! CASENOTE JAMES GRAFTON RANDALL, ESQ. LAWATYOURFINGERTIPS.COM FILING AN ANSWER FOR A MISSING [OR SUSPENDED OR DEFAULTED] DEFENDANT

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1 ISSUE:! CASENOTE JAMES GRAFTON RANDALL, ESQ. LAWATYOURFINGERTIPS.COM FILING AN ANSWER FOR A MISSING [OR SUSPENDED OR DEFAULTED] DEFENDANT What are the ethical responsibilities of an attorney representing the defendant in a civil action wherein a complaint has been filed and served on the defendant, an answer is now due and the client cannot be located? THE STATE BAR OF CALIFORNIA STANDING COMMITTEE ON PROFESSIONAL RESPONSIBILITY AND CONDUCT FORMAL OPINION NO DIGEST: The attorney must avoid foreseeable prejudice to the client. The attorney should make reasonable efforts to locate the client and to provide actual notice to the client in the event the attorney decides to obtain an order of withdrawal as attorney of record. Finally, while the attorney is under no obligation to inform opposing counsel that the client cannot be located, the attorney may not conceal the information if asked directly. AUTHORITIES INTERPRETED: Rule 3-700(A)(2) of the Rules of Professional Conduct of the State Bar of California. Business and Professions Code section 6068, subdivisions (d) and (e). [Thank you to James Curry for the Ethical Opinion]

2 DISCUSSION An attorney was retained to represent the defendant in a personal injury action. A complaint was filed and served but no answer was filed on behalf of the defendant. The answer is now due and the attorney cannot locate the client. The attorney initiated several telephone calls to the client without successful contact. The attorney wrote three letters to the client which were mailed to the client's last known address. The letters were returned to the attorney unclaimed, with no forwarding address. Unable to locate or communicate with the client, the attorney seeks to withdraw from the employment. What are the ethical considerations raised by the contemplated withdrawal from employment? An attorney, whose client appears to have abandoned the case, faces at least three problems: 1) the limitation on the authority of the attorney to act without the consent of the client; 2) the extent to which the attorney should or must incur expense in attempting to locate the client; and 3) the propriety of the attorney disclosing to opposing counsel that the client cannot be located. Limitation on the Authority of Attorney to Work on Behalf of the Client. The attorney's authority to act on behalf of the client is derived from two sources; contractually, through the retainer agreement and generally, through the principles of agency. Business and Professions Code section 6148 requires a written fee contract when it is reasonably foreseeable that the cost to the client will exceed one thousand dollars. 1 However, the retainer agreement does not provide the attorney with any greater authority to act or bind the client than is specifically set forth in that contractual document. In accordance with agency theory, the authority of an attorney to bind a client is defined, in part, by those acts of the principal (client) which place the agent (attorney) in a position where the agent appears to have the authority which he claims or exercises. (See Blanton v. Womancare (1985) 38 Cal.3d 396, 406.) The implied authority will allow the attorney to act with regard to procedural matters without consulting the client, and to bind the client, as long as the client's cause of action or defense is not impaired or destroyed. (See Carrol v. Abbott Labs (1982) 32 Cal.3d 892, 898; Linsk v. Linsk (1969) 70 Cal.2d 272, 276.) However, without the express consent of a client, an attorney cannot enter into a settlement agreement, (see Bambic v. State Bar (1985) 40 Cal.3d 314; Sampson v. State Bar (1974) 12 Cal.3d 70; Bodisco v. State Bar (1962) 58 Cal.2d 495; Los Angeles County Bar Association Ethics Opinion No. 441 (1987)) endorse a client's name on a check, (see

3 Palomo v. State Bar (1984) 36 Cal.3d 785, ) or dismiss a cause of action (see Bowden v. Green (1982) 128 Cal.App.3d 65, 72.) It is clear the attorney is severely limited in the substantive acts the attorney may take on behalf of a client when the client cannot be located. In assessing what actions the attorney may take on behalf of the client, the attorney should be mindful of Rule of Professional Conduct 3-700(A)(2) which provides, in pertinent part:.... A member shall not withdraw from employment until the member has taken reasonable steps to avoid reasonably foreseeable prejudice to the rights of the client, allowing time for employment of other counsel, complying with rule 3-700(D), and complying with applicable laws and rules. (Emphasis supplied.) The Committee opines that the attorney may file an answer to the complaint to avoid reasonably foreseeable prejudice to the client. 2 Withdrawal from Employment. An attorney may withdraw from employment if the client "renders it unreasonably difficult for the member to carry out the employment effectively." (Rule of Professional Conduct 3-700(C)(1)(d). Under the facts presented, the attorney is severely limited in the ability to act on behalf of the client without the client's express authority. The attorney has a sufficient basis to withdraw under rule 3-700(C). Prior to withdrawal the attorney must comply with Rule of Professional Conduct 3-700(A). The focus of rule 3-700(A) is to avoid reasonably foreseeable prejudice to the client. Since the attorney cannot impair or destroy the client's cause of action, the attorney should attempt to preserve it without exceeding the attorney's authority. The "due notice" requirement presents a substantial obstacle. The parameters of notice have been defined to include a written statement that the attorney is withdrawing from employment, information concerning the relevant statutes of limitation and time limits for filing documents, and any available legal referral services and the procedures for self representation. (See State Bar Opinion ) Although the content of the notice poses no problem, delivering actual notice to the client may be virtually impossible. The methods of search used to locate a client should be considered by the attorney in the context of giving notice of the attorney's intention to withdraw from employment. The attorney should take care to document all steps taken to give notice to the client.

4 The attorney should preserve the file in the event the client returns. If the attorney is in possession of any client funds, they must be maintained in the client trust account. (See State Bar Opinion ; Code of Civil Procedure section 1518.) The extent to which an attorney should or must incur expense to try to locate the client. The considerations pertinent to the cost of locating a client are twofold: 1) how much money must or should an attorney spend to locate a client; and 2) who ultimately bears the cost of the search. The attorney should not weigh the value of the client's case or the attorney's desire to withdraw from employment against the costs to conduct a reasonably diligent search to locate the client. The costs relative to locating a client could include a private investigator, a search of records (D.M.V., voter registration, public records, social security files, and county records) or less expensive methods such as registered mail and telephone contact with the client's family or friends. In all cases the attorney must expend a reasonably amount of time and funds so as to insure that the attorney makes a diligent effort to locate the client. Since each case is unique, the attorney should evaluate what methods of search would be reasonable to locate the client. The propriety of the attorney disclosing the disappearance of the client to opposing counsel and the Court. The attorney has a duty to maintain inviolate the confidence of his client and at every peril to himself to preserve the secrets of his client. (Bus. & Prof. Code, sec. 6068, subd. (e).) The attorney also has a duty not to mislead the judge or a judicial officer by an artifice or false statement of fact or law. (Bus. & Prof. Code, sec. 6068, subd. (d).) The concealment of material information is as misleading as an overtly false statement. (See Griffis v. S.S. Kresge (1984) 150 Cal.App.3d 491, 499.) Disclosure of the inability to locate the client could be detrimental to the clients' interests. (See State Bar Opinions and ) Clearly, the attorney is under no obligation to inform opposing counsel that the client cannot be located. However, the attorney may reveal such information as may be necessary to formulate the basis for a motion to withdraw. CONCLUSION Although there is no definitive answer to what the ethical responsibilities of an attorney are when representing a client who cannot be located, it is certain the attorney must make a reasonably diligent effort both to locate the client and to give actual notice to the client should the attorney desire to withdraw from the employment. The attorney must take steps to avoid reasonably foreseeable prejudice to the client and the client's cause of action. Finally, while the attorney is under no obligation to inform opposing counsel that

5 the client cannot be located, the attorney cannot conceal the information if asked directly by the court. [This opinion is issued by the Standing Committee on Professional Responsibility and Conduct of the State Bar of California. It is advisory only. It is not binding upon the courts, the State Bar of California, its Board of Governors, any persons or tribunals charged with regulatory responsibilities or any member of the State Bar] 1 Business and Professions Code section 6147 requires contingency fee contracts to be in writing. 2 The attorney who determines to file an answer to the complaint must take care to ensure that the facts are as stated in the answer to avoid misleading the court as to a statement of fact. NOTE SUSPENDED CORPORATION (1) While it is normally improper and subject to sanctions to answer a Complaint for a Defendant whose corporate status has been suspended, an insurance carrier may do so without repercussions. See: A suspended corporation may not prosecute or defend an action. (Rev. & Tax.Code, 19719, subd. (a); Reed v. Norman (1957) 48 Cal.2d 338, 343, 309 P.2d 809.) But there is an exception for insurers. Revenue and Taxation Code section 19719, subdivision (b), states: This section shall not apply to any insurer, or to counsel retained by an insurer on behalf of the suspended corporation, who provides a defense for a suspended corporation.... El Escorial Owners' Ass'n v. DLC Plastering, Inc. (2007) 154 Cal.App.4th 1337, The court in Kaufman & Broad Communities, Inc. v. Performance Plastering, Inc. (2006) 136 Cal.App.4th 212, 217, interpreted this section and concluded that, an insurance company must intervene in the lawsuit to protect the rights of its insured suspended corporation. It may defend in its own name, but not in the name of the suspended corporation. El Escorial Owners' Ass'n v. DLC Plastering, Inc. (2007) 154 Cal.App.4th 1337, INSURED DEFENDANT DEFAULTED (2) When an insured Defendant cannot be located or has defaulted an insurance carrier may intervene to protect its interest by filing a Complaint in Intervention. The insurance carrier may file answer and do everything the missing insured Defendant would have been able to do by itself. See: A liability insurer that intervened in an action brought against its insured may litigate the issues of liability even though a default has been entered against the insured. Western Heritage Ins. Co. v. Superior Court (2011) 199 Cal. App. 4th 1196.