weiss, cofounder of the class action Bissell & Liddell LLP. Both are former chairs and cur- by John W. Amberg law firm Milberg Weiss, to 30 months in rent members of the Los Angeles County Bar prison and ordered him to forfeit $9.75 mil- Association’s Professional Responsibility and and Jon L. Rewinski lion and pay a $250,000 fine for secretly Ethics Committee. Rewinski is a member of the paying class representatives.3 Judge Wallace State Bar of California’s Committee on Professional Tashima, sitting as a special master, found that Responsibility and Conduct, of which Amberg is a Thomas Girardi, Walter Lack, and their asso- former chair.

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Circuit’s judicial council dismissed misconduct failed to pay class members for overtime in pany and his brother, alleging that his brother charges against Judge Real that were based on accordance with applicable law. The law firm had mismanaged the business, wasted cor- 38 cases. The council failed to find “clear representing the plaintiffs also represented porate assets, used company assets to buy real and convincing evidence of willfulness…” the Writers Guild of America in unrelated estate for himself, and improperly ran him out under court rules.6 matters. The guild wanted to unionize real- of the business. He asserted claims for declara- The State Bar’s Board of Governors voted ity TV employees and set up the meetings tory relief, breach of fiduciary duty, wrong- to support a new rule of professional conduct, between its lawyers and the employees that ful termination, and dissolution. overcoming resistance that had doomed the led to the lawsuit. The guild also agreed to pay With a conflict waiver in hand, a lawyer proposal in 2007. If approved by the Cal- the legal fees and costs incurred in the class attempted to represent both defendants—the ifornia Supreme Court, the new rule would action. majority-owning brother and the company. require lawyers in private practice to dis- Arguing that the plaintiffs and the guild Indeed, as a practical matter, to communicate close whether they carry professional liabil- had conflicting interests, the producers moved with the company, the lawyer had to com- ity insurance to new clients in nonemergency to disqualify the plaintiffs’ law firm. The municate with the majority-owning brother. engagements lasting longer than four hours.7 court denied the motion but ordered the law Arguing that the interests of his brother and The State Bar also approved a proposal by its firm to erect an ethical screen that would the company were in conflict and that the con- Office of Chief Trial Counsel to post pend- preclude communications about the class flict could not be waived, the minority-owning disciplinary charges on a member’s per- action between the lawyers handling the class ing brother moved to disqualify the defen- sonal profile page on the State Bar’s Web action and the lawyers handling the guild’s dants’ lawyer. Although the trial court denied site.8 matters, with an exception for the issue of fees the motion, the Fourth District Court of The heated national debate over the pro- and costs, because the guild had agreed to pay Appeal issued a writ, ordering the trial court priety of ethical screens when lawyers switch them. The Second District Court of Appeal to grant the motion. private firms was fought to a draw when the affirmed. In cases involving concurrent representa- American Bar Association’s House of The trial court found that the Writers tion of clients with actual or potential con- Delegates voted 192 to 191 to postpone indef- Guild and the plaintiffs did not have conflicting interests, the primary concern is the initely the consideration of an amendment to flicting interests within the meaning of Rule duty of loyalty that the lawyer owes to each the ABA’s Model Rules of Professional 3-310 of the Rules of Professional Conduct. client.17 The appellate court reasoned that Conduct that would have permitted ethical The court of appeal declined to review this even though the plaintiff had not asserted a screens.9 Meanwhile, California still lacks a finding because it concluded that the guild and derivative claim, his allegations of waste and definitive rule or state supreme court decision the plaintiffs had signed consents waiving mismanagement created an actual conflict on the subject. any actual or potential conflicts and, therefore, that prevented a single lawyer from satisfy- The U.S. Department of Justice announced it was unnecessary to decide whether there ing a duty of loyalty to both the company and new guidelines regarding the cooperation of was a conflict. The Rules of Professional the majority owner. For example, if the plain- corporate defendants with federal prosecutors. Conduct do not specifically address conflict tiff established that his brother had used cor- Under the guidelines, credit for the coopera- waivers in the context of a class action,13 porate assets to buy real estate for himself, his tion will not depend on the corporation’s and neither the California Supreme Court brother would owe money to the company. waiver of the attorney-client privilege or the nor a California court of appeal had done so An actual conflict between the interests of the protection for attorney work product.10 The in a published case before Sharp. two defendants precluded one lawyer from Justice Department acted under pressure from In Sharp, the Second District held that jointly representing them. the legal profession and the business com- the law firm was not required to obtain con- In another matter, Justice Arthur Gilbert, munity as well as from Congress, which had flict waivers from all putative class members. writing for the Second District Court of threatened legislation to protect the attor- It only needed to obtain waivers from the Appeal, continued his tradition of deciding ney-client privilege and attorney work prod- named plaintiffs and the guild.14 The court of attorney misconduct cases without reference uct. Moreover, the department was respond- appeal reasoned that because the class had not to the Rules of Professional Conduct or the ing to the dismissal by the Second Circuit yet been certified, unnamed members of the State Bar Act. The appellate court affirmed Court of Appeals of charges against 13 for- putative class were not parties. Obtaining judgment against an attorney, Eddie B. mer partners and employees of KPMG as a consent from all putative class members Jamison, for malpractice, breach of fiduciary sanction for the government’s pressure on would have been impractical, and requiring duty, and financial abuse of an elder in Wood the accounting firm to terminate payment of all putative members to sign conflict waivers v. Jamison.18 The attorney simultaneously their legal fees.11 would have, in effect, created an inappropriate represented a 78-year-old woman and an opt-in class action. Further, if there are con- imposter claiming to be the woman’s nephew. Conflicts of Interest flict-of-interest issues, the ability of a named During the representation he helped procure With continuing lawyer mobility and law plaintiff to represent class members ade- a $250,000 loan at 18.41 percent interest firm consolidation, it is no surprise that con- quately would be sufficiently vetted through for his elderly client, secured by her house, so flicts of interest continue to be a hot topic. The the class certification process.15 she could invest in the phony nephew’s night fundamental principles set forth in Rule 3-310 In Gong v. RFG Oil, Inc.,16 the Fourth club. The lawyer received $14,000 from the of the Rules of Professional Conduct have not District Court of Appeal considered a motion loan proceeds, which he did not disclose. changed. During 2008, the Second and Fourth to disqualify defense counsel because of a The woman defaulted on the first install- District Courts of Appeal had occasion to ana- conflict arising in litigation over the man- ment. After she died, the lender moved to fore- lyze them in published opinions. agement of a closely held corporation. Two close on her home, and the executor of her In Sharp v. Next Entertainment, Inc.,12 the brothers owned all the defendant corpora- estate sued the lawyer. defendants—producers of reality television tion’s stock—one held 51 percent, the other, The appalled appellate court rejected a programs—moved to disqualify the lawyers 49 percent. The majority owner managed document—which the lawyer claimed he representing the named plaintiffs in a puta- the business. After a dispute arose between the received seven months after the trial from tive class action alleging that the defendants brothers, the minority owner sued the com- an anonymous source—in which his deceased

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MCLE Test No. 179 MCLE Answer Sheet #179 2008 ETHICS ROUNDUP

The Los Angeles County Bar Association certiﬁes that this activity has been approved for Minimum Continuing Legal Education legal ethics credit by the State Bar of California in the amount of 1 hour. Name Law Firm/Organization

1. The fundamental rules governing conflicts of inter- 11. A lawyer may not communicate with a party that the est are set forth in Rule 3-310 of the California Rules of lawyer knows to be represented by another lawyer Address Professional Conduct. without the consent of the other lawyer. City True. True. State/Zip False. False. E-mail 2. A lawyer must obtain informed written consent to a 12. A lawyer may not communicate directly with a party Phone conflict of interest from all members of a class, not who has filed a lawsuit in propria persona if the party State Bar # just the representative plaintiffs. is being assisted by an attorney who is not of record. True. True. INSTRUCTIONS FOR OBTAINING MCLE CREDITS False. False. 1. Study the MCLE article in this issue. 2. Answer the test questions opposite by marking 3. When the interests of a closely held corporation 13. A settlement agreement procured in violation of Rule the appropriate boxes below. Each question and its controlling shareholder conflict, the corporation 2-100 of the Rules of Professional Conduct is void, has only one answer. Photocopies of this and the shareholder cannot waive the conflict to per- even if the complaining party will not repay the settle- answer sheet may be submitted; however, this mit one lawyer to represent them both. ment funds. form should not be enlarged or reduced. True. True. 3. Mail the answer sheet and the $15 testing fee False. False. ($20 for non-LACBA members) to: Los Angeles Lawyer 4. When a trial court’s denial of a motion to recuse a 14. A lawyer continues to owe fiduciary duties to a MCLE Test prosecutor is supported by the record, the court of client after the lawyer is sued for malpractice. P.O. Box 55020 appeal should accord deference to the ruling. True. Los Angeles, CA 90055 True. False. Make checks payable to Los Angeles Lawyer. False. 4. Within six weeks, Los Angeles Lawyer will 15. A court can punish misconduct by an out-of-state return your test with the correct answers, a 5. By making arguments that other parties also support, lawyer by revoking the lawyer’s pro hac vice admission. rationale for the correct answers, and a a lawyer does not assume the representation of those True. certificate verifying the MCLE credit you earned through this self-assessment activity. parties. False. True. 5. For future reference, please retain the MCLE test materials returned to you. False. 16. It is unethical for a lawyer to take the default of a party known to be represented by counsel without giv- ANSWERS 6. In a business transaction with a client, a lawyer ing advance notice. Mark your answers to the test by checking the owes no fiduciary duty to his or her client so long as the True. appropriate boxes below. Each question has only lawyer complies with Rule 3-300 of the Rules of Profes- False. one answer. sional Conduct. True. 17. The State Bar’s Ethics Hotline is a source of legal 1. ■ True ■ False False. advice, not just a research service. 2. ■ True ■ False True. ■ ■ 7. The commission of an act of moral turpitude, dis- False. 3. True False honesty, or corruption will subject a lawyer to disbar- 4. ■ True ■ False ment or suspension. 18. Rule 2-200 of the Rules of Professional Conduct gov- 5. ■ True ■ False True. erns fee-splitting arrangements. 6. ■ True ■ False False. True. ■ ■ False. 7. True False 8. Rule 3-300 of the Rules of Professional Conduct 8. ■ True ■ False applies to charging liens in hourly fee cases. 19. If a contingency fee agreement complies with 9. ■ True ■ False True. Business and Professions Code Section 6147, an amend- 10. ■ True ■ False False. ment to the agreement does not need to meet the re- 11. ■ True ■ False quirements of the statute. 9. If a party has waived the attorney-client privilege by True. 12. ■ True ■ False freely producing documents to one party, it cannot False. 13. ■ True ■ False assert the privilege against another party seeking the 14. ■ True ■ False same documents. 20. A lawyer can recover fees on a quantum meruit the- 15. ■ True ■ False True. ory if the fee agreement with the client did not comply ■ ■ False. with Rule 2-200 of the Rules of Professional Conduct. 16. True False True. 17. ■ True ■ False 10. There is no waiver of the attorney-client privilege False. 18. ■ True ■ False if production of the privileged documents was coerced. 19. ■ True ■ False True. ■ ■ False. 20. True False

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client supposedly acknowledged that the ecutor may have gone too far. Disseminating disclosure of confidential documents, lawyer did not represent her in the loan trans- confidential criminal records, such as police and we certainly are not situated to do action. The court chastised the lawyer for reports and probation reports, is unlawful and so here. If it did result in such a dis- failing to disclose his conflict of interest to his may constitute a misdemeanor.24 The movie closure, sanctions are available, as are client, thereby “bring[ing] financial harm to vilified Hollywood. After he was caught, authorities whose function it is to pur- his client, institutional harm to his profession, Hollywood moved to recuse the deputy dis- sue those sanctions.31 and catastrophic harm to himself.”19 trict attorney. For these and other similar situations, the However, the court ignored Rule 3-310 of the In both Haraguchi and Hollywood, the district attorney’s office has the authority to Rules of Professional Conduct, in which trial courts denied the recusal motions, and investigate and prosecute illegal conduct, and informed written consent, not just disclo- the appellate courts reversed. In Haraguchi, the State Bar has the authority to investigate sure, is required. Moreover, under the cir- the appellate court reasoned that the prose- and prosecute unethical conduct. cumstances, not even consent would have cutor’s “views of the justice system, as Last year the supreme court also had an cured the conflict. reflected in her novel, were so one-sided as to opportunity to consider whether a prosecu- raise a reasonable possibility she would not tor’s advocacy of a victim’s rights may create Motions to Recuse Prosecutors exercise her discretion even-handedly, and a conflict of interest requiring recusal. In In criminal prosecutions, Penal Code Section her interest in promoting her book presented People v. Superior Court (Humberto S.),32 the 1424 authorizes the court under certain cir- a conflict so great it was unlikely that the prosecutor filed a motion to quash a defense cumstances to recuse a prosecutor because of defendant could receive a fair trial.”25 In subpoena for the victim’s medical and psy- a conflict. During 2008, the California Hollywood, the appellate court commented chotherapy records. When the motion was not Supreme Court issued three significant opin- that “[i]n this case of first impression, we granted, the prosecutor filed a writ petition ions on motions to recuse prosecutors pur- should not give our imprimatur to [the pros- with the court of appeal and moved for the suant to Section 1424. In two of them, ecutor’s] conduct or embolden other prose- appointment of a guardian ad litem for the Haraguchi v. Superior Court20 and Holly- cutors to assist the media in the public vilifi- victim. With these actions, had the prosecu- wood v. Superior Court,21 the court consid- cation of a defendant in a case which is yet tor undertaken the representation of the vic- ered the extent to which prosecutors may to be tried.”26 tim? No, the supreme court concluded, and risk recusal by engaging in extracurricular However, in both cases, the California therefore the trial court had abused its dis- activities. Supreme Court reversed, because the appel- cretion in recusing the prosecutor because Haraguchi22 involved a deputy district late courts failed to accord sufficient deference of a conflict. By making arguments that oth- attorney who routinely prosecuted defen- to the trial court findings.27 In Haraguchi, the ers also support, “the prosecution does dants accused of committing rape. The attor- supreme court noted that although there was not…assume representation of those third ney was the author of a novel titled Intox- sufficient evidence in the record upon which parties any more than an amicus curiae whose icating Agent, an account of the rape of an a trial court could have found that the novel interests align with a party represents that intoxicated person. The novel features the created a reasonable possibility that the party by submitting arguments that support efforts of the heroine—an intrepid deputy deputy district attorney would have handled its position.”33 The court noted, however, district attorney modeled on the author—to the defendant’s prosecution differently, the that “the persistent, bad faith use of litigation bring the rapist to justice. Three months trial court found otherwise—and its findings tactics lawful in and of themselves might in before the novel was published, the defendant also were supported by the record.28 Accord- some circumstances evidence an underlying in Haraguchi was charged with raping an ing to the court, “That a prosecutor may conflict that renders a fair trial unlikely and intoxicated victim. Claiming similarities pursue an independent writing career does not warrants recusal.…”34 between himself and his case and the char- alone create a conflict with the public inter- acters and events depicted in Intoxicating est and disqualify her from future prosecu- Business Transactions with a Client Agent, the defendant moved to recuse the tions, absent proof her writings create a mate- Rule 3-300 of the Rules of Professional deputy district attorney pursuant to Section rial conflict in a particular case.”29 Conduct, “Avoiding Interests Adverse to the 1424. He argued that his prosecution by the In Hollywood, the court noted that Client,” has long been a trap for lawyers deputy district attorney could be swayed by “[c]ertainly, a case might arise in which a who confuse their role as a professional her interest in generating publicity for herself trial court could order recusal based on the adviser to their clients with the role of busi- and her novel and thus he would be pre- prosecution’s attempt to manipulate the ness partner. The rule prohibits a member of cluded from receiving a fair trial. prospective jury pool by disseminating inflam- the bar from entering into a business trans- In Hollywood,23 another deputy district matory portrayals of the defendant.”30 But action with a client or “knowingly acquir[ing] attorney from the same office prosecuted substantial evidence supported the trial court’s an ownership, possessory, security, or other defendant Jesse James Hollywood on charges findings that the deputy district attorney pecuniary interest adverse to a client” unless of kidnapping and first degree murder of a 15- wanted to facilitate Hollywood’s capture and 1) the terms are fair and reasonable to the year-old boy. The motive for the crimes portray his character as accurately as possi- client, 2) the client has been advised in writ- appeared to be the bungling by the victim’s ble. Still, the court had stern words for the ing of the terms and of the right to seek older brother of a drug deal. While prosecutor: advice from an independent lawyer, and has Hollywood was on the lam, the deputy dis- This is not to say that [the prosecutor] been given an opportunity to do so, and 3) the trict attorney helped filmmaker Nick should escape censure. We find his client consents in writing. Even when a trans- Cassavetes make Alpha Dog, a movie based acknowledged actions in turning over action is not governed by the rule, however, on the crimes. The prosecutor gave the film- his case files without so much as an lawyers must meet fiduciary duties to their maker a copy of his trial notebook, tran- attempt to screen them for confidential clients, as the State Bar Court ruled in an scripts of testimony from the previous trials, information highly inappropriate and unpublished decision, In the Matter of contact information for witnesses, police disturbing. The trial court made no Clifford Lee Casey.35 reports, probation reports, and other mate- findings as to whether this omission in In that case, an 80-year-old woman rials. In his zeal for justice, however, the pros- fact resulted in the illegal or unethical retained attorney Casey to file an unlawful

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detainer action when the woman’s tenants fell tingent fees from the multimillion-dollar set- have been performed by a non-attorney.”40 behind in their rent of a Palm Springs con- tlement through an interpleader action. Faced This ﬁnding trivializes the importance of dominium. Casey’s client continued to expe- with fees totaling 48.5 percent of the recov- a lawyer’s factual investigation. Moreover, rience problems managing the condominium, ery, the client sought to evade payment by it suggests that whenever a court decides in so Casey arranged for her to sign a grant arguing that the lawyers had violated Rule 3- hindsight that a particular task could have deed conveying the property to two new 300. They did so, according to the client, by been performed by a nonlawyer, the client owners—a company he represented and his acquiring attorney’s liens on the proceeds should lose the protection of the privilege minor son. The client remained liable on the without complying with the disclosure and and the work product doctrine. deed of trust, which was not canceled or consent requirements of the rule. The First The superior court ruled that Costco had The defendant paid a signiﬁcant sum in settlement that the plaintiff did not want to give back. The plaintiff wanted “to both keep the money and maintain the war.” If the plaintiff had returned the settlement proceeds, no doubt a more appropriate remedy would have been to void the settlement agreement.

reconveyed to her, and never received a District Court of Appeal rejected this argu- not waived the privilege but nevertheless promised $500 reimbursement for taxes she ment, noting that while the California ordered the redacted letter to be produced. had paid. Supreme Court had applied Rule 3-300 to Costco petitioned for a writ of mandate. The The client sued Casey, incurring legal fees charging liens in hourly fee cases in Fletcher court of appeal denied Costco’s petition on the of at least $67,000, and won a judgment of v. Davis,37 it had not done so for contingent narrow ground that the petitioner had not met $1 but not legal possession of the condo- fee cases, and even if the liens were unen- its burden to show that release of the redacted minium. The State Bar filed disciplinary forceable, the underlying fee agreements letter would cause irreparable harm, mini- charges against Casey and, after a hearing, the remained valid and enforceable.38 mizing the concern that once a privileged judge recommended three years’ probation. communication is disclosed, the privilege is Casey appealed, and the three-judge review Attorney-Client Privilege and Work lost. The appellate court stated that the trial panel concluded that the lawyer did not vio- Product court had used the D.I. Chadbourne, Inc.41 late Rule 3-300 because he had not acquired In a case now on review by the supreme factors to determine if the lawyer’s commu- a pecuniary or financial interest in his cli- court, the Second District Court of Appeal nications with company employees were priv- ent’s property since he was neither a party to denied a petition for extraordinary relief by ileged. But the superior court never reviewed the transaction nor a third-party beneficiary. a client who sought to prevent production of the redacted document, and the appellate However, the court concluded Casey had sig- an opinion letter from its lawyers. In Costco court offered its own conclusion that the nificantly harmed his financially and emo- Wholesale Corporation v. Superior Court,39 unredacted parts did not reveal the lawyer’s tionally vulnerable client and was guilty of a purported wage and hour class action, the mental processes or impressions and con- moral turpitude under Business and Profes- plaintiffs moved to compel production of a tained information available elsewhere.42 The sions Code Section 6106. The court reached 22-page opinion letter prepared at Costco’s question remains: Why not require the plain- this result because Casey had 1) failed to request by its outside employment counsel at tiffs to obtain the discovery they seek from a inform his client that she would no longer Sheppard Mullin. The opinion letter reflected nonprivileged source? The supreme court has have any interest in the condominium but the lawyer’s factual investigation, including granted review.43 would remain on the deed of trust and would interviews of company employees, as well as In a case of first impression in California, continue to receive the tax bills, 2) failed the lawyer’s legal research and expertise the Fourth District Court of Appeal held that adequately to document the transaction, and regarding wage and hour law. Costco asserted a trial court did not abuse its discretion when 3) had a conflict of interest due to his divided the protection of the attorney-client privi- it denied a motion to compel production of loyalties to her, his corporate client, and his lege and work product doctrine for the letter. attorney-client privileged documents in a civil son. The panel was particularly troubled by In response, the plaintiffs argued that the let- antitrust case, despite the fact that the hold- Casey’s insensitive assertion, in his opening ter was discoverable because Costco had ers of the privilege previously had produced brief, that “it is nice to protect little old waived the privilege by placing its knowl- the same documents to the federal govern- ladies, but it is very common that many peo- edge and expectations regarding the man- ment. In The Regents of the University of ple use the age of the client as a ploy to win agerial tasks performed by employees at California v. Superior Court,44 the plaintiffs lawsuits.” In a second pyrrhic victory for the issue—and this was based on its counsel’s sued a group of energy suppliers, alleging long-suffering client, the panel recommended input. they unlawfully inflated the retail price of actual suspension for Casey in addition to Over Costco’s objection, the superior natural gas in California between 1999 and probation, though no restitution was required court ordered the company to produce the let- 2002. The defendants were also the subject beyond the $500 tax payment. ter for in camera inspection by a discovery ref- of an investigation by a federal Corporate A challenge to lawyers’ compensation eree. The referee redacted the letter to remove Fraud Task Force composed of the U.S. based on an alleged violation of Rule 3-300 those parts she believed were protected by the Department of Justice, the Federal Energy was rejected in Shopoff & Cavallo LLP v. privilege or work product doctrine and con- Regulatory Commission, the Commodity Fu- Hyon.36 After lengthy litigation involving cluded that the remaining content was tures Trading Commission, and the Securities five successive teams of lawyers for the pre- obtained by the lawyer “in her role as fact- and Exchange Commission. At the time, it vailing plaintiff, the lawyers sought their con- finder rather than attorney, a role that could was the Justice Department’s policy to con-

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sider a corporation’s willingness to waive the to recognize her as such and to treat her a very effective system for disciplining and attorney-client privilege when determining accordingly.”50 With respect to ethical bound- deterring attorney misconduct….”56 whether it would indict. All the defendants aries, the court noted that “a bright line test waived the privilege and produced docu- is essential. As a practical matter, an attorney Lawyers Behaving Badly ments in response to government subpoenas. must be able to determine beforehand Attorney Anthony Pagkas was sued for mal- The plaintiffs moved to compel production whether particular conduct is permissible; practice after a default judgment of $730,466 of the same documents. They relied on otherwise, an attorney would be uncertain was rendered against his client, Mumbert, McKesson HBOC, Inc. v. Superior Court45— whether the rules had been violated until…he by the plaintiff, Styles. When Mumbert which held that when a holder of the privi- or she is disqualified.”51 appealed the judgment in Styles v. Mumbert,57 lege waives it with respect to one party, the A party in a case is either represented by Pagkas displayed the kind of initiative that holder cannot assert the privilege against counsel or not. If the party is not represented, had been sadly lacking in his representation others—and Evidence Code Section 912(a), opposing counsel may communicate directly of his former client and bought Styles’s rights which provides that a privilege is waived “if with him or her without violating Rule 2-100. to the judgment for an undisclosed sum. He any holder, without coercion, has disclosed a In Myerchin v. Family Benefits, Inc.52 then sought leave of court to substitute him- significant part of the communication….” and United States v. Carona,53 courts con- self as respondent in the appeal “to offset any The superior court denied the motion, and the cluded that lawyers violated Rule 2-100. In [future malpractice] award against him.”58 appellate court affirmed, finding that the Myerchin, the defendant’s lawyer, who had The Sixth District Court of Appeal denied the defendants had produced the documents to known the plaintiff for many years, left a motion, holding that as Mumbert’s former the government because they believed there voicemail message for the plaintiff after the lawyer, Pagkas continued to owe his client would be severe regulatory or criminal con- plaintiff filed his lawsuit. In it, the lawyer fiduciary duties, including a duty of confi- sequences if they were labeled as uncooper- said, “I am trying to help you and your dentiality. The appellate court rejected ative by the government.46 Therefore, accord- attorney doesn’t know what he is doing and Pagkas’s argument that he was entitled to ing to the appellate court, no waiver occurred is just ripping you off and will just run up a reveal confidences to defend himself because under Section 912(a) because the production big bill…Your only chance to settle is to it distinguished between the malpractice of the privileged documents was coerced by deal with me.”54 The plaintiff then signed a action and the case in which the lawyer was the federal government’s policies.47 settlement proposal that the defendant’s seeking to step into the position of Mumbert’s lawyer sent to him without consulting with adversary. Unimpressed by Pagkas’s ingenu- Contact with a Represented Party his own lawyer. ity, the court held that Pagkas had “violated Rule 2-100 of the Rules of Professional In Carona, while a grand jury was inves- a myriad of ethical duties” by buying an Conduct provides that when a lawyer repre- tigating possible corruption within the Orange interest in the judgment against his former sents a client, the lawyer may not communi- County Sheriff’s Office, a government lawyer client and sanctioned both Pagkas and his cate directly or indirectly about the subject of wired one of the target defendant’s cronies, lawyer for making a mockery of the Rules of the representation with a party the lawyer armed him with phony subpoena documents Professional Conduct.59 The court ordered knows to be represented in the matter by intended to trick the target defendant into Styles, who had sold her interest and failed to another lawyer, unless the client’s lawyer has believing that the crony was about to testify file a respondent’s brief, to show cause why the consent of the other party’s lawyer.48 before the grand jury, and sent him to talk her default should not be entered, setting up What happens when a litigant appearing in with the target defendant with the hope of a potential new claim against Pagkas.60 propria persona uses shadow counsel? What soliciting evidence to support a charge of In Sheller v. Superior Court,61 a Texas should be done if a lawyer violates Rule 2- obstruction of justice. The government lawyer lawyer admitted pro hac vice as lead counsel 100? How does Rule 2-100 affect criminal knew at the time that the target defendant was in a class action against Farmers New World investigations? Courts addressed these issues represented by counsel. Life Insurance Company and Farmers Group, during 2008. Not surprisingly, the courts in Myerchin Inc., was sanctioned by the Los Angeles In McMillan v. Shadow Ridge at Oak and Carona found that the lawyers violated Superior Court when he sent out an adver- Park Homeowner’s Association,49 the plain- Rule 2-100. Indeed, the courts wrestled tising flyer to 350 policyholders, seeking addi- tiff for a time pursued her claims in propria more with the appropriate remedy for the tional class representatives. The flyer stated persona with the assistance of a lawyer who violations. falsely that “Farmers may have given you wrote a letter to defense counsel stating that In Myerchin, the Fourth District Court of misleading information about this lawsuit” he would defend depositions that had been Appeal agreed with the trial court that and that if a policyholder was accepted as a scheduled. When defense counsel contacted notwithstanding the ethical violation, the set- class representative, “you are paid for your the plaintiff directly to give notice of his tlement agreement was still enforceable. This time in an amount set by the judge.”62 After intent to file an ex parte application to com- is not a surprising result given the circum- the lawyer’s explanations proved contradic- pel the depositions of the plaintiff’s expert wit- stances. The defendant paid a significant sum tory and inadequate, he was formally repri- nesses, the plaintiff moved to disqualify in settlement that the plaintiff did not want to manded and ordered to pay Farmer’s attor- defense counsel for violating Rule 2-100. give back. The plaintiff wanted “to both keep ney’s fees of $95,009. Writing for the Second The Second District Court of Appeal held the money and maintain the war.”55 If the District Court of Appeal, Justice H. Walter that the trial court did not abuse its discretion plaintiff had returned the settlement proceeds, Croskey agreed that the flyer was “com- in denying the motion. The court stated that no doubt a more appropriate remedy would pletely false” but held that the superior court the plaintiff “has every right to be assisted by have been to void the settlement agreement. lacked authority to impose the sanctions, an attorney not of record, but neither she In Carona, U.S. District Court Judge which were vacated. However, because a nor the assisting attorney could unilaterally Andrew Guilford denied a defense motion to court has the inherent power to revoke an limit the ability of opposing counsel to con- suppress the tape-recorded statements. In attorney’s pro hac vice admission, the appel- fer with the attorney of record. As [the plain- doing so, the judge ruled that “the harm late court remanded the case for further pro- tiff] was at all times relevant the attorney of caused by suppression is too high a price to ceedings.63 record, [opposing counsel] was duty bound pay” and “[t]he State Bar of California has The First District Court of Appeal set

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aside a default judgment as an abuse of dis- Weil and Brown’s treatise66 and the California the public availability of the trade secret cretion in Fasuyi v. Permatex, Inc.64 Three Attorney Guidelines of Civility and information. Taking this step, she argued, weeks before the statute of limitations Professionalism: “An attorney should not showed her good faith. The appellate court expired, the plaintiff filed a personal injury take the default of an opposing party known concluded, however, that Mendoza did not action. Despite being provided with the to be represented by counsel without giving discuss with the person at the Ethics Hotline address of the agent for the defendant, the party advance notice.”67 that she was subject to a protective order, Permatex, by the legal department of the par- Lawyer Joanna Mendoza and her clients which she was bound to obey, and this sup- ent company of Permatex for service of were jointly and severally sanctioned $43,678 ported the conclusion that she had acted in process, the plaintiff’s lawyer, Robert J. Hooy, for violating a protective order by disclosing bad faith. Moreover, as the court noted, the did not serve the lawsuit until after the time trade secret information to third parties. In Ethics Hotline is a confidential research ser- set forth in the California Rules of Court Wallis v. PHL Associates, Inc.,68 an attorney vice, “not a source of legal advice.”69 and the issuance of the case management for the opposing parties filed a declaration order by the superior court. The complaint with 800 pages of attached trade secret doc- Getting Paid was forwarded to the defendant’s insurer, uments. Although the declaration plainly Several legal authorities govern fee agree- but it failed to file a responsive pleading. stated that it was filed under seal and was sent ments. Business and Professions Code Section Without further notice to Permatex or its to the court in a sealed envelope, the docu- 6148 sets forth certain requirements for most parent, the plaintiff’s lawyer filed a request for ments appeared in a court file available to the noncontingency fee agreements.70 Business default and, 13 days later, obtained a default public. Learning of the public availability of and Professions Code Sections 6146, 6147, judgment for $236,500. Within days, the trade secret documents, Mendoza and 6147.5 contain requirements applicable Permatex learned of the judgment and asked arranged for her clients and third parties to to most contingency fee agreements. Rule 2- Hooy voluntarily to set it aside, but he copy them. After being sanctioned, they 200 of the California Rules of Professional refused. Permatex filed a motion for relief appealed. The Third District Court of Appeal Conduct applies to agreements between from default, but it was denied in a four- affirmed, holding that their argument that the lawyers to split fees. In 2008, courts ana- word order. The court of appeal reversed, appearance of the documents in the court lyzed these authorities and reinforced the noting that there was no lack of coopera- file allowed them to disclose the trade secrets general principle that lawyers who fail to tion from the defense side: “No deception. No was frivolous, and their disclosure of the comply with applicable rules risk some or all duplicitousness. No stonewalling. No eva- information was in bad faith. of their fees. sion. No disregard of any warning. In fact, no In her defense, Mendoza claimed that she In Stroud v. Tunzi,71 the Second District warning.”65 It concluded that the plaintiff’s had spoken to someone at the State Bar’s Court of Appeal held that a lawyer may not counsel had an ethical obligation to warn Ethics Hotline, who advised her that her enforce the terms of an amendment to a con- Permatex before he took the default, quoting paramount duty was to tell her clients about tingency fee agreement unless the amend-

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ment satisfies all the requirements of Section tiff had devoted to the case, the plaintiff the fee-splitting agreement. The lawyer receiv- 6147.72 This is true even if the original agree- received nothing. She sued the clients and ing the lower award sued but without success. ment fully complied with Section 6147. her former cocounsel. The trial court sus- In affirming a dismissal of the lawsuit on Applying Section 6147 to the original agree- tained the former clients’ demurrer to her demurrer, the Fourth District Court of Appeal ment only “would too easily allow an attor- complaint, and the Fourth District Court of wrote, “We are not persuaded to protect [the ney to frustrate the statute’s purpose.”73 Appeal affirmed: “It makes no sense to allow lawyer’s] interest in the fee splitting agreement Rule 2-200 of the Professional Rules of an attorney whose only connection to the at the expense of the…class members.”79 Conduct provides that without full disclosure client is through an unenforceable fee-shar- Experience comes at a price. and client consent, a lawyer may not split a ing agreement to recover fees directly from When a client disputes a fee, the client has fee with a lawyer who is not part of the same that client. [The plaintiff’s] recourse is against the option to force his or her lawyer to arbi- firm. In 2008, in a matter of first impres- [the other lawyer].”76 trate the fee dispute through a local bar asso- sion, the Fourth District Court of Appeal Other rules may also apply, as illustrated ciation pursuant to the Mandatory Fee concluded in Strong v. Beydoun74 that a in Mark v. Spencer.77 Two lawyers and their Arbitration Act (MFAA).80 Under the MFAA, lawyer could not even assert a quantum client agreed in writing that all fees awarded the fee award becomes final if neither party meruit claim against a client because the fee by the court to the lawyers for prosecuting a rejects it and requests a trial de novo within agreement failed to comply with Rule 2-200. class action with their client as the class rep- 30 days after the mailing of the appropriate In Strong, the plaintiff, a lawyer, entered resentative would be evenly split between statutory notice of the award.81 In Perez v. into a written fee-splitting agreement on a them. The agreement complied with Rule 2- Grajales,82 a client was awarded $124,000 contingent fee case with another lawyer. The 200, but the lawyers failed to disclose the against her lawyer after an MFAA arbitration. plaintiff agreed to assist the other lawyer in agreement to the court when they moved to The lawyer filed a lawsuit challenging the prosecuting a case on behalf of two clients. approve the class action settlement, as award and requested a trial de novo within After the other lawyer promised the plaintiff required by California Rule of Court 30 days, but ultimately his action was dis- that he would get the clients’ signatures on the 3.769(b).78 Based on their fee declarations, the missed for failure to prosecute. fee-splitting agreement, the plaintiff began to court handling the class action awarded What effect did the involuntary dismissal work on the matter. The clients never signed $401,000 in fees to one lawyer and $76,000 have on the lawyer’s challenge to the MFAA the agreement. As a result, the fee-splitting to the other. The one receiving the lower award? Analyzing this issue of first impres- agreement violated Rule 2-200.75 After about amount of fees did not know about Rule of sion, the Sixth District Court of Appeal con- a year, the other lawyer terminated the plain- Court 3.769(b) and deferred to his cocoun- cluded that the involuntary dismissal con- tiff’s services. Thereafter, the clients settled, sel, who was more experienced in class action stituted a repudiation of the lawyer’s challenge and the other lawyer collected the contingency litigation. What price did he pay for his lack to the award, thereby empowering the client fee. Notwithstanding the work that the plain- of experience? His cocounsel refused to honor to petition to confirm the award—even

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HR 3/31/09

30 Los Angeles Lawyer March 2009 March2009_Master.qxp 2/12/09 10:45 AM Page 31

though the client’s cross-complaint also had been dismissed for failure to prosecute. The court noted that “[a]llowing a party to avoid the adverse consequences of an MFAA arbitration award by failing to prosecute the case to a de novo trial would ‘produce[] absurd consequences and promote[] mischievous lawyering.’”83 Once an MFAA award in favor of a client becomes final, it behooves the lawyer to pay it. In fact, as illustrated in Chandler v. State Bar,84 if a lawyer fails to satisfy a final monetary award in favor of a client under the MFAA, the State Bar can initiate proceedings before the State Bar Court to place the lawyer on inactive status. Chandler also illustrates that lawyers cannot object properly to an MFAA award by simply filing a lawsuit seeking the reasonable value of their services. Lawyers must specifically object to the award and request a trial de novo.

Revision of the Rules of Professional Conduct The Commission on the Revision of the Rules of Professional Conduct continued its multi- year task of revising California’s ethics rules by publishing new rules for public comment. It also held regular meetings around the state and will continue to do so in 2009. The public is invited to attend.85 ■

1 A Year of Uncertainty, L.A. DAILY J., Dec. 31, 2008, at 1. 2 Lawyer Gets 3 Years in Wiretap Case, L.A. TIMES, Nov. 25, 2008, at B3. 3 Milberg Weiss Co-Founder Sentenced to 2-1/2 Years for Kickback Schemes, 24 Laws. Man. on Prof. Conduct (ABA/BNA) 295 (June 11, 2008). 4 In re Girardi, Ninth Circuit Ct. of App. Case No. 08- 80090; Independent Prosecutor Will Investigate Whether Lawyers Prolonged Frivolous Appeal, 24 Laws. Man. on Prof. Conduct (ABA/BNA) 327 (June 25, 2008); Franco v. Dow Chem. Co., Thomas V. Girardi, et al. Respondents, Ninth Circuit Ct. of App. Case No. 03-57038, “Report and Recommendation of The Special Master” (ﬁled Mar. 21, 2008). 5 Controversial Judge Splits Bar, NATIONAL L. J., Aug. 11, 2008; Supreme Court Weighs In on the Conduct of Judge Real, L.A. DAILY J., July 28, 2008. 6 In re Complaint of Judicial Misconduct, Ninth Circuit Ct. of App. Case No. 07-89000 (Dec. 12, 2008). 7 Calif. Bar Votes to Require Client Disclosure on Malpractice Insurance, http://www.Law.com (May 20, 2008). 8 Calif. Bar OKs Posting Discipline Charges Online, http://www.Law.com (July 14, 2008). 9 ABA Stands Pat on Lateral Lawyer Rules, ABA J., Aug. 12, 2008. 10 Principles of Federal Prosecution of Business Organizations, U.S. ATTORNEYS MANUAL tit. 9, ch. 9- 28.000 (2008). 11 DOJ Backs Off Privilege Waiver Policy, L.A. DAILY J., Aug. 29, 2008; United States v. Stein, 541 F. 3d 130 (2d Cir. 2008). 12 Sharp v. Next Entm’t, Inc., 163 Cal. App. 4th 410 (2008). In January 2009 the parties reached a settlement in which the defendants agree to pay the plaintiffs more than $1.5 million to resolve their claims of unpaid overtime. See http://www.law.com/jsp/nlj/PubArticleNLJ

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.jsp?id=1202427636790. 13 Sharp, 163 Cal. App. 4th at 433. 14 Id. at 431-32, 433. 15 Id. at 432-33. 16 Gong v. RFG Oil, Inc., 166 Cal. App. 4th 209 (2008). 17 Id. at 214. 18 Wood v. Jamison, 167 Cal. App. 4th 156 (2008). 19 Id. at 158. 20 Haraguchi v. Superior Court, 43 Cal. 4th 706 (2008). 21 Hollywood v. Superior Court, 43 Cal. 4th 721 (2008). 22 Haraguchi, 43 Cal. 4th 706. 23 Hollywood, 43 Cal. 4th 721. 24 See, e.g., PENAL CODE §§1203.5, 11105, 11140- Dan F. Oakes 11144. Bernadette M. Duran 25 Haraguchi, 43 Cal. 4th at 711. 26 Hollywood, 43 Cal. 4th at 727. 27 Haraguchi, 43 Cal. 4th at 711; Hollywood, 43 Cal. 4th at 725. 28 Haraguchi, 43 Cal. 4th at 717. 29 Id. 30 Hollywood, 43 Cal. 4th at 732. 31 Id. at 735. 32 People v. Superior Court (Humberto S.), 43 Cal. 4th It’s More than Just a Referral 737 (2008). 33 Id. at 752. It’s Your Reputation 34 Id. at 747. 35 In the Matter of Clifford Lee Casey, Review Dep’t of State Bar Ct. Case No. 04-O-11237 (Dec. 4, 2008). Make the Right Choice 36 Shopoff & Cavallo LLP v. Hyon, 167 Cal. App. 4th 1489 (2008). 37 Fletcher v. Davis, 33 Cal. 4th 61 (2004). Personal Injury • Products Liability 38 Shopoff, 167 Cal. App. 4th at 1522-23. 39 Costco Wholesale Corp. v. Superior Court, 161 Cal. Medical Malpractice • Insurance Bad Faith App. 4th 488, review granted, 186 P. 3d 392 (Cal. 2008). 40 Id. at 498. Referral Fees per State Bar Rules 41 D. I. Chadbourne, Inc. v. Superior Court, 60 Cal. 2d 723 (1964). 42 Costco, 161 Cal. App. 4th at 506-07. www.cdrb-law.com 43 Costco, 186 P. 3d 392. 44 The Regents of the Univ. of Cal. v. Superior Court, 310.277.4857 165 Cal. App. 4th 672 (2008). 45 McKesson HBOC, Inc., v. Superior Court, 115 Cal. App. 4th 1229 (2004). The More You Know About Us, 46 Regents, 165 Cal. App. 4th at 677-78. 47 Id. at 683-84. The Better Choice You Will Make 48 CAL. RULES OF PROF’L CONDUCT R. 2-100(A). 49 McMillan v. Shadow Ridge at Oak Park Home- owner’s Ass’n, 165 Cal. App. 4th 960 (2008). 50 Id. at 965. 51 Id. at 966. 52 Myerchin v. Family Beneﬁts, Inc., 162 Cal. App. 4th 1526 (2008). 53 United States v. Carona, Case No. SA CR 06-224 AG (C.D. Cal. May 2, 2008) (unpublished). On January 16, 2009, former Orange County Sheriff Michael S. Carona was convicted of one count of witness tampering and acquitted on ﬁve counts of conspiracy, mail fraud, and witness tampering. See http://www.latimes.com/news /local/orange/la-mecarona17009jan17,0,1853488.story. 54 Myerchin, 162 Cal. App. 4th at 1531. 55 Id. at 1533. 56 See also McMillan, 165 Cal. App. 4th at 968 (“The court’s goal is not to impose a penalty, as the propri- ety of punishment for violation of the Rules of Professional Conduct is a matter within the purview of the State Bar, not of a court presiding over the affected case. Instead, what the court must do is focus on the appropriate remedy for whatever improper effect the 10100 Santa Monica Blvd., Suite 2460, Los Angeles, California 90067 attorney’s misconduct may have had in the case before it.”) (emphasis in original) (citations omitted)). 310.277.4857 office ■ 310.277.5254 fax 57 Styles v. Mumbert, 164 Cal. App. 4th 1163 (2008). www.cdrb-law.com 58 Id. at 1166. 59 Id. at 1169.

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60 Id. at 1170. 61 Sheller v. Superior Court, 158 Cal. App. 4th 1697, as modified (2008). 62 Id. at 1703. 63 Id. at 1718. 64 Fasuyi v. Permatex, Inc., 167 Cal. App. 4th 681 (2008). 65 Id. at 701. 66 WEIL & BROWN, CIVIL PROCEDURE BEFORE TRIAL 5:68-5:70 (2007). 67 Fasuyi, 167 Cal. App. 4th at 701-02. 68 Wallis v. PHL Assocs., Inc., 168 Cal. App. 4th 882 (2008). 69 Id. at 900. 70 Section 6148 generally requires that noncontingency fee agreements be memorialized in writing (signed by the lawyer and the client). The agreement must include 1) a disclosure of the fees and charges applicable to the case, 2) a description of the services to be rendered, and 3) the respective duties of the lawyer and the client. BUS. & PROF. CODE §6148(a). A fee agreement that fails to satisfies all the applicable requirements is voidable at the client’s option, but the lawyer is nevertheless entitled to recover a reasonable fee for any work performed. BUS. & PROF. CODE §6148(c). 71 Stroud v. Tunzi, 160 Cal. App. 4th 377 (2008). 72 Section 6147 requires that a contingency fee agreement must be memorialized in a writing (signed by the lawyer and the client). The agreement must include 1) a disclosure of the contingency rate, 2) an explanation of how disbursements will be handled, 3) a statement regarding what extent, if any, the client could be required to pay any compensation to the lawyer for related matters falling outside the contingency fee, and 4) a disclosure that the fee is not set by law but rather is negotiable (unless a certain limited exception applies). BUS. & PROF. CODE §6147(a). A contingency fee agreement that fails to satisfy all the applicable requirements is voidable at the client’s option, but the lawyer is entitled to recover a reasonable fee for any work performed. BUS. & PROF. CODE §6147(b). 73 Stroud, 160 Cal. App. 4th at 383. 74 Strong v. Beydoun, 166 Cal. App. 4th 1398 (2008). 75 See CAL. RULES OF PROF’L CONDUCT R. 2-200(A)(1) (requiring the client to consent in writing to the fee-splitting arrangement). 76 Strong, 166 Cal. App. 4th at 1404. 77 Mark v. Spencer, 166 Cal. App. 4th 219 (2008). 78 Rule 3.769(b) of the California Rules of Court provides: “Any agreement, express or implied, that has been entered into with respect to the payment of attorney’s fees or the submission of an application for the approval of attorney’s fees must be set forth in full in any application for approval of the dismissal or settlement of an action that has been certified as a class action.” 79 Mark, 166 Cal. App. 4th at 229. 80 Mandatory Fee Arbitration Act, BUS. & PROF. CODE §§6200 et seq. 81 BUS. & PROF. CODE §6203(b). For a summary of the MFAA, see Chandler v. State Bar, 2008 WL 901865 (N.D. Cal. 2008). The MFAA provides that a client or lawyer may reject an MFAA fee award and seek de novo review in court. On January 26, 2009, the California Supreme Court concluded that a binding arbitration clause in an engagement letter overrides the MFAA’s right to de novo review. Schatz v. Allen Matkins Leck Gamble & Mallory LLP, __ Cal. 4th __, 2009 WL 161199 (Jan. 26, 2009). 82 Perez v. Grajales, 169 Cal. App. 4th 580 (2008). 83 Id. at 602 (quoting Herbert Hawkins Realtors, Inc. v. Milheiser, 140 Cal. App. 3d 334, 339-40 (1983) (footnote omitted)). 84 Chandler, 2008 WL 901865. 85 For the proposed new rules and a schedule of the commission’s public meetings, see http://www.calbar .ca.gov.

Los Angeles Lawyer March 2009 33 March2009_Master.qxp 2/12/09 10:45 AM Page 34

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The Seven Deadly Sins Superior Court Litigation Program in a Case Headed ON SATURDAY, MARCH 7, the Los Angeles County Bar Association, the Barristers, for Appeal the judges of the Los Angeles Superior Court, and the Los Angeles Daily Journal will present a program offering a general overview of the Los Angeles Superior ON THURSDAY, MARCH 19, the Los Angeles Court. The presenters—Phillip C. Baker, Julie Bronson, Steven R. Cerveris, John J. County Bar Association and the Small and Collins, Judge Emilie H. Elias, Robert S. Fink, Tom Girardi, Judge Aurelio Muñoz, Solo Division will present a program Linda Rice, Jerome L. Ringler, Linda Star, and Alexander H. Williams III—will share covering the seven deadly sins that can valuable ideas for successful pretrial and trial techniques and discuss common pitfalls to avoid in the courtroom. The first hour will involve court administration doom a case on appeal. Speakers Laurie issues and alternate dispute resolution. Among the topics to be covered during the Hepler, Peter Pierce, and Paul Turner will afternoon session are opening statements, voir dire, cross-examination, and final cover 1) omitting from pleadings or trial a arguments. Interested lawyers, law students, and paralegals are encouraged to claim, defense, or theory warranted by the attend. The program will include segments on basic courthouse orientation, ADR, courtroom demeanor, law and motion, writs and receivers, and discovery. In evidence, 2) failing to recognize an addition, prominent trial lawyers will present parts of a mock trial based upon a appealable pretrial order, or an order medical malpractice hypothetical. Continental breakfast, breaks, and lunch will be reviewable only by writ, 3) failing to make included. The program will take place at the Los Angeles Superior Court, 111 North an adequate record for appellate review Hill Street, Downtown. Parking is available at no charge at lot 17 (entrance is on the west side of Olive Street just south of First Street). This program will begin at 8:30 (beginning with the filing of the complaint A.M. and end at 3:45 P.M. The deadline for advanced payment is noon on February through the trial), 4) failing to obtain a 23. The registration code number is 010340. The prices below include the meals. ruling on evidentiary objections sub- $55—CLE+PLUS members mitted in connection with a motion for $90—payment before noon on February 23 $125—all at-the-door registrants summary judgment (or other dispositive 6 CLE hours motion), 5) mishandling of statements of decision, 6) failing to propose every form and special jury instruction needed to Forensics Technology Webinar support your trial theory, and 7) filing an ON WEDNESDAY, MARCH 4, from 11:30 A.M. to 12:30 P.M., the Los Angeles County Bar untimely notice of appeal. The seminar Association and the Small and Solo Division will present a webinar, or online will take place at LACBA, 1055 West seminar, on computer forensics. Alexander H. Lubarsky will show how today’s Seventh Street, 27th floor, Downtown. On- computer forensic technology can be applied to aid in electronic discovery as well as to find the hidden or deleted e-mail message or file that can help you win your case. site registration will begin at 11:30 A.M., This program will discuss the definition and evolution of computer forensics and how with the program continuing from noon to

cutting-edge law ﬁrms are harnessing forensic technology to give clients a substantial 1:30 P.M. The registration code number is advantage in civil and criminal litigation. An overview of a key computer forensics 010146. The prices below include the tool will be demonstrated. Those who attend will learn how to best select a computer forensic expert for data analysis and trial testimony. Registration for this program meal. closes on March 2. Early registration is required because of the special nature of the $15—CLE+Plus members program. Those who enroll must provide an e-mail address prior to the program. The $55—Small and Solo Division members registration code number is 010159. $90—LACBA members $45—CLE+PLUS members $85—LACBA members $120—all others $125—all others 1.5 CLE hours 1 CLE hour

The Los Angeles County Bar Association is a State Bar of California MCLE approved provider. To register for the programs listed on this page, please call the Member Service Department at (213) 896-6560 or visit the Association Web site at http://calendar.lacba.org/where you will ﬁnd a full listing of this month’s Association programs.

Los Angeles Lawyer March 2009 35 March2009_Master.qxp 2/12/09 10:45 AM Page 36

closing argument BY THOMAS H. VIDAL

Running through the Finish Line

“NEWCOMER AIMS TO DETHRONE ASSEMBLYMAN.” That’s what the ments; coalition building among voters and centers of influence; headline read in the October 30, 2008, edition of Easy Reader, a South developing a political strategy; communicating the campaign message Bay weekly newspaper. The thoughts racing through my mind when to voters, donors, elected officials, organizations, and the media; I read the article that morning—a mere five days before the most organizing the campaign; and getting out the vote. Moreover, all these momentous political election in my lifetime—were exhilarating, tasks must be timed to occur with the precision of a classical symphony. despite the fact that in the previous nine months, I couldn’t recall a That is the campaign environment every candidate must face, but single night in which I had slept more than five hours. each campaign has its unique features. My own race was particularly The year 2008 was an incredible one for American politics. People challenging for two reasons. First, I was running against an incum- were engaged in, and captivated by, the political process at a level most bent. Incumbents generally have some measure of name recognition of us had never before experienced. Understandably most people were and a tremendous advantage when it comes to campaign cash, which enraptured by the presidential election. Per- sonally, I was caught up in a different, less- talked about race. I was the newcomer aiming Campaigning for public office epitomizes the epic struggle of to dethrone the incumbent in my state assembly district. I decided to run for office because I had David against Goliath—and his three brothers. grown weary of the elected officials who are in leadership positions but who fail to lead. I believe that we have to elect new leaders who are capable of, and committed to, making life better for all of us, makes it extremely difficult to defeat them. The reelection rate for instead of mere politicians who care about us only when it is time for incumbents is well beyond 90 percent. The problem for the challenger their reelection. I wrestled long with the decision to run for office. It is convincing the voters that the current guy is doing such a bad job was a difficult decision because I had worked so hard over the past that his contract should not be renewed and convincing them that the nine years to become a good lawyer, build my own book of trans- challenger is more qualified for the position. Assuming the candidate actional entertainment clients, and establish myself as a candidate for has the goods, it still takes an engaged electorate that is paying atten- partnership at the large firm where I worked. Campaigning for a polit- tion to the race and sufficient financial resources to get the message ical office would likely mean walking away from all of that. Besides, out in order to prevail on Election Tuesday. there was no guarantee that I’d even win my election. Yet, I could not Second, I am a conservative Republican who campaigned in an shake the desire that I had to try to make a difference as an elected election cycle that greatly favored Democrats. The biggest challenge official. is that a down-ticket candidate has only a very limited ability to define In the end, I decided that the promise of security would not be what it means to be a member of his or her party. To a large extent, worth a lifetime of regret. As Helen Keller noted, “Security is mostly the candidate is defined by the party’s elected officials, the media, and a superstition. It does not exist in nature, nor do the children of men the national campaigns. Consequently, unless the voters are paying as a whole experience it. Avoiding danger is no safer in the long run close attention to the race, the candidate must live with an image cre- than outright exposure. Life is either a daring adventure or nothing.” ated by others. I chose the life of adventure. I didn’t choose it because I’m a thrill I worked as hard as I possibly could on my campaign. The cam- seeker, but because I believe that cautious and careful people never paign hosted 14 major community events. I built and managed a vol- bring about reform. Restlessness and discontent, as Thomas Edison unteer base of more than 150 people who walked 30,000 homes, made noted, are the first necessities of progress. (Of all the things I worried countless phone calls, set up appointments, delivered lawn signs, and about losing, only the chance for partnership at my firm actually dis- stuffed and licked envelopes. Despite all these efforts, I did not pre- solved. I left the firm after the primary election to focus full time on vail on Election Day. But I prevailed in every other way, and I earned my campaign.) some 62,000 votes in the process. You can bet I’ll be back again. Of course, the reason some people choose the path of least resis- More young lawyers need to opt for the life of adventure. Pearl tance is, well, because there is less resistance. Campaigning for pub- Buck once commented that “the young do not know enough to be lic office epitomizes the epic struggle of David against Goliath—and prudent, and therefore they attempt the impossible—and achieve it, his three brothers. There’s plenty of resistance. As a practicing lawyer, generation after generation.” We need more young people who are I have been no stranger to grueling work and long hours. Campaigning willing to take the risk to do impossible things. Who knows? We just for a state office, however, is another level altogether. There are tre- might accomplish them. I will certainly keep trying. ■ mendous demands on the candidate, particularly a challenger. The candidate is ultimately responsible for fund-raising; obtaining endorse- Thomas H. Vidal is an entertainment lawyer in Los Angeles.

36 Los Angeles Lawyer March 2009 March2009_Master.qxp 2/12/09 10:49 AM Page 37

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