Linnick v. The State Bar of California
62 Cal. 2d 17, 396 P.2d 33, 41 Cal. Rptr. 1 (1964)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
An attorney violates the rule against remunerating another for obtaining professional employment when there is a tacit understanding that payments, even if characterized as loans, are made to reward past referrals and ensure a continued stream of clients. An express agreement or evidence of active client solicitation by the referrer is not required for a violation.
Facts:
- Between April 1958 and December 1960, Sam Williams referred at least five personal injury cases to petitioner Albert R. Linnick.
- During this same period, Linnick issued multiple checks to Williams totaling $669, which were not related to any legitimate business dealings between the two.
- Linnick testified that he made these payments when Williams expressed urgent financial need, and that his "secondary motivation was obviously because he had done things for me such as referred cases to me."
- Linnick also admitted that he made payments to Williams to "Keep him happy... I wanted him to keep sending in the cases, yes."
- None of the payments to Williams were evidenced by a promissory note, and Linnick testified he never seriously considered pressing Williams for repayment.
- Donald Cooksey, a highway patrol officer, was responsible for referring at least 10 cases directly to Linnick.
- In 1960, after most of the referrals from Cooksey had already occurred, Linnick issued checks to Cooksey totaling $1,000.
- Linnick consistently maintained that the payments to Cooksey were legitimate loans advanced against a personal injury settlement he was handling for Cooksey at the time.
Procedural Posture:
- A local administrative committee of the State Bar charged petitioner Albert R. Linnick with five counts of professional misconduct.
- The local committee found against Linnick on two counts of improper remuneration and one count of commingling funds, and recommended a three-month suspension.
- The Board of Governors of the State Bar reviewed the case, dismissed the commingling charge, but affirmed the two remuneration counts.
- The Board of Governors recommended an increased suspension of two years.
- Linnick petitioned the Supreme Court of California to review the Board of Governors' decision.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does an attorney violate Rule 3 of the Rules of Professional Conduct by making a series of payments, characterized as loans, to a non-lawyer who refers clients, when there is a tacit understanding that the payments are intended to ensure the continued referral of cases?
Opinions:
Majority - The Court
Yes, an attorney violates Rule 3 by making such payments. The rule prohibits remunerating another for either 'soliciting' or 'obtaining' professional employment, and a tacit working arrangement is sufficient to establish a violation. With respect to Williams, petitioner's own testimony established that he made payments to 'keep him happy' and ensure the continued referral of cases. This admission, coupled with the lack of promissory notes or any real expectation of repayment, demonstrated a tacit understanding that Williams was being compensated for obtaining clients. This conduct creates the very risk Rule 3 is designed to prevent: a lay intermediary is likely to refer claimants not to the most competent attorney, but to the one who is compensating him. However, with respect to Cooksey, the evidence was insufficient to find a violation. Petitioner consistently maintained the payments were loans against a pending settlement, and the timing of the loans after most referrals had occurred supported this claim. The court resolved the evidentiary doubts in favor of the accused attorney.
Analysis:
This decision clarifies the scope of rules prohibiting attorney payments for referrals by establishing that a formal, express agreement is not necessary for a violation. The court's focus on the attorney's subjective intent and the existence of a 'tacit working arrangement' lowers the evidentiary burden for disciplinary bodies. It demonstrates that circumstantial evidence, such as the lack of loan documentation and an attorney's own admissions about motivation, can be sufficient to prove improper remuneration. The case also distinguishes between a pattern of payments clearly intended to maintain a stream of referrals and payments for which there is a plausible, alternative explanation, showing that disciplinary bodies must still meet a burden of proof.
Unlock the full brief for Linnick v. The State Bar of California