{"id":643,"date":"2019-11-14T17:39:03","date_gmt":"2019-11-14T22:39:03","guid":{"rendered":"https:\/\/my.vanderbilt.edu\/marijuanalaw\/?p=643"},"modified":"2019-11-15T11:11:39","modified_gmt":"2019-11-15T16:11:39","slug":"california-issues-draft-formal-ethics-opinion-for-attorneys-advising-marijuana-clients","status":"publish","type":"post","link":"https:\/\/my.vanderbilt.edu\/marijuanalaw\/2019\/11\/california-issues-draft-formal-ethics-opinion-for-attorneys-advising-marijuana-clients\/","title":{"rendered":"California Issues (Draft) Formal Ethics Opinion for Attorneys Advising Marijuana Clients"},"content":{"rendered":"

It escaped my attention earlier, but it looks like the California Bar Association in June issued guidance for California-licensed attorneys informing them of what legal services they may (and may not) ethically provide to marijuana clients. The 16 page opinion from the State Bar Standing Committee on Professional Responsibility and Conduct (COPRAC) can be found here<\/a>.\u00a0(Note that this is billed as an interim opinion \u2013 suggesting it could later be modified \u2013 but the period for comments on the draft has already expired.)<\/p>\n

Here\u2019s the summary of the Opinion:<\/p>\n

A lawyer may ethically advise a client concerning compliance with California’s cannabis laws and may assist the client in conduct permitted by those laws, despite the fact that the client’s conduct may violate federal law. Such advice and assistance may include the provision of legal services to the client that facilitate the operation of a business that is lawful under California law (e.g., incorporation of a business, tax advice, employment advice, contractual arrangements and other actions necessary to the lawful operation of the business under California law). However, a lawyer may not advise a client to violate federal law or provide advice or assistance in violating state or federal law in a way that avoids detection or prosecution of such violations. The lawyer must also inform the client of the conflict between state and federal law, including the potential for criminal liability and the penalties that could be associated with a violation of federal law. Where appropriate, the lawyer must also advise the client of other potential impacts upon the lawyerclient relationship, including the attorney-client privilege, that may result from the fact that the client\u2019s conduct may be prohibited under federal law.<\/p>\n

In my book, I discuss at length the ethical\u00a0dilemma facing attorneys who deal with marijuana clients (see book pages 626-644). The dilemma stems from the Model Rules of Professional Conduct; Rule 1.2(d) in particular bars attorneys from, inter alia, \u201cassist[ing] client[s] . . . in conduct that the lawyer knows is criminal.\u201d In light of this (and related Rules), may attorneys\u00a0assist clients engage in marijuana activities that are permitted by state law if those same activities are prohibited by federal law?<\/p>\n

As I note in the book, every jurisdiction that has addressed this question has reached the same basic conclusion: Yes, attorneys may provide the same legal services to marijuana clients\u00a0that they offer to\u00a0other types of clients. However, jurisdictions have reached\u00a0this conclusion through different routes.\u00a0Some jurisdictions \u2013 like New York \u2013 have interpreted MPRC 1.2(d) permissively. Those permissive jurisdictions say that as written, Rule 1.2(d) allows\u00a0attorneys to provide a full range of legal services to marijuana clients, notwithstanding the federal marijuana prohibition. By contrast, some jurisdictions \u2013 including Colorado and Ohio \u2013 have interpreted MPRC 1.2 more restrictively. Those restrictive jurisdictions say that as written, Rule 1.2(d) limits the types of services their licensed attorneys may ethically provide to marijuana clients. (The Problems in the book explore whether the line drawn by these restrictive jurisdictions between services\u00a0is cogent or defensible. See pages 629-630, n.1, Problems 12.11-12.13.)\u00a0Nonetheless, it appears that each of the jurisdictions that has interpreted MPRC 1.2 restrictively has subsequently amended the language of its Rule 1.2 (or added comments thereto) to authorize attorneys to provide the full suite of legal services to marijuana clients. That\u00a0is why I\u00a0say that every jurisdiction that has addressed the\u00a0question posed above has reached the same basic conclusion: attorneys may ethically provide the same legal services to marijuana clients that they would provide to other types of clients.<\/p>\n

In the Opinion linked above, California\u00a0takes a somewhat different path, but it ultimately reaches the same conclusion as every other jurisdiction. As far as I can tell, the state has never\u00a0interpreted\u00a0original Rule 1.2(d) to prohibit lawyers from providing some services to marijuana clients. Nonetheless, in 2017 (I think), the state added a Comment to its Rule 1.2 that seems plainly designed to counter such an interpretation:<\/p>\n

Comment 6: [Rule 1.2] permits a lawyer to advise a client regarding the validity, scope, and meaning of California laws that might conflict with federal or tribal law. In the event of such a conflict, the lawyer may assist a client in drafting or administering, or interpreting or complying with, California laws, including statutes, regulations, orders, and other state or local provisions, even if the client\u2019s actions might violate the conflicting federal or tribal law. If California law conflicts with federal or tribal law, the lawyer must inform the client about related federal or tribal law and policy . . . .<\/p>\n

(For California’s full Rules, see here<\/a>; note that California numbers its Rules somewhat differently than the MPRC, so the relevant provision is called Rule 1.2.1.)<\/p>\n

This Comment is nearly identical to the one adopted by Colorado after it had interpreted the language of original MPRC 1.2(d) to bar its lawyers from providing certain (poorly defined) legal services to marijuana clients.<\/p>\n

Regardless of how it got there, however, California \u2013 like every state before it \u2013 reached the conclusion that there is no ethical problem with lawyers helping clients to possess, grow, and \/ or distribute marijuana, even though such activities remain criminal under federal law. California may not have needed to adopt Comment 6 to reach that conclusion; after all, other jurisdictions concluded that original Rule 1.2 already permitted lawyers to advise marijuana clients. But I suppose it does no harm to provide such authorization explicitly in the language of the Rule itself (or the comments used to interpret it), and to reinforce that clarity by issuing a formal Opinion on the matter.<\/p>\n

While the California Bar reached the same result as other jurisdictions, California\u2019s ethics Opinion is noteworthy in at least a few respects:<\/p>\n

1. California disavows reliance on federal marijuana enforcement policy.<\/h4>\n

As I discuss in the book, New York\u2019s permissive reading of original Rule 1.2 rested in part on the fact that the federal government was not enforcing its marijuana ban at the time. But it warned that \u201cIf federal enforcement were to change materially, this Opinion [authorizing lawyers to provide legal services to marijuana clients] might need to be reconsidered.\u201d Page 634.<\/p>\n

The California Opinion, by contrast, leaves nothing to chance. It emphatically states that a lawyer\u2019s ethical obligations under its Rule 1.2.1 are unaffected by whether (or not) the federal government is enforcing its marijuana ban:<\/p>\n

None of these conclusions [about the services a lawyer may provide to marijuana clients] depend on the content of federal enforcement policy, which is not a factor discussed in any of the relevant provisions. The fact that a federal law is not regularly enforced does not by itself render the law a nullity or relieve those subject to the law of their obligation to comply. Moreover, because the specifics of announced federal enforcement policies can and do change with changing times and changing administrations, they provide uncertain support for ethics policy making. [Opinion page 8, n.4]<\/p>\n

To be sure, I think it highly unlikely the federal government will try to enforce its marijuana ban against state-law abiding suppliers anytime soon. But one can hardly blame the California bar for addressing — and dispelling any confusion that might arise from — this unlikely scenario.<\/p>\n

2. California provides\u00a0interesting details about what sorts of services lawyers may NOT provide to marijuana clients.<\/h4>\n

California\u2019s ethics Opinion includes two standard caveats for advising marijuana clients. First, as noted above, it instructs lawyers that they must inform clients about any conflicts between state and federal (or tribal) law. Second, it warns that lawyers \u201cmay not . . . provide advice or assistance in conduct that enables the client to evade detection or prosecution under California or federal law.\u201d [Opinion page 12.]<\/p>\n

The Opinion also\u00a0posits\u00a0an interesting hypothetical scenario that would run afoul of the second restriction. It posits a lawyer who is asked by a marijuana supplier to provide the standard range of services, including, e.g., help with applying for state permits and drafting sales contracts. But in addition, the lawyer and supplier discuss the possibility that the lawyer will:<\/p>\n

(1) hold client funds in excess of any amount required to cover legal fees in the lawyer\u2019s client trust account, as a \u201crainy day\u201d fund, with the possibility that federal authorities might seize the client\u2019s assets; [and]<\/p>\n

(2) assist the client in establishing offshore bank accounts into which the proceeds of the business may be placed. [Opinion page 2.]<\/p>\n

The Opinion concludes that the lawyer would be prohibited from providing either of these two services. It explains:<\/p>\n

The client\u2019s request that the lawyer permit the client to create a \u201crainy day fund,\u201d and keep it in the lawyer\u2019s trust account, to protect against the risk of a federal seizure of the client\u2019s assets clearly falls into that category, since it seems principally intended to conceal those assets from federal law enforcement. The client\u2019s request for assistance in establishing offshore bank accounts to receive the proceeds of the business very likely falls into the forbidden category as well. If the lawyer knows that the client expects such assistance, the lawyer should advise the client of the limitations on the lawyer\u2019s conduct imposed by the Rules of Professional Conduct . . . [Opinion page 12.]<\/p>\n

At first glance, these two restrictions on legal services may seem a bit puzzling \u2013 at least insofar as\u00a0the lawyers’ services are being used to frustrate enforcement of federal<\/em>\u00a0(rather than state<\/em>) law. After all, if the state bar\u00a0permits a\u00a0lawyer to facilitate the violation of federal drug<\/em> laws (say, by drafting a sales contract between a grower and a retailer), why doesn’t \u00a0it also permit the lawyer to facilitate violations of federal money laundering laws as well? But I suspect the reason may be that\u00a0the Bar is more squeamish about lawyers getting involving in crimes involving fraud and deceit. The two prohibited actions described above involve fraud \/ deceit, whereas drug dealing (at least, in today’s\u00a0transparent, state legal\u00a0marijuana market) does not. Indeed, the legal services the Opinion deems permissible — like drafting a contract for the sale of marijuana \u2013 arguably expose drug\u00a0activities to authorities, rather than conceal them. After all,\u00a0the contract would memorialize an arrangement that is conducted clandestinely in black markets and thus, more difficult to detect.\u00a0At bottom, it appears the\u00a0state Bar is comfortable allowing lawyers to\u00a0help\u00a0clients\u00a0break federal law, but only if the clients (and lawyers) do not seek to hide their activities from the government.<\/p>\n

3. California reminds lawyers that their ethical obligations also include a requirement of competence.<\/h4>\n

As my students know well,\u00a0marijuana law is enormously complicated because any one case can implicate several advanced legal subjects, from criminal law to tax law to administrative law to constitutional law (among many others). For this reason alone, it’s very difficult for any lawyer to\u00a0master\u00a0all of the distinct fields on which\u00a0a marijuana client\u00a0might need assistance. Of course, lawyers who have taken a course \u2013 or read a good book<\/a>! \u2013 on marijuana law will have a big advantage! But even the best trained lawyer needs to recognize that sometimes they will need to bring in additional counsel to help with a particular matter outside their area of expertise. And the California Bar Opinion reminds them that doing so is part of their ethical obligations to clients:<\/p>\n

Competent representation of a regulated cannabis business requires specialized learning: notably, mastering a novel, complex, and rapidly evolving body of state and local statutes and regulations. In addition, the scope of competent representation will always encompass providing basic information on conflicting federal law to comply with rule 1.2.1 and may often require additional advice going beyond such information. A lawyer who is unable to acquire the full range of required learning and skill through study, or through consulting or associating with another attorney, should limit the representation to those issues that she has or can acquire the requisite learning and skill and advise the client to obtain separate counsel with sufficient learning and skill to represent the client on other issues presented. [Opinion page\u00a012.]<\/p>\n

4. California warns lawyers (and in turn, clients) about the vulnerability of client confidences.<\/h4>\n

I\u2019ve written about federal attempts to seize information gathered by state regulators for use in enforcing the federal marijuana ban. See Mikos, Can the States Keep Secrets from the Federal Government?<\/a> (also excerpted in the book pages 720-721). That work recognizes that\u00a0state privilege rules do not bind federal agents. Hence, even if a client may be able to confide in an attorney without worrying about the information she provides being\u00a0used by state<\/em> regulators, the same cannot be said of federal<\/em> regulators. In particular,\u00a0federal agents could use the\u00a0crime-fraud exception to the attorney client privilege to obtain information a marijuana client shared in confidence with her attorney. The Opinion notes this possibility and instructs attorneys to inform clients about it:<\/p>\n

To the extent that conduct permitted under state law constitutes a federal crime, there is a risk in a federal court proceeding that the lawyer\u2019s files may be discoverable and the lawyer may be called as a witness, that the court will rule that because of the crime-fraud exception the privilege does not apply to confidential communications between lawyer and client, and that the lawyer will be ordered to testify concerning those communications. . . .
\nThe potential unavailability of the privilege and its consequences should be disclosed to the client at the outset of the representation, because it is information that is \u201creasonably necessary to permit the client to make informed decisions regarding the representation.\u201d\u00a0[Opinion page 13.]<\/p>\n

5. California opines that lawyers\u00a0may also own marijuana businesses.<\/h4>\n

Apart from whether they may advise marijuana clients without running afoul of\u00a0MPRC\u00a01.2(d), a related issue is whether lawyers may invest in marijuana businesses (or, e.g., use or grow marijuana themselves). This latter action implicates a separate ethics rule: MPRC 8.4 bars an attorney from \u201ccommit[ting] a criminal act that reflects adversely on the lawyer\u2019s honesty, trustworthiness or fitness as a lawyer in other respects.\u201d<\/p>\n

As I note in the book, fewer states have addressed the question whether a lawyer violates\u00a0her ethical obligations by growing marijuana, using marijuana, or investing in a client who\u00a0supplies the\u00a0drug. See book pages 635-638. The California Opinion, however, appears to give these actions its blessing.\u00a0In the hypothetical scenario\u00a0to which the Opinion is addressed,\u00a0the lawyer wants to accept a stake in the marijuana client\u2019s business in lieu of accepting more\u00a0traditional legal fees (i.e., cash). The\u00a0California Opinion\u00a0finds this arrangement to\u00a0be indistinguishable (ethically speaking) from advising the client in the first instance \u2013 i.e., both advising the client and investing in its business are permissible:<\/p>\n

The facts presented in this opinion raise the possibility that the lawyer will make an investment in the entity that carries out the business in lieu of legal fees. Given the analysis above, there can be no ethical objection to such an investment based on a conflict between state and federal law, so long as the arrangement is not intended to evade detection or prosecution under California or federal law. The same principles that permit a California business to receive a California lawyer\u2019s assistance in complying with California law, notwithstanding any resulting violation of federal law, should also permit the client to pay for those services and for the lawyer to receive payment in the form of an interest in that business. [Opinion page 14.]<\/p>\n

I would assume, based on this latter conclusion, that the lawyer may also use marijuana and produce the drug for her own consumption, at least to the extent permitted by state law.<\/p>\n

That\u2019s it for now. For more on lawyer discipline in this field, see this previous post: UPDATE: The Criminal case against a San Diego Marijuana Attorney has Settled<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

It escaped my attention earlier, but it looks like the California Bar Association in June issued guidance for California-licensed attorneys informing them of what legal services they may (and may not) ethically provide to marijuana clients. The 16 page opinion from the State Bar Standing Committee on Professional Responsibility and Conduct (COPRAC) can be found…<\/p>\n","protected":false},"author":6789,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1,4],"tags":[99,120,6,578,395,100,15,5,576,531,577],"class_list":["post-643","post","type-post","status-publish","format-standard","hentry","category-news","category-updates","tag-attorney","tag-california","tag-cannabis","tag-ethical","tag-ethics","tag-lawyer","tag-marihuana","tag-marijuana","tag-model-rules-of-professional-conduct","tag-opinion","tag-rule-1-2"],"_links":{"self":[{"href":"https:\/\/my.vanderbilt.edu\/marijuanalaw\/wp-json\/wp\/v2\/posts\/643","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/my.vanderbilt.edu\/marijuanalaw\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/my.vanderbilt.edu\/marijuanalaw\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/my.vanderbilt.edu\/marijuanalaw\/wp-json\/wp\/v2\/users\/6789"}],"replies":[{"embeddable":true,"href":"https:\/\/my.vanderbilt.edu\/marijuanalaw\/wp-json\/wp\/v2\/comments?post=643"}],"version-history":[{"count":3,"href":"https:\/\/my.vanderbilt.edu\/marijuanalaw\/wp-json\/wp\/v2\/posts\/643\/revisions"}],"predecessor-version":[{"id":646,"href":"https:\/\/my.vanderbilt.edu\/marijuanalaw\/wp-json\/wp\/v2\/posts\/643\/revisions\/646"}],"wp:attachment":[{"href":"https:\/\/my.vanderbilt.edu\/marijuanalaw\/wp-json\/wp\/v2\/media?parent=643"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/my.vanderbilt.edu\/marijuanalaw\/wp-json\/wp\/v2\/categories?post=643"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/my.vanderbilt.edu\/marijuanalaw\/wp-json\/wp\/v2\/tags?post=643"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}