The Fourth District holds that a “framework” fee agreement designed to expedite future engagements did not create an open-ended disqualifying attorney-client relationship.
Banning Ranch Conservancy (Conservancy) retained Shute, Mihaly & Weinberger (the Shute firm) to challenge the City of Newport Beach’s (City) plan to build a four-lane divided highway on its land. The City filed a motion to disqualify Shute based on prior representations as well as two identical fee agreements signed several years prior that the City claimed established a current attorney-client relationship. The trial court granted the motion to disqualify, determining that the City remained the Shute firm’s current client under the fee agreements.
Motions to disqualify implicate clients’ rights to be represented by their preferred counsel, and the potential for costly and time-consuming gamesmanship. Competing considerations are attorneys’ duties of loyalty and confidentiality, and maintaining public confidence in the integrity of the legal process.
In matters of simultaneous representation of current clients disqualification is mandatory regardless of whether the matters have anything in common. This rule insures the attorney will not have to choose between conflicting duties, or reconcile conflicting interests.
The Court of Appeal disagreed with the City that the fee agreements rendered the City a current client. The agreements were “framework” retainer agreements, providing a structure for future attorney-client relationships on an “as-requested” basis by the City, and subject to confirmation by the Shute firm. The agreements could expedite future relationships but did not create an attorney-client relationship absent an actual request, and acceptance on a particular matter. The firm retained the right to confirm its ability to take on the matter based on workload, conflicts, or other reasons.
Extrinsic evidence is admissible to prove a meaning to which a contract is reasonably susceptible, even if it appears to be plain and unambiguous on its face. The Shute firm offered evidence to show the agreements arose from the City’s request that the firm perform work in a specific matter. A City employee’s declaration that he still considered the City a client of the Shute firm did not change the equation, because a party’s undisclosed subjective intent cannot be used to override the contractual terms themselves. Furthermore, after the agreements were executed, the Shute firm performed less than two hours of work and the City retained at least ten other law firms to represent it on other matters.
The fact that neither party formally terminated the agreements did not sway the Court. Under California law, continuity of representation does not depend upon a formal withdrawal or the client’s subjective beliefs. There must be evidence of an ongoing mutual relationship and of activities in furtherance of the relationship. The framework agreements were not self-effectuating; future representation required reciprocal actions by both client and attorney.
The Court distinguished the “framework” agreement from a “classic” retainer agreement. A classic retainer agreement involves a client who pays a fee to secure ongoing legal representation for a specified period of time. They are essentially option agreements where attorneys, in exchange for a fee, commit themselves to take on future legal work, regardless of inconvenience, client relations, or workload constraints. The Shute firm did not receive a retainer fee or make commitments for future legal representation.
In cases of prior representation a law firm is subject to disqualification if there is a substantial relationship between the subject of the current representation and the subject of the former representation. In that scenario the attorney’s access to privileged and confidential information is presumed and disqualification is to preserve the former client’s confidences.
The City argued that the Shute firm gained insight into the City’s approach to land use matters through its prior representation of the City in past decades. Knowledge of a former client’s general business practices or litigation philosophy is an insufficient basis for disqualification. Former representation alone does not give rise to a lifetime prohibition against future representation of an opposing party.
A writ was warranted to avoid the extended time of an appeal because of the significant right of the Conservancy to counsel of its choice.
Comment: Courts carefully balance the competing considerations in disqualification motions and are reluctant to disrupt current attorney-client relationships.