Innovation of Note
On August 24, 2022, California legislature halts all regulatory innovation with the passage of AB-2958, effective immediately with an Urgency Clause adopted on August 22, 2022.
On June 6, 2022, the California Bar “Closing the Justice Gap Working Group” resumed business after a “pause” in 2021.
On May 23, 2022 the California Bar working group’s revised recommendations around paraprofessionals delivering limited legal services in areas of consumer debt, custody, and housing. The next step will require the California Supreme Court and state legislature to approve.
Ruben Duran, state bar official for California, has indicated the legal regulatory sandbox will be immediately paused “to allow time for further conversations and determine the best next steps”. This is in response to the December 7, 2021 letter to the bar from the chairmen of the legislative judiciary committee, Assemblyman Mark Stone and Senator Tom Umberg.
In 2019, the State Bar of California formed the Task Force on Access Through Innovation of Legal Services. It issued a final report found here.
In January 2021, the State Bar of California has announced the Closing the Justice Gap Working Group to continue to the work of the Task Force on Access Through Innovation of Legal Services (ATILS).
Change Log Entries
- March 3, 2020
- March 13, 2020
- May 15, 2020
- January 19, 2021
- December 15, 2021
- May 25, 2021
- June 6, 2022
- August 29, 2022
Differences from ABA Model Rules
|Rule 1.2(c) Limited Scope||Minor Clerical Changes|
|Rule 5.4(a) Fee-Sharing||Significant Changes|
|Rules 5.4(b)-(d) Non-Lawyer Ownership||Significant Changes|
|Rule 5.5. Unauthorized Practice of Law||Significant Changes|
|Rule 5.7 Law Related Services||Does Not Have|
|Rule 6.5 Limited Scope||Significant Changes|
|Rule 7.2(b) Lawyer Referral||Significant Changes|
|Cloud Computing Advisory||Yes|
|Technology Competency Rules||Yes|
ABA Rule 1.2(c) (Limited Scope)
Rule 1.2 Scope of Representation and Allocation of Authority
(b) A lawyer may limit the scope of the representation if the limitation is reasonable* under the circumstances, is not otherwise prohibited by law, and the client gives informed consent.
Agreements Limiting Scope of Representation
 All agreements concerning a lawyer’s representation of a client must accord with
the Rules of Professional Conduct and other law. (See, e.g., rules 1.1, 1.8.1, 5.6; see
also Cal. Rules of Court, rules 3.35-3.37 [limited scope rules applicable in civil matters
generally], 5.425 [limited scope rule applicable in family law matters].)
Los Angeles Cnty Bar Ass’n Prof. Resp. and Ethics Comm. Ethics Op. 502 (1999) (Attorneys may limit scope of representation of a litigation client to consultation, preparation of pleadings to be filed by client, and participation in negotiations, as long as client consents to the limitation in advance. Attorney must still tell the client about reasonably apparent legal problems even if they fall outside the scope of representation.)
Los Angeles Cnty Bar Ass’n Prof. Resp. and Ethics Comm. Ethics Op. 483 (1995) (An attorney may limit the attorney’s services by agreement with a pro per itigant to consultation on procedures and preparation of pleadings to be filed by the client pro per. A litigant may be either self-represented or represented by counsel, but not both at once, unless approved by the court. In order for attorney to specially appear on behalf of the litigant before the court for a limited purpose, the attorney should comply with all applicable court rules and procedures of the particular tribunal.)
Orange Cnty. Formal Ethics Op. 2011-01 (2011
Orange County Bar Association Formal Opinion 2014-1 (Ghostwriting by Contract Lawyers and Out-of-State Lawyers) (A lawyer may use another contract lawyer or out-of-state lawyer to ghostwrite court documents without having to disclose that assistance to the court.)
The State Bar of California Ass’n Standing Comm. on Prof. Resp. and Conduct Ethics Op. No. 2012-184 (As it pertains to the use of technology, the Business and Professions Code and the Rules of Professional Conduct do not impose greater or different duties upon a VLO practitioner in operating in the cloud than they do upon an attorney practicing in a traditional law office. While an attorney may maintain a VLO in the cloud where communications with the client, the storage of and access to all information about the client’s matter, are conducted solely via the internet using a third-party’s secure servers, Attorney may be required to take additional steps to confirm that she is fulfilling her ethical obligations due to distinct issues raised by the hypothetical VLO and its operation.)
Cole v. Patricia A. Meyer & Assocs. APC, 142 Cal. Rptr.3d 646, (Cal. Ct. App. 2012) (lawyers who allow their name to appear on plaintiffs’ pleadings cannot avoid liability for malicious prosecution by asserting they had been retained solely as “standby” trial counsel and had done no work on the case, which was dismissed before trial).
Nichols v. Keller, 19 Cal.Rptr.2d 601 (1993) (Plaintiff who consulted defendants’ law firms regarding workers’ compensation claim was not advised of potential for additional third party claim before statue of limitations expired. Defendants argued that plaintiff’s representation was limited only to filing workers’ compensation claim and no duty existed to advise plaintiff in any other matter. Court found that representation was not limited solely to workers compensation claim, and defendants should have advised plaintiff regarding third party claim.)
Ricotta v. California, 4 F.Supp.2d 961 (S.D. Cal. 1998) (Attorney licensed in the State of California did not violate procedural, substantive, and professional rules of a federal court by lending some assistance to friends, family members, and others with whom she shared specialized knowledge. Attorney performed research and prepared rough drafts of portions of pro se litigant’s pleadings in an action against various official defendants, but did not sign the documents. Because attorney did not gather and anonymously present legal arguments with the actual or constructive knowledge that plaintiff would use them in court, and because attorney did not engage in extensive, undisclosed participation that permitted plaintiff to falsely appear as being without professional assistance, attorney had not violated any rules.)
Streit v. Covington & Crowe, 82 Cal.App. 4th 441 (2000) (In a lawsuit, plaintiff’s counsel of record requested that another firm make a “special appearance” at a summary judgment motion, appearing on behalf of counsel of record. Plaintiff filed a legal malpractice suit after a summary judgment was entered against her, arguing that the special appearance created an attorney-client relationship. The appellate court found that an attorney making a special appearance represents the client’s interests and has a professional attorney-client relationship with the client. Further, the voluntary appearance created a limited representation status and not a true “special appearance.”)
ABA Rule 5.4(a) (Fee-sharing)
Rules 5.4 Financial and Similar Arrangements with Nonlawyers
(a) A lawyer or law firm* shall not share legal fees directly or indirectly with a nonlawyer or with an organization that is not authorized to practice law, except that:
(1) an agreement by a lawyer with the lawyer’s firm,* partner,* or associate may provide for the payment of money or other consideration over a reasonable* period of time after the lawyer’s death, to the lawyer’s estate or to one or more specified persons;*
(2) a lawyer purchasing the practice of a deceased, disabled or disappeared lawyer may pay the agreed-upon purchase price, pursuant to rule 1.17, to the lawyer’s estate or other representative;
(3) a lawyer or law firm* may include nonlawyer employees in a compensation or retirement plan, even though the plan is based in whole or in part on a profit-sharing arrangement, provided the plan does not otherwise violate these rules or the State Bar Act;
(4) a lawyer or law firm* may pay a prescribed registration, referral, or other fee to a lawyer referral service established, sponsored and operated in accordance with the State Bar of California’s Minimum Standards for Lawyer Referral Services; or
(5) a lawyer or law firm* may share with or pay a court-awarded legal fee to a nonprofit organization that employed, retained or recommended employment of the lawyer or law firm* in the matter..
Paragraph (a) does not prohibit a lawyer or law firm* from paying a bonus to or otherwise compensating a nonlawyer employee from general revenues received for legal services, provided the arrangement does not interfere with the independent professional judgment of the lawyer or lawyers in the firm* and does not violate these rules or the State Bar Act. However, a nonlawyer employee’s bonus or other form of compensation may not be based on a percentage or share of fees in specific cases or legal matters.
Paragraph (a) also does not prohibit payment to a nonlawyer third-party for goods and services provided to a lawyer or law firm;* however, the compensation to a nonlawyer third-party may not be determined as a percentage or share of the lawyer’s or law firm’s overall revenues or tied to fees in particular cases or legal matters. A lawyer may pay to a nonlawyer third-party, such as a collection agency, a percentage of past due or delinquent fees in concluded matters that the third-party collects on the lawyer’s behalf.
Paragraph (a)(5) permits a lawyer to share with or pay court-awarded legal fees to nonprofit legal aid, mutual benefit, and advocacy groups that are not engaged in the unauthorized practice of law. (See Frye v. Tenderloin Housing Clinic, Inc.(2006) 38 Cal.4th 23 [40 Cal.Rptr.3d 221]; see also rule 6.3.) Regarding a lawyer’s contribution of legal fees to a legal services organization, see rule 1.0, Comment  on financial support for programs providing pro bono legal services.
McIntosh v. Mills, 17 Cal. Rptr. 3d 66 (Ct. App. 2004) (agreement to pay bank’s former employee percentage of lawyer’s fee for helping in suit against bank violated state’s counterpart to Rule 5.4(a))
ABA Rule 5.4(b – d) Non-lawyer ownership
Rules 5.4 Financial and Similar Arrangements with Nonlawyers
(b) A lawyer shall not form a partnership or other organization with a nonlawyer if any of the activities of the partnership or other organization consist of the practice of law.
(c) A lawyer shall not permit a person* who recommends, employs, or pays the lawyer to render legal services for another to direct or regulate the lawyer’s independent professional judgment or interfere with the lawyer-client relationship in rendering legal services.
(d) A lawyer shall not practice with or in the form of a professional corporation or other organization authorized to practice law for a profit if:
(1) a nonlawyer owns any interest in it, except that a fiduciary representative of a lawyer’s estate may hold the lawyer’s stock or other interest for a reasonable* time during administration;
(2) a nonlawyer is a director or officer of the corporation or occupies a position of similar responsibility in any other form of organization; or
(3)a nonlawyer has the right or authority to direct or control the lawyer’s independent professional judgment.
(e)The Board of Trustees of the State Bar shall formulate and adopt Minimum Standards for Lawyer Referral Services, which, as from time to time amended, shall be binding on lawyers. A lawyer shall not accept a referral from, or otherwise participate in, a lawyer referral service unless it complies with such Minimum Standards for Lawyer Referral Services.
(f)A lawyer shall not practice with or in the form of a nonprofit legal aid, mutual benefit or advocacy group if the nonprofit organization allows any third person* to interfere with the lawyer’s independent professional judgment, or with the lawyer-client relationship, or allows or aids any person* to practice law in violation of these rules or the State Bar Act
This rule is not intended to affect case law regarding the relationship between insurers and lawyers providing legal services to insureds. (See, e.g., Gafcon, Inc. v. Ponsor Associates(2002) 98 Cal.App.4th 1388 [120 Cal.Rptr.2d 392].)
Paragraph (c) is not intended to alter or diminish a lawyer’s obligations under rule 1.8.6 (Compensation from One Other Than Client).
ABA Rule 5.5 (UPL)
Rule 5.5 Unauthorized Practice of Law; Multijurisdictional Practice of Law
(a) A lawyer admitted to practice law in California shall not:
(1) practice law in a jurisdiction where to do so would be in violation of regulations of the profession in that jurisdiction; or
(2) knowingly* assist a person* in the unauthorized practice of law in that jurisdiction.
(b) A lawyer who is not admitted to practice law in California shall not:
(1) except as authorized by these rules or other law, establish or maintain a resident office or other systematic or continuous presence in California for the practice of law; or
(2) hold out to the public or otherwise represent that the lawyer is admitted to practice law in California.
L.A. Cnty. Ethics Op. 518 (2006) (lawyer using services of out-of-state legal research and brief-writing firm does not assist in unauthorized practice as long as lawyer remains responsible for final product)
San Diego Cnty. Ethics Op. 2007-1 (2007) (lawyers using outsourcing firm based in India did not assist in unauthorized practice of law when lawyers supervised and retained control of, and responsibility for, firm’s work).
Agran v. Shapiro, 273 P.2d 619 (Cal. Ct. App. 1954) (accountant conducted legal research to resolve difficult legal issue relating to tax consequences of loss sustained by client, upon which he based advice to client and formulated arguments presented to Treasury Department representatives)
Benninghoff v. Superior Court, 38 Cal. Rptr. 3d 759 (Ct. App. 2006) (representing parties in state administrative hearings constituted practice of law, even though laypeople permitted to do so).
Birbrower, Montalbano, Condon & Frank, P.C. v. Superior Court, 949 P.2d 1 (Cal. 1998) (noting that one may impermissibly practice in California, though not physically present, through “telephone, fax, computer, or other modern technological means,” but rejecting notion that lawyer’s virtual presence in California automatically amounts to practicing law “in California”)
In re Carlos, 227 B.R. 535 (Bankr. C.D. Cal. 1998) (nonlawyer law firm employee’s negotiation of reaffirmation agreements was unauthorized practice).
In re Hessinger & Assocs., 192 B.R. 211 (N.D. Cal. 1996) (bankruptcy law firm’s paralegal allowed to make decisions on important aspect of individual bankruptcy filings, such as claiming of exemptions)
In re Reynoso, 477 F.3d 1117 (9th Cir. 2007) (software vendor violated California prohibition on unauthorized practice because the “software … determined where (particularly, in which schedule) to place information provided by the debtor, selected exemptions for the debtor and supplied relevant legal citations”)
Z.A. v. San Bruno Park Sch. Dist., 165 F.3d 1273 (9th Cir. 1999) (denying attorneys’ fees for legal services rendered in state administrative proceeding because lawyer– though admitted in U.S. District Court for Northern District of California–was on inactive status with Pennsylvania bar and not admitted to practice in California)
People v. Merchants Protective Corp., 209 P.363,365 (1922) (‘As the term is generally understood, the practice of the law is the doing or performing services in a court of justice, in any matter depending therein, throughout its various stages, and in Conformity to the adopted rules of procedure.But in a larger sense it includes legal advice And counsel, and the preparation of legal instruments and contracts by which legal rights are Secured although such matter may or may not be depending in a court.’ Quoting In the case of Eley v. Miller, 7 Ind. App. 529, 34 N. E. 836.
Baron v. Los Angeles, 2 C.3d 535, 86 C.R. 673,469 P.2d 353 (1970). (T)he Legislature adopted the state bar act in 1927 and used the term ‘practice law’ Without defining it. [FN7] The conclusion is obvious and inescapable that in so doing it accepted both the definition already judicially supplied for the term and the declaration of the Supreme Court (in Merchants’) that it had a sufficiently definite meaning to need no further definition. The definition above quoted from People v. Merchants’ Protective Corp.has been approved and accepted in the subsequent California decisions (citations), and must be regarded as definitely establishing, for the jurisprudence of this state, the meaning of the term ‘practice law.” (People v. Ring (1937) supra. 26 Cal. App.2d Supp. 768, 772, 70 P.2d 281,283.)
ABA Rule 5.7 (Law Related Services)
Not adopted in California
ABA Rule 6.5 (Court annexed/Non-profit limited scope)
Rule 6.5 Limited Legal Services Programs
(a) A lawyer who, under the auspices of a program sponsored by a court, government agency, bar association, law school, or nonprofit organization, provides short-term limited legal services to a client without expectation by either the lawyer or the client that the lawyer will provide continuing representation in the matter:
(1) is subject to rules 1.7 and 1.9(a) only if the lawyer knows* that the representation of the client involves a conflict of interest; and
(2) is subject to rule 1.10 only if the lawyer knows* that another lawyer associated with the lawyer in a law firm* is prohibited from representation by rule 1.7 or 1.9(a) with respect to the matter.
(b) Except as provided in paragraph (a)(2), rule 1.10 is inapplicable to a representation governed by this rule.
(c) The personal disqualification of a lawyer participating in the program will not be imputed to other lawyers participating in the program.
 Courts, government agencies, bar associations, law schools and various nonprofit organizations have established programs through which lawyers provide short-term limited legal services — such as advice or the completion of legal forms that will assist persons* in addressing their legal problems without further representation by a lawyer. In these programs, such as legal-advice hotlines, advice-only clinics or pro se counseling programs, whenever a lawyer-client relationship is established, there is no expectation that the lawyer’s representation of the client will continue beyond that limited consultation. Such programs are normally operated under circumstances in which it is not feasible for a lawyer to systematically screen* for conflicts of interest as is generally required before undertaking a representation.
 A lawyer who provides short-term limited legal services pursuant to this rule must secure the client’s informed consent* to the limited scope of the representation. (See rule 1.2(b).) If a short-term limited representation would not be reasonable* under the circumstances, the lawyer may offer advice to the client but must also advise the client of the need for further assistance of counsel. Except as provided in this rule, these rules and the State Bar Act, including the lawyer’s duty of confidentiality under Business and Professions Code section 6068, subdivision (e)(1) and rules 1.6 and 1.9, are applicable to the limited representation.
 A lawyer who is representing a client in the circumstances addressed by this rule ordinarily is not able to check systematically for conflicts of interest. Therefore, paragraph (a)(1) requires compliance with rules 1.7 and 1.9(a) only if the lawyer knows* that the representation presents a conflict of interest for the lawyer. In addition, paragraph (a)(2) imputes conflicts of interest to the lawyer only if the lawyer knows* that another lawyer in the lawyer’s law firm* would be disqualified under rules 1.7 or 1.9(a).
Because the limited nature of the services significantly reduces the risk of conflicts of interest with other matters being handled by the lawyer’s law firm,* paragraph (b) provides that imputed conflicts of interest are inapplicable to a representation governed by this rule except as provided by paragraph (a)(2). Paragraph (a)(2) imputes conflicts of interest to the participating lawyer when the lawyer knows* that any lawyer in the lawyer’s firm* would be disqualified under rules 1.7 or 1.9(a). By virtue of paragraph (b), moreover, a lawyer’s participation in a short-term limited legal services program will not be imputed to the lawyer’s law firm* or preclude the lawyer’s law firm* from undertaking or continuing the representation of a client with interests adverse to a client being represented under the program’s auspices. Nor will the personal disqualification of a lawyer participating in the program be imputed to other lawyers participating in the program.
If, after commencing a short-term limited representation in accordance with this rule, a lawyer undertakes to represent the client in the matter on an ongoing basis, rules 1.7, 1.9(a), and 1.10 become applicable.
ABA Rule 7.2 (Lawyer referral)
Rule 7.2 Advertising
(b) A lawyer shall not compensate, promise or give anything of value to a person* for the purpose of recommending or securing the services of the lawyer or the lawyer’s law firm,* except that a lawyer may:
(1) pay the reasonable* costs of advertisements or communications permitted by this rule;
(2) pay the usual charges of a legal services plan or a qualified lawyer referral service. A qualified lawyer referral service is a lawyer referral service established, sponsored and operated in accordance with the State Bar of California’s Minimum Standards for a Lawyer Referral Service in California;
(3) pay for a law practice in accordance with rule 1.17;
(4) refer clients to another lawyer or a nonlawyer professional pursuant to an arrangement not otherwise prohibited under these Rules or the State Bar Act that provides for the other person* to refer clients or customers to the lawyer, if:
(i) the reciprocal referral arrangement is not exclusive; and
(ii) the client is informed of the existence and nature of the arrangement;
(5) offer or give a gift or gratuity to a person* having made a recommendation resulting in the employment of the lawyer or the lawyer’s law firm,* provided that the gift or gratuity was not offered or given in consideration of any promise, agreement, or understanding that such a gift or gratuity would be forthcoming or that referrals would be made or encouraged in the future.
Emmons, Williams, Mires & Leech v. Cal. State Bar, 86 Cal. Rptr. 367 (Cal. 1967) (upholding agreement between lawyer and bar association’s referral program that requires lawyer to pay one-third of fee to association);
California Opinion 2010-179 https://www.calbar.ca.gov/Portals/0/documents/ethics/Opinions/2010-179-Interim-No-08-0002-PAW.pdf
Reasonable care standard
- Evaluate the nature of the technology, available security precautions, and limitations on third-party access.
- Consult an expert if lawyer’s technology expertise is lacking.
- Weigh the sensitivity of the data, the impact of disclosure on the client, the urgency of the situation, and the client’s instructions.
State Bar of California Formal Opinion No. 2015-193 https://www.calbar.ca.gov/Portals/0/documents/ethics/Opinions/CAL%202015-193%20%5B11-0004%5D%20(06-30-15)%20-%20FINAL.pdf