Client Secrets Must Stay in Vault Forever, Even if They Have Gone Viral on the Internet

The ABA/BNA Lawyers’ Manual on Professional Conduct™ is a trusted resource that helps attorneys understand cases and decisions that directly impacts their work, practice ethically, and...

June 15 — Lawyers may never reveal embarrassing or detrimental secrets they learn about a client during the representation—even if the information doesn't come from the client and is publicly available, according to a proposed opinion from the California bar's ethics committee.

A lawyer's duty of confidentiality extends beyond attorney-client privileged communications and continues after the representation ends, the opinion makes clear.

The committee gave its advice through a series of hypotheticals involving a lawyer who defends a hedge fund manager against fraud claims and learns some interesting information along the way.

The bar is asking for comments on the proposed opinion through Aug. 27.

Secret #1

During the investigation the hedge fund bigwig tells the lawyer in confidence that he has taken liberties in the past with investors' money, but he assures the lawyer that he has been completely above board in his dealings with the investors now suing him.

The professional duty of confidentiality extends beyond information protected by the evidentiary attorney-client privilege.

The committee said that because the client communicated this information confidentially during the representation, the lawyer must keep it secret under Cal. Bus. & Prof. Code §6068(e) and California Rule of Professional Conduct 3-100, as well as under the evidentiary attorney-client privilege in Cal. Evid. Code §954.

Secret #2

While the lawyer is interviewing former investors during the litigation, one tells the lawyer that several years earlier she accused the hedge fund manager of fraud in connection with the fund, and he paid her $100,000 to resolve the dispute. The former investor provides the lawyer with a link to a blog she wrote about her settlement. The lawyer forwards the link to several friends, saying only “interesting reading.”

The committee said this information is not protected by the attorney-client privilege because it was not learned through a confidential communication with the hedge fund manager.

Nevertheless, the committee said, it constitutes a protected secret that may not be disclosed, because it was obtained in the course of the representation of and disclosure likely would be embarrassing or detrimental to the hedge fund manager.

“Secrets” consist of any information an attorney obtains during the professional relationship, or relating to the representation, which the client has requested to be kept confidential or the disclosure of which might be embarrassing or detrimental to the client, the committee explained.

The category of client secrets covers a broader category of information than attorney-client communications, it pointed out. Moreover, the committee said, the duty of confidentiality applies to client secrets even if the information is publicly available.

Thus, even though the former investor made her information public by blogging about it, the lawyer has a duty to protect it as a client secret, and he violated that duty by forwarding the blog link to friends, the committee said.

Secret #3

The hedge fund manager reaches a nonconfidential settlement with the plaintiffs, and the lawyer's representation ends.

Several months later, the lawyer reads a interview in the Wall Street Journal in which the former investor who had told him about her previous experience with the hedge fund manager described the details of the dispute and the settlement. The lawyer writes a letter to the editor of the Journal, noting that he previously represented the hedge fund manager and saying he would not be surprised if the former investor's claims in the prior dispute had some merit.

The committee advised that the lawyer's remarks on the merits of the former investor's claims amounted to a disclosure of client secrets and therefore violated the lawyer's ongoing duty of confidentiality.

The lawyer's comments likely would cause the hedge fund manager harm or embarrassment, the committee said, because the lawyer's prior representation of the manager suggests that his views were based on confidential information he learned during the representation.

This conclusion, the committee said, is consistent with a lawyer's duty to former clients under Rule 3-310(E), which prohibits representation adverse to a former client where the lawyer obtained confidential information material to the new representation through the earlier representation.

This One's Not Protected

Years later the lawyer reads that the hedge fund manager has been arrested for drunk driving. The lawyer posts a comment about the arrest on his Facebook page, stating “Drinking and driving is irresponsible.”

This post did not breach the lawyer's duty of confidentiality, the committee concluded, because it bears no relationship to the lawyer's prior representation of the hedge fund manager.

“If … otherwise embarrassing or detrimental information is unrelated to a prior representation and was not learned by the lawyer during the course of his representation of the client, the lawyer is not bound to preserve that information as a client secret,” the opinion states.

Full text of the proposed opinion at http://www.calbar.ca.gov/Portals/0/documents/publicComment/2015/2015_13-0005DisclosurePublicyAvailableInformation.pdf.

The public comment notice is at http://www.calbar.ca.gov/AboutUs/PublicComment/201511.aspx.

The ABA/BNA Lawyers’ Manual on Professional Conduct is a joint publication of the American Bar Association Center for Professional Responsibility and Bloomberg BNA.

Copyright 2015, the American Bar Association and The Bureau of National Affairs, Inc. All Rights Reserved.