Lawyers must disclose client loans and face penalties for solicitation

Employers, law firms, attorneys, and people acting for them must not retaliate against good-faith reports of suspected attorney misconduct. The protection covers employees, former employees, job applicants, contractors, vendors, clients, and others with a professional relationship to a lawyer or law firm. The person must have reasonable cause to believe the information shows a violation. A lawyer’s report is protected only when confidentiality rules allow it; client confidentiality duties remain in place. The protection applies when a person makes, or an employer believes the person may make, a good-faith disclosure.

An attorney entering a loan or financial assistance arrangement with a client must use a separate written contract and may not charge interest. This covers loans or financial help from a lawyer or law firm to a current or prospective client, but not ordinary litigation costs expressly allowed by law. The contract must list the total amount financed, repayment terms and contingencies, fees and charges, and potential conflicts. Before signing, the attorney must advise the client in writing that they may seek independent advice. The client gets at least five business days to consider the deal unless they waive that time in writing after disclosure, and must give informed written consent. The attorney may not hide fees, interfere with the client’s decisions, or condition legal strategy, settlement, or continued representation on taking or repaying a loan. The separate contract and written advice must come before the agreement is signed; the client must receive at least five business days to consider it unless they waive that period in writing.

The State Bar must establish summary disbarment procedures for specified convictions involving illegal client solicitation. This applies to State Bar licensees convicted of a felony under the law against capping or running, or of a misdemeanor under that law with the required finding of knowing conduct for financial gain. The misdemeanor must involve a finding by the court, or a record showing, that the lawyer acted knowingly and for financial gain. After receiving a certified record of a covered conviction, the state Supreme Court must order disbarment; the State Bar cannot substitute another form of discipline. An appeal does not prevent an interim suspension under existing State Bar rules while the appeal is pending.

People or businesses that violate the ban on capping or running must pay a $25,000 civil penalty for each violation. This applies to people and organizations that engage in conduct barred by the law against capping or running. Each client retained and each claim filed through the prohibited conduct counts as a separate violation. The Attorney General, a city attorney, or county counsel may bring an action to enforce the penalty. The penalty applies per violation; each retained client and each filed claim counts as its own violation.