On March 22, 2011, the Fourth District Court of Appeal in Banning Ranch Conservancy v. Superior Court (2011) 193 Cal.App.4th 903, issued a peremptory writ of mandate directing the trial court to set aside its order disqualifying the law firm Shute, Mihaly & Weinberger (Shute) from representing Banning Ranch Conservancy (Conservancy) in a suit against the City of Newport Beach (City). The court held that the 2005 “framework” retainer agreements at issue did not create a current attorney-client relationship between Shute and the City, since there was not an acceptance of an actual request for representation on any recent matters.
In 2005, Shute and the City signed two legal retainer agreements regarding the City’s proposed mooring permit regulations. After completing minor legal work on two discrete matters that concluded by early 2006, Shute did not undertake any other legal work for the City. In 2010, Shute began representing the Conservancy in a suit challenging the City’s environmental impact report (EIR) for a four-lane highway across the coastal property of Banning Ranch. The City filed a motion to disqualify Shute, alleging that the City was both a former client and a current client of the law firm.
The trial court granted the motion to disqualify, holding that Shute did not provide evidence the retainer agreements were terminated, and the terms of the agreement did not provide an expiration date. The Conservancy filed a writ petition, requesting a peremptory writ in the first instance. The Fourth District granted a temporary stay of the disqualification order, and ultimately issued a peremptory writ directing the trial court to set aside its previous order and to enter a new order denying the motion to disqualify Shute.
The court started by addressing the City’s contention that it was a current client of Shute. Analyzing the language in the 2005 agreements, the court found that the framework retainer agreements only provided a structure for establishing future attorney-client relationships on an “as-requested” basis. The court noted that two sections in the agreements established qualifiers that prevent the creation of an open-ended attorney-client relationship. One section stated that Shute would be retained on an “as-requested basis.” The other section provided that Shute must confirm it would be able to take on a future matter, based on a conflicts check and the firm’s workload, before Shute could advise the City on any new matter. Taken together, the two sections created two prerequisites for any future representation: the City must request representation on a particular matter, and Shute must confirm the request. Since Shute concluded its most recent legal work for the City back in 2006, the City could not claim to be a current client in 2010 or 2011.
The court also found there was no need to terminate the 2005 agreements because they did not establish a self-effectuating mechanism, since reciprocating actions by the City and Shute were required to establish any future representation. Comparing the 2005 agreements to “classic” retainer agreements, the court noted that Shute did not receive an engagement retainer fee and did not enter into an option agreement in which Shute could not refuse to take on the City’s future legal work regardless of the circumstances.
Finally, the court turned to the argument that Shute may be disqualified based on its past representation of the City. The court found that none of the legal matters on which Shute previously represented the City had any substantial relationship to the current litigation brought by the Conservancy. Therefore, Shute could not be disqualified on this basis, even if it might have some knowledge of the City’s general business practices or litigation philosophy.