For many transactional lawyers, the goal to “get the deal done” may cloud judgment by including provisions in the contract that the lawyer knows are illegal. Lawyers have a duty not to counsel or assist a client in anything that they know is criminal, fraudulent, or violates any law or rule. This includes using provisions in a contract that have been or may be found to be illegal under California law.

The California State Bar is seeking public opinion on Proposed Formal Opinion Interim No. 19-0003 regarding an attorney's counsel on improper contract provisions.

If a lawyer knows the provision may violate securities law, they must advise the client accordingly, may not recommend the use of the provision, and should counsel the client not to use it. If the client insists on the use of the illegal provision against your advice, you must not participate in presenting the illegal provision to the other party that you do not represent. If you think that the provision may be imputed to the organization/company and could result in substantial injury to the organization, you must report the actions to a higher authority (if your direct contact is not the higher authority).

The relevant applicable rules include Cal. Rule of Professional Conduct 1.1, 1.2.1, 1.4, 1.13, 1.16(b), 4.1, 8.4, and Business and Professions Code section 6068(d).

Garcia Hong Law counsels lawyers and law firms on legal ethics issues. For more information on Garcia Hong Law, visit www.garciahonglaw.com. This is an attorney advertisement. Results may vary depending on the facts of your case. 

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