Rule 1.6 (Confidentiality of Information)
. . .
(b) A lawyer may reveal information relating to the representation of a client to the extent the lawyer reasonably believes necessary:
(1) to prevent reasonably certain death or substantial bodily harm;
(2) to prevent the client from committing a crime or fraud that is reasonably certain to result in substantial injury to the financial interests or property of another and in furtherance of which the client has used or is using the lawyer's services;
(3) to prevent, mitigate or rectify substantial injury to the financial interests or property of another that is reasonably certain to result or has resulted from the client's commission of a crime or fraud in furtherance of which the client has used the lawyer's services;
(4) to secure legal advice about the lawyer's compliance with these Rules;
(5) to establish a claim or defense on behalf of the lawyer in a controversy between the lawyer and the client, to establish a defense to a criminal charge or civil claim against the lawyer based upon conduct in which the client was involved, or to respond to allegations in any proceeding concerning the lawyer's representation of the client; or
(6) to comply with other law or a court order.; or
(7) to detect and resolve potential conflicts of interest, but only when the revealed information could not adversely affect the client. Information revealed under this paragraph shall not be used or revealed by the recipient for any purpose except the detection and resolution of potential conflicts of interest.
COMMENT
. . .
Detection of Conflicts of Interest
[13] Paragraph (b)(7) recognizes that lawyers and firms may sometimes need to disclose information to each other about current and former clients to detect and resolve conflicts of interest. For example, disclosures may be necessary when a lawyer is considering an association with a firm, two or more firms are considering a merger, or a lawyer is considering the purchase of a law practice. See Rule 1.17, Comment [7]. Under these circumstances, lawyers and law firms are permitted to disclose limited information to each other, but only once substantive discussions regarding the new relationship have occurred and only to the extent reasonably necessary to permit the lawyer and firm to detect and resolve potential conflicts of interest that might arise from the possible new relationship. In many situations, the disclosure of the client’s identity and the general nature of the legal and factual issues involved will be sufficient to detect potential conflicts of interest. In other situations, it may be necessary to disclose additional information, which typically will include no more than the identity of parties involved in a matter and their counsel, the dates during which the work was performed, and whether the matter has ended. The disclosure of any information, however, is forbidden if it could adversely affect the client or former client (e.g., the fact that a corporate client is seeking advice on a corporate takeover that has not been publicly announced; that a person has consulted a lawyer about the possibility of divorce before the person's intentions are known to the person's spouse; or that a person has consulted a lawyer about a criminal investigation that has not led to a public charge). If there could be an adverse effect, the lawyer must not disclose the information unless the client or former client gives informed written consent to the disclosure. Moreover, the information disclosed under paragraph (b)(7) may be used or revealed to others only to the extent necessary to detect and resolve potential conflicts of interest; and except for the client's identity, the identity of parties involved in a matter and their counsel, no such information may be revealed to lawyers at the firm who have worked on the same or a substantially related matter. This prohibition does not apply to other lawyers in the same firm who have obtained the information from an independent source.
The Commission's Explanation for the Proposal
Formal Opinion 09-455 from the ABA Standing Committee on Ethics and Professional Responsibility recently explained that lawyers and law firms must have some discretion to disclose limited confidential information to each other about current and former clients in order to determine if a conflict would arise from a lawyer’s association with the firm.[1] The Formal Opinion nevertheless concluded that “[d]isclosure of conflicts information does not fit neatly into the stated exceptions to Rule 1.6.” The Commission reached the same conclusion and determined that, given the importance of the issue and the increasing frequency with which it already arises and will continue to occur, the Commission should propose an amendment to Model Rule 1.6 that provides a firmer doctrinal basis for these disclosures and more guidance on the limitations on such disclosures.
The Commission considered a number of ways to address this issue, but concluded that the most effective way to do so is to propose a new Model Rule 1.6(b)(7). The proposed amendment would permit lawyers and firms, with restrictions, to disclose limited confidential information to each other in order to detect conflicts of interest.
The Commission concluded that these disclosures, although necessary, need to be carefully limited and regulated. First, the lawyer or firm must conclude that the disclosure is reasonably necessary to detect a conflict of interest. As proposed new Comment [13] explains, this condition means that lawyers should disclose no more information than is necessary to detect a conflict. In many situations, the disclosure of the client’s identity and the general nature of the legal and factual issues involved will be sufficient to accomplish this objective. In other situations, it may be necessary to disclose additional information, but the information should typically include no more than the identity of parties involved in a matter and their counsel, the dates during which the work was performed, and whether the matter has ended.
Second, even this limited disclosure is not permissible if it could adversely affect the client. For example, the Comment explains that, if a lawyer or firm knows that a particular corporate client is seeking advice on a corporate takeover that has not yet been publicly announced or if an individual consults a lawyer about the possibility of a divorce before the spouse is aware of such an intention, it may be impossible to disclose sufficient information to ensure compliance with the conflict of interest rules. Under those circumstances, the proposed relationship may have to be postponed until the information, if disclosed, could no longer prejudice the client.
Third, the disclosure should occur only when there is a reasonable possibility that the relationship in question (e.g., a law firm merger or the hiring of a new lawyer) might be established. This moment can sometimes occur at an early point in discussing the possible relationship. For example, the disclosure may be permissible before the lawyer and the firm begin to engage in substantive discussions regarding the lawyer’s possible association or before two firms begin serious negotiations regarding a possible merger.[2]
The last sentence of paragraph (b)(7) and the next to last sentence of the proposed new Comment are intended to remind lawyers that they must not use or reveal the information that they receive pursuant to a conflicts-checking process, except to determine whether a conflict would arise from the possible relationship. The Comment also emphasizes that, except for the client's identity and the identity of parties involved in a matter and their counsel, no information obtained by a firm pursuant to Rule 1.6(b)(7) may be revealed to lawyers at that firm who have worked on the same or a substantially related matter. This portion of the Comment is intended to recognize that it is often necessary to approach specific lawyers in a firm to find out more about their work in order to determine whether that work might give rise to a conflict if the firm creates a new relationship with another lawyer or firm. The Comment language reminds firms that, when approaching their own lawyers under these circumstances, the information that can be shared with those lawyers may have to be particularly limited in scope.
[1] Formal Opinion 09-455 describes the need to perform a conflicts check when hiring (or discussing the possibility of hiring) a lateral lawyer, but the logic of the Opinion applies equally well to other conceptually similar situations, such as when law firms consider a merger or when a lawyer considers the purchase of another lawyer’s practice.
[2] ABA Comm. on Ethics & Prof’l Responsibility, Formal Op. 09-455 (2009), at 5 (reaching a similar conclusion).
This addition seems necessary and has been going on for years (decades?) anyway. I wonder if anyone has heard of any incidents where clients were hurt by such disclosures.
Posted by: John Steele | February 29, 2012 at 08:17 AM