The Court of Appeal decision in Sabey v. City of Pomona, issued Tuesday, April 16, 2013, will change the way public agencies and their law firms, handle advisory arbitration cases. Prior to the Sabey decision, the case of Howitt v. Superior Court (1992) 3 Cal.App.4th 1575, was understood to allow two attorneys from the same firm to discharge different functions in an advisory arbitration type proceeding as long as they erected, and respected, an ethical wall between them by having no communication about the matter and preventing each other from accessing their respective files and documentation. Thus, one attorney could function as an advocate, presenting the case to the arbitrator, hearing officer, administrative law judge, board or commission, depending on what sort of hearing format the agency used. The second attorney could then be the legal advisor to the decision maker, i.e. arbitrator, hearing officer, etc.

Now, in Sabey v. Pomona, the Second District Court of Appeal has set down the clear rule that this sort of arrangement is not acceptable when the two attorneys are partners in the same firm. The Court thus limited the viability of the Howitt decision to public law offices, e.g. County Counsel or City Attorney offices where the lawyers are employees of their respective agencies.

Glenn Sabey was a Pomona police officer who was terminated for misconduct. He appealed and an administrative hearing was held before an advisory arbitrator. The arbitrator found that Sabey had engaged in the conduct as alleged with one exception. However, the arbitrator determined that termination was not the appropriate penalty and recommended that the discipline be reduced to reinstatement without back pay or benefits. Debra Bray, a LCW partner, represented the City in the arbitration hearing.

The matter then went to the City Council which had the prerogative to accept, modify or reject the recommended decision. Peter Brown, also a LCW partner, advised the Council. Consistent with the Howitt decision, an ethical wall was implemented between Bray and Brown and they did not talk to each other about the matter, and they were prevented from accessing each other’s files. The Council accepted the arbitrator’s factual findings but reinstated the penalty of discharge.

Sabey then petitioned the Superior Court for administrative mandate and raised an objection to the participation of two attorneys from the same firm. The trial court ruled against Sabey and he took the matter up on appeal where he obtained a reversal of the judgment.

In her decision for the Court, Justice Judith Ashmann-Gerst wrote that, even though there was no evidence of bias, there was a sufficient appearance of the possibility of impartiality that “experience teaches that the probability of actual bias” was “too high to be constitutionally tolerable.” The Court held that, because two partners from the same firm have both a fiduciary responsibility to each other, as well as a duty to their client, the “appearance of unfairness and bias” compels a prohibition on the participation of the two lawyers from the same firm.

Justice Ashmann-Gerst wrote that this risk alone required the Court’s decision. “The rule we announce today is simple. Agencies are barred from using a partner in a law firm as an advocate in a contested matter and another partner from the same law firm as an advisor to the decision maker in the same matter.”

The Court distinguished the Howitt decision, opining that attorneys in the same public law office, who are governmental employees, do not have a fiduciary duty to each other as do private firm attorneys, as they do not have the impetus to seek business as that law firm partners have.

Accordingly, the Court of Appeal reversed the judgment and sent the case back to the trial court which in turn is required to remand the matter to the City Council. Officer Sabey may have won a victory in principle only, as the Council will have the option to obtain independent legal counsel and revisit its decision, which could still result in his termination.

The message of this decision, however, is clear: agencies and law firms are now precluded from having two attorneys from the same firm participate in a contested administrative matter in two capacities—as an advocate before the trier of fact and as a legal advisor to the official(s) making the decision. An “ethical wall”, previously believed to be a sufficient safeguard to preclude bias and impartiality, is no longer acceptable. Agencies and law firms should be reviewing their pending cases to determine whether they have any matters open where the Sabey decision could require reexamination of the procedures that were used.