Can an in-house lawyer have sexual relations with his or her client?  To answer this question, it is necessary to identify the lawyer's client.  The California Rules of Professional Conduct provide a clear answer to this question:

In representing an organization, a member shall conform his or her representation to the concept that the client is the organization itself, acting through its highest authorized officer, employee, body, or constituent overseeing the particular engagement.

Rule 3-600(A).

When the client is an organization, can in-house counsel have sexual relations (defined in Rule 3-120(A) as "sexual intercourse or the touching of an intimate part of another person for the purpose of sexual arousal, gratification, or abuse") with that client?  Given that "can" may express either possibility or permission, this could be viewed as two questions.

First, are sexual relations even possible with an organization?  According to the Rules, the answer could be "yes".   The discussion accompanying Rule 3-120 provides:

For purposes of this rule, if the client is an organization, any individual overseeing the representation shall be deemed to be the client. (See rule 3-600.)

Thus, the Rules make it possible for an in-house lawyer to have sexual relations with an organizational client.

Second, are sexual relations permitted?  In many cases, the answer will be "no".  Under Rule 3-120(B), a member may not:

(1) Require or demand sexual relations with a client incident to or as a condition of any professional representation; or

(2) Employ coercion, intimidation, or undue influence in entering into sexual relations with a client; or

(3) Continue representation of a client with whom the member has sexual relations if such sexual relations cause the member to perform legal services incompetently in violation of rule 3-110.

Rule 3-120(B).  These proscriptions, however, do not apply to sexual relations between members and their spouses or to ongoing consensual sexual relationships which predate the initiation of the lawyer-client relationship.  Rule 3-120(C).