California's confidentiality rules present some problems I have been thinking about lately, which I'll summarize here in the hope of prompting discussion that might lead to some answers.
California's Business & Professions Code §6068(e) creates a very restrictive duty of confidentiality. It provides it is the duty of an attorney to “maintain inviolate the confidence, and at every peril to himself or herself to preserve the secrets, of his or her client.” The only statutory exception to this duty grants lawyers discretion to disclose client confidential information if and to the extent the lawyer “reasonably believes the disclosure is necessary to prevent a criminal act that the attorney reasonably believes is likely to result in death of, or substantial bodily harm to, an individual,” and then only after providing warnings to the client that are specified in CA Rule of Prof. Conduct 3-100(c).
The text of this rule lacks two exceptions present in most jurisdictions. It does not allow disclosure in disputes between lawyers and clients, and it does not allow disclosure if a lawyer is sued by someone other than the client whose information is at stake. Courts have implied an exception for the first problem, but not the second.
California courts solved the first problem simply by presuming an exception to the duty of confidentiality when a lawyer seeks to establish the scope of his authority, Pacific Tel. & Tel. Co. v. Fink, 141 Cal. App. 2d 332 (1956), defend against disciplinary proceedings, Arden v. State Bar, 52 Cal. 2d 310, 320 (1959); Brockway v. State Bar, 53 Cal. 3d 51, 63-64 (1991), or a claim brought by a client, Miller v. Superior Court, 111 Cal. App. 3d 390, 392 (1980)(dicta), or to collect a fee. Carlson, Collins, Gordon & Bold v. Banducci, 257 Cal.App.2d 212, 227-228 (1967).
Courts have justified such an exception on three different grounds: fairness, convention, and, by reference in two cases, Evidence Code Section 958. That section allows the introduction of otherwise privileged communications pertaining to “an issue of breach, by the lawyer or by the client, of a duty arising out of the lawyer-client relationship.”
The two cases to refer to Section 958 in this context are both employment cases involving discharged in-house lawyer. The first, the well-known General Dynamics Corp. v. Superior Court, 7 Cal. 4th 1164, 1189, 1191 (1994), referred to that section as among exceptions to the privilege that generally evinced a legislative judgment "that the principle of professional confidentiality does not apply.” 7 Cal. 4th at 1189.
The second case, Fox Searchlight Pictures, Inc. v. Paladino, 89 Cal. App. 4th 294 (2001), dealt with a claim of discrimination based on sex (not, it should be noted, a retaliatory discharge claim as in General Dynamics). The plaintiff's former employer sued her for disclosing to her employment counsel confidential information regarding the employer. The employer moved to disqualify employment counsel, and the appellate court affirmed the trial court's denial of the motion. The court reasoned in part that Section 6068(e) had to be read in light of “other statutes and ethical rules,” such as Evidence Code Section 958, which, according to the court, “specifically permit the attorney to depart from the usual rules of client confidentiality.” 89 Cal. App. 4th at 313.
None of these cases can be squared with the plain language of Section 6068(e). General Dynamics never squarely confronts the language of the statute; the opinion in fact seems to conflate the duty of confidentiality with the privilege, which is simply wrong. Paladino at least acknowledges the problem, but its invocation of Section 958 is insufficient to overcome the language of Section 6068(e);that the Evidence code allows for compelled disclosure in some cases does not imply that lawyers may initiate disclosure, particularly not for their own benefit. (Paladino is right to say that General Dynamics must be read to allow disclosure to employment counsel, and as an inferior tribunal the court is perfectly right to rest its ruling on that ground).
As a general rule, even apart from the strict language of Section 6068(e), one cannot imply exceptions to the duty of confidentiality from exceptions to the privilege. They are different sorts of rules. The duty is broader than the privilege. The privilege is a rule of evidence providing a defense against disclosure that otherwise would be compelled by the rules of some tribunal. The duty provides no defense against compelled disclosure--when rules of evidence compel disclosure and no privilege applies, the rules trump the duty—but the duty, unlike the privilege, applies even where no matter is pending.
Indeed, in some cases the Evidence Code and the duty of confidentiality conflict. A communication between client and lawyer for the purpose of committing a crime or fraud is not privileged, for example, Evidence Code §956, but that fact would not free a lawyer to reveal the content of the communication unless the crime contemplated threatened death or substantial bodily harm. The absence of any exception to Section 6068(e) prior to 2004, and the narrowness of the exception then adopted, is inconsistent with the idea that exceptions to the privilege are automatically exceptions to the duty. Indeed, if there were such a principal the 2003 amendment to Section 6068(e) was superfluous, as the substance of that amendment would have been enacted in the 1993 adoption of Evidence Code Section 956.5. That the legislature believed a separate amendment was necessary implies that no such principal exists.
All these exceptions make good policy sense, however, and one can understand why courts are inclined not to adhere strictly to the language of Section 6068(e) in such cases. But that point brings me to the second difference between California and most other jurisdictions, which is that Section 6068(e) does not allow a lawyer to disclose in defense of a charge brought by a third party. Here, in contrast to the cases discussed above, the court has refused to imply an exception to the statutory language.
The leading case is Solin v. O’Melveny & Myers, 89 Cal. App. 4th 451 (2001). Solin was a lawyer who consulted the O'Melveny firm regarding his representation of clients engaged in allegedly criminal activities. He discussed his potential liability and the best way to secure his fees. (Although this point was not raised in the case, nothing in Section 6068(e) allows lawyers such as Solin to discuss client confidential information for the purpose of securing advice about their own conduct, and certainly not to discuss how best to secure their fees.)
Solin later sued O'Melveny for malpractice. The court dismissed the action on the ground that the firm could not defend itself without disclosing confidential information regarding these clients, which it had received from Solin. (The clients, of course, did not consent to such disclosure.) Because the clients themselves were not involved in the malpractice action, the court held, Section 958 did not apply, and Solin would be bound by Evidence Code Section 955 to assert the privilege as against O’Melveny’s attempted disclosure, leaving O’Melveny unable to defend itself. (The absence of a self-defense exception with regard to third-party suits also was an implicit basis for the decision in McDermott, Will & Emery v. Superior Court, 83 Cal.App.4th 378 (2000).)
Solin is an understandable opinion, given California's strong defense of both confidentiality and privilege. But I believe a judicial system willing to imply exceptions to confidentiality to allow lawyers to recover fees and pursue employment claims should be willing to imply an exception that allows a firm to defend a claim against it brought either by a third party (the usual case) or, as in Solin, a suit brought by client A that could only be defended by disclosure of confidences of (the plaintiff's) Client B, which the firm also has.
Why should there be such an exception? First, in such a system there is no flat rule against implied exceptions, nor any rule against exceptions where a client objects to disclosure. General Dynamics proves that much (the Solin court's narrow reading of that opinion notwithstanding).
Second, to the extent one cares about fairness, the concern should be for fairness to all relevant parties. Solin is concerned that the defendant firm not be treated unfairly, but it vindicates that concern by dismissing a cause of action that might in fact be meritorious. In some cases, there might be clients on both sides of the fairness question: Firm A might represent clients B and C (separately, not as joint clients), and might need to disclose confidential information of B to defend an action by C.
The fairest way to deal with such problems would be to manage disclosure, through protective orders and the like, in a way to protect the interests of the client whose information was at stake without causing the plaintiff to forfeit a potentially meritorious claim. Any other result would suggest to the cynical that the real principle at work is to benefit lawyers: create exceptions that allow lawyers to get money (pursue fees or tort claims) but deny exceptions when doing so allows lawyers to avoid costs, such as the cost of third party suits.
Ideally, of course, such a rule would take the form of legislative action adopting rules equivalent to Model Rule 1.6(b)(4)-(5), and Restatement (Third) of the Law Governing Lawyers §64. But the legislature has not shown much interest in modifying Section 6068(e) and has not shown any interest in repealing judicial interpetations of confidentiality at odds with the plain language of the statute. Against such a history of practice, an exception for disclosures to allow lawyers to defend against claims by a party other than the client whose information is at stake seems desirable.
DM
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Update (6/16): I neglected to link to a very good L.A. County Bar Association opinion on this issue.
DM