Cal. State Bar Formal Opn. No. 2019-198 — Settling Before Withdrawal

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THE STATE BAR OF CALIFORNIA
STANDING COMMITTEE ON
PROFESSIONAL RESPONSIBILITY AND CONDUCT
FORMAL OPINION NO. 2019-198
ISSUE: May an attorney who is required to withdraw from representing a client
under rule 1.16(a), because the client’s claim lacks merit, ethically settle
the action before withdrawing from the representation?
DIGEST: An attorney who has concluded that a client’s claim lacks merit and
cannot be pursued without violating the Rules of Professional Conduct or
the State Bar Act is required to withdraw from the representation. Before
withdrawing, the attorney must take reasonable steps to avoid
reasonably foreseeable prejudice to the rights of the client. Such
reasonable steps may include settling the claim if the attorney can do so
consistent with the attorney’s duty of truthfulness.
AUTHORITIES
INTERPRETED: Rules 1.16, 3.1, 3.4, and 4.1 of the Rules of Professional Conduct of the
State Bar of California.1/
Business and Professions Code sections 6068(c), 6068(d), 6106, and
6128(a).
STATEMENT OF FACTS
Attorney commences a legal action for Client based on alleged false statements made to Client
by the Client’s former business partner. During the course of protracted discovery in the case,
Attorney learns that the uncontroverted evidence refutes the Client’s claims. Attorney has
therefore concluded that Client’s case lacks merit and Attorney must withdraw under rule
1.16(a).2/ Attorney advises Client of his conclusion and that he is ethically obligated to withdraw
from representing her. Attorney requests from Client consent to dismiss the case or,
alternatively, offers to delay his withdrawal to allow Client time to attempt to retain other
counsel. Client does not consent to outright dismissal of the case, but instead asks Attorney to
1/ Unless otherwise indicated, all references to rules in this opinion will be to the Rules of Professional Conduct
of the State Bar of California.
2/ This opinion addresses the ethical obligations applicable when an attorney concludes that he or she is in a
mandatory withdrawal situation under rule 1.16(a) on the basis that a claim lacks merit. For purposes of this
opinion, the Committee assumes the attorney has correctly concluded that he or she is in such a mandatory
withdrawal situation, and does not address all of the ways that a mandatory withdrawal situation may arise.

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attempt to settle the case before withdrawing because Client is concerned that finding
replacement counsel will be difficult and that dismissing the case outright may expose her to
liability to the defendant. Notwithstanding Attorney’s ethical prohibition against proceeding to
trial, may Attorney nonetheless attempt to settle the case with the defendant before
withdrawing?3/
DISCUSSION
1. When is an Attorney Ethically Prohibited from Proceeding to Trial on a Claim?
An attorney is ethically prohibited by rule 1.16(a) from proceeding to trial in certain limited
circumstances.
Withdrawal is mandatory if (1) the lawyer knows or reasonably should know that the action is
being taken without probable cause and for the purpose of harassing or maliciously injuring any
person; (2) the lawyer knows or reasonably should know that continued employment will
result in a violation of the Rules of Professional Conduct or the State Bar Act; (3) the lawyer’s
mental or physical state renders it unreasonably difficult to effectively carry out the
representation; or (4) the lawyer is discharged by the client. Rule 1.16(a)(1)-(4).
Similar to the language in rule 1.16(a)(1), rule 3.1 (Meritorious Claims and Contentions)
prohibits a lawyer from bringing or continuing an action “without probable cause and for the
purpose of harassing or maliciously injuring any person.” Rule 3.1(a)(1) (emphasis added). Here,
Attorney has concluded that the evidence refutes Client’s claims, but there is no indication that
Client has pursued the case for the purpose of harassing or maliciously injuring a person. In
fact, Client may still believe the facts Client presented to Attorney even though Attorney has
concluded that those facts are not true. Under these circumstances, rule 3.1(a)(1) is not
implicated and withdrawal is not mandated under rule 1.16(a)(1).4/
Rule 3.1(a)(2) prohibits an attorney from presenting a claim in litigation “that is not warranted
under existing law, unless it can be supported by a good faith argument for an extension,
modification, or reversal of the existing law.” The phrase “warranted under existing law” is not
defined in the rule or the cases applying the predecessor to rule 3.1, former rule 3-200. Statutes
using the same language apply only to “claims, defenses, and other legal contentions,” not to
3/ This question was left unanswered in the case Estate of Falco (1987) 188 Cal.App.3d 1004, 1015 n. 11 [223
Cal.Rptr. 807] (“We refrain from determining the corollary issue of whether an attorney who is ethically prohibited
from proceeding to trial in a case the attorney believes lacks merit is similarly prohibited from settling the case.”).
4/ While not the situation addressed directly here, the analysis in this opinion would seem to also apply where an
attorney knows a claim lacks probable cause and is being pursued to harass or maliciously injure another person
and therefore must withdraw under rule 1.16(a)(1).

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“factual contentions,” which are treated separately. (See Cal. Civ. Proc. Code § 128.7(b)(2) and
(3); Fed. R. Civ. P. 11(b)(2)-(4).)
Under the State Bar Act, an attorney has a duty to “counsel or maintain those actions,
proceedings, or defenses only as appear to him or her legal or just.” (Bus. & Prof. Code
§ 6068(c).) Thus, an attorney’s continued employment in a case that the attorney knows is not
“legal or just” will violate the State Bar Act. The terms “legal or just” are not defined in the
statute, but subsection (c) has been interpreted as ensuring that attorneys only bring
complaints and maintain arguments that “are supported by law or facts.” Canatella v. Stovitz
(N.D. Cal. 2005) 365 F.Supp.2d 1064, 1077.
Here, the facts Attorney has uncovered since the case was filed have caused Attorney to
conclude that the case lacks merit because the evidence refutes the claims asserted. Thus,
Attorney’s continued employment is prohibited by Business and Professions Code section
6068(c) and, to the extent that the lack of evidentiary support means the claim is not
“warranted under existing law,” by rule 3.1(a)(2). Attorney must therefore withdraw from the
representation under rule 1.16(a)(2).5/
2. Although Grounds for Mandatory Withdrawal Exist, May Attorney Nevertheless Settle
the Case?
A. Attorney Continues to Have Ethical Duties Even Though Attorney Has
Concluded Client’s Case Lacks Merit
Attorney’s ethical duties to Client do not cease because Attorney has determined the case lacks
merit and Attorney must withdraw.
Even where grounds for mandatory withdrawal under rule 1.16(a) exist, an attorney may not
withdraw from representation until the lawyer “has taken reasonable steps to avoid reasonably
foreseeable prejudice to the rights of the client.” Rule 1.16(d); see also In re Hickey (1990) 50
Cal.3d 571 [788 P.2d 684]; Kirsch v. Duryea (1978) 21 Cal.3d 303, 311 [146 Cal.Rptr. 218]. In a
matter pending before a tribunal, even where mandatory grounds for withdrawal exist, the
duty to take reasonable steps to protect against reasonably foreseeable prejudice lasts until the
attorney is either formally substituted out of the case or has been relieved as counsel by order
of the Court. See In the Matter of Riley (Review Dept. 1994) 3 Cal. State Bar Ct. Rptr. 91, 115. If
neither substitution nor permission to withdraw is granted, the attorney must continue to
represent the client and continue to satisfy all ethical and other duties to the client.
In both In re Hickey and Kirsch, the lawyer concluded that he could no longer represent the
client because the client’s claims lacked merit. In In re Hickey, the lawyer called the client and
5/ Attorney’s continued prosecution of Client’s claim may also be sanctionable under Code of Civil Procedure
sections 128.5 or 128.7 or Federal Rules of Civil Procedure 11.

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told her he could no longer represent her, but did nothing to obtain a substitution of attorney
or to be relieved as counsel by the Court. The lawyer instead let the claims languish, ultimately
resulting in dismissal. The lawyer was disciplined for, among other things, failing to withdraw in
accordance with the rules and failing to take steps to avoid reasonably foreseeable prejudice to
the client. Thus, although the lawyer had determined the case lacked merit and mandatory
grounds for withdrawal therefore existed, the lawyer could not simply let it be dismissed
through inaction.
The attorney in Kirsch did take steps to be relieved as counsel, ultimately obtaining a court
order relieving him as counsel, but with only two months remaining to bring the case to trial.
The client thereafter sued the attorney, claiming that his determination that the case lacked
merit was incorrect and that the withdrawal was too close to the prosecution deadline thereby
prejudicing the client. The Court rejected the client’s claims, holding “an attorney should not
seek nonconsensual withdrawal immediately upon determination that the case lacks merit, but
should delay to give his client an opportunity to obtain other counsel or to file a consensual
withdrawal.” Kirsch, 21 Cal.3d at 311. This is because when an attorney non-consensually
withdraws, there is “an obvious inference” that the withdrawal “is not for the client’s purpose
but for the attorney’s purpose, usually a lack of confidence in the merits of the case.” Id. 6/
Thus, between the time an attorney determines that because a client’s case lacks merit
withdrawal is mandatory, and the time actual withdrawal from the case occurs, the attorney’s
obligation to represent the client’s interests remain.
Here, if Attorney must withdraw because he concludes he is ethically prohibited from
proceeding to trial with the case, then any successor attorney may face the same ethical
dilemma. Once Attorney withdraws, then, Client could be left without representation and
exposed to potential default, entry of a judgment against Client for costs and possibly
attorneys’ fees, and a potential claim for malicious prosecution against Client. These risks to
Client could potentially be avoided or mitigated through a settlement of the claims.
If an attorney may ethically advise a client to dismiss a case that lacks merit, as an attorney
surely may and in some circumstances must,7/ it stands to reason that the attorney could
6/ Although not dealing directly with the issue of mandatory withdrawal, Zamos v. Stroud (2004) 32 Cal.4th 958,
970 [12 Cal.Rptr.3d 54], is instructive as to an attorney’s duties when he or she concludes that a client’s case lacks
merit. In Zamos, the Court held an attorney who receives information after commencing an action indicating his
client’s claims are meritless, but continues to prosecute those claims, may be liable for malicious prosecution, but
only if the claims are such that “any reasonable attorney would agree are totally and completely without merit.”
amos, 32 Cal.4th at 971. Under such circumstances, the attorney must either cause the dismissal of the lawsuit or
withdraw. Id. at 969-70. The Court also suggests that the attorney may (and perhaps must) properly advise the
client to dismiss the lawsuit: “[B]y advising a client to dismiss a meritless case, the attorney will serve the client’s
best interest in that the client will avoid the cost of fruitless litigation, and the client’s exposure to liability for
malicious prosecution will be limited.” Zamos, 32 Cal.4th at 969-70.
7/ See Zamos v. Stroud (2004) 32 Cal.4th 958, 970 [12 Cal.Rptr.3d 54].

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attempt to protect her client’s interests by effectuating a dismissal through a negotiated
settlement on whatever terms the opposing side is willing to accept. Such terms generally
would include a release so that the case could be dismissed without exposing the client to
further liability or expense. This is consistent with Kirsch and In re Hickey, which make clear that
an attorney who concludes a client’s case lacks merit may not simply abandon the client’s cause
without taking steps to protect the client. We have found no authority that would prohibit
Attorney under the circumstances present here from attempting to negotiate a settlement of
Client’s claims.8/
B. The Steps Attorney May Take to Avoid Prejudice May Be Tempered Because
Attorney Has Knowledge that the Case Lacks Merit
Although Attorney may seek to settle the case, his ability to advocate for settlement may be
significantly limited by his duty of truthfulness, in multiple respects.
First, in seeking to negotiate a settlement, an attorney may not make affirmative material
misstatements of fact concerning the merits of the claim, by, for example, falsely stating that
certain evidence will support liability or damages recoverable against the defendant, when the
Attorney now knows that in fact it will not do so. See Cal. State Bar Formal Opn. No. 2015-194
(Puffing in Negotiations); Kotlar v. Hartford Fire Ins. Co. (2000) 83 Cal.App.4th 1116, 1123 [100
Cal.Rptr.2d 246] (duty of zealous advocacy is limited by “the bounds of the law”); Business and
Professions Code sections 6068(d) (an attorney must use “for the purpose of maintaining the
causes confided to him or her those means only as are consistent with truth”), 6106
(prohibiting attorneys from engaging in any acts involving moral turpitude or dishonesty), and
6128(a) (attorney engaging in “any deceit or collusion” with the intention of deceiving any party
is guilty of a misdemeanor). “[A] lawyer communicating on behalf of a client with a nonclient
may not knowingly make a false statement of material fact to the nonclient [citation], and may
be liable to a nonclient for fraudulent statements made during business negotiations.” Vega v.
Jones, Day, Reavis & Pogue (2004) 121 Cal.App.4th 282, 291 [17 Cal.Rptr.3d 26]. Rule 4.1
likewise prohibits lawyers from knowingly making “a false statement of material fact or law to a
third person.”
8/ While the court in Zamos v. Stroud (2004) 32 Cal.4th 958, 970 [12 Cal.Rptr.3d 54] held that, to avoid liability
for malicious prosecution, an attorney who concludes that a case is “totally and completely without merit” must
either cause the dismissal of the case or withdraw (id. at 970), the court does not address the issue of whether
dismissal of the case can be achieved through settlement. It seems however that the factors articulated by the
Zamos court in support of its holding, such as the efficient administration of justice and reduction of burden on the
courts and defendants resulting from the dismissal of meritless claims (id. at 969-70), would apply to any dismissal,
whether achieved as part of a settlement or filed independent of settlement. We see nothing in the Zamos
decision that would prohibit an attorney from negotiating a dismissal of a case through settlement. Consistent
with the Zamos decision, if not able to negotiate a dismissal or obtain client consent to dismiss, however, the
attorney must withdraw.

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Second, in negotiating any settlement, an attorney may not conceal information material to the
negotiations in violation of a duty to disclose. Acts of moral turpitude prohibited by Business
and Professions Code section 6106 “include concealment as well as affirmative
misrepresentations.” In the Matter of Loftus (Review Dept. 2007) 5 Cal. State Bar Ct. Rptr. 80, 86.
“‘[N]o distinction can . . . be drawn among concealment, half-truth, and false statement of
fact.’” In the Matter of Dale (Review Dept. 2005) 4 Cal. State Bar Ct. Rptr. 798, 808 (quoting In
the Matter of Chestnut (Review Dept. 2000) 4 Cal. State Bar Ct. Rptr. 166, 174. Similarly, it is
unethical for an attorney to make implicit misrepresentations in settlement negotiations. See
Cal. State Bar Formal Opn. No. 2015-194 (discussing examples of implicit misrepresentations)
and ABA Formal Opn. No. 06-439.
Third, lawyers may not knowingly assist the client in negotiating a settlement based upon prior
material misrepresentations or wrongful concealment of material facts concerning the merits of
the claim. Rule 4.1 prohibits lawyers from knowingly failing to disclose material facts to third
parties “when disclosure is necessary to avoid assisting a criminal or fraudulent act by a client,”
unless disclosure is prohibited by the lawyer’s duty of confidentiality under rule 1.6 and
Business and Professions Code section 6068(e). Moreover, in Cal. State Bar Formal Opn. No.
2013-189, we opined that, although attorneys generally do not have a duty to correct material
errors of opposing counsel, when the error is induced by the attorney’s conduct constituting
“deceit, active concealment or fraud,” the failure to alert opposing counsel of the error is
unethical. Lawyers are further prohibited by rule 3.4 from suppressing “any evidence the lawyer
or the lawyer’s client has a legal obligation to reveal or produce.”9/ Rule 3.4(b). Thus, here, for
example, if Attorney’s conclusion that the case lacks merit was based on information wrongfully
concealed from the opposing side during discovery, Attorney may be ethically prohibited from
settling the case before withdrawing, unless the misrepresentation or concealment is corrected
before negotiating a settlement of the claim.10/
On the other hand, if the evidence that has caused Attorney to conclude the claim is meritless is
not known to the other side but neither Attorney nor his client was or is under a duty to
provide it to the other side, then Attorney may be able to negotiate a settlement so long as his
statements are truthful and do not violate a duty to disclose. In this scenario, Attorney would
9/ A legal obligation to reveal or produce may arise under applicable discovery rules and statutes, or may arise
outside of the discovery context in certain circumstances. In the family law context, for example, parties owe each
other fiduciary duties, including duties to immediately, fully, and accurately update and augment financial
disclosures to the extent there are material changes so that at the time an agreement is entered, each party will
have full and complete knowledge of the relevant underlying facts. See, e.g., Cal. Fam. Code §§ 721, 1100, 1101,
2100. Similar duties exist for criminal prosecutors. An attorney may not ethically negotiate a settlement where the
attorney knows an affirmative obligation to disclose accurate and complete information material to the settlement
negotiation has not been fulfilled.
10/ Similarly, if information material to a decision to settle the case is required to be disclosed under rule 4.1(b)
but has not or cannot be disclosed without violating rule 1.6, the attorney cannot ethically settle the case, unless
the client consents to the disclosure of the confidential information.

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need to consider whether prior statements made to the adverse party could be considered
false or misleading in light of the new information Attorney has gained.
Attorney’s compliance with these obligations may often limit the ability to make a persuasive
demand going beyond an exchange of releases or to accept a prior offer from defendant that
does not reflect an awareness of the evidence refuting liability. Assuming, however, that the
Attorney fully complies with the foregoing obligations of truthfulness, the Attorney may
properly seek to settle the claim on whatever terms can be obtained, even if the resulting
settlement involves some payment to the Client in exchange for releasing the claim.
Under our facts, Attorney concluded that the Client’s case lacks merit through the discovery
process, suggesting that both sides had a fair opportunity to learn the information Attorney
possesses. There is no suggestion that Client or Attorney, for example, falsified evidence or
failed to disclose material information that they were under a duty to disclose, or that any
conduct or activity by Attorney or Client constitutes fraud, deceit or concealment. Thus, while
Attorney’s advocacy of Client’s position may be tempered by his duty of truthfulness, he may
ethically attempt to settle the claim on whatever terms that can be negotiated.
CONCLUSION
Even when an attorney determines withdrawal is required because the client’s claim lack merit,
reasonable steps must be taken to avoid reasonably foreseeable prejudice to the client before
withdrawal. Those steps could include delaying withdrawal to allow the client to attempt to
retain other counsel, continuing to take the steps necessary to preserve the claim, advising
client to dismiss the case, and/or negotiating to settle the claim, provided a settlement could be
negotiated consistent with the attorney’s ethical obligations of truthfulness. The attorney may
not make any false statements about the merits of the client’s claim in the course of the
settlement process and may not be able to negotiate terms of settlement at all if doing so
would be based on the wrongful concealment of information material to determining the
merits of the case and required to be disclosed.
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 Trustees, any persons, or tribunals charged with regulatory
responsibilities, or any licensee of the State Bar.

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