Part II THE DUTIES OF LAWYERS

Chapter 3. The Duty to Protect Client Confidencespp. 159-228

A. The basic principle of confidentiality RPC 1.6(a)

A lawyer shall not reveal information relating to the representation of a client unless the client gives informed consent, the disclosure is impliedly authorized in order to carry out the representation or the disclosure is permitted by paragraph (b). Why duty? Cmt. 2Scope: “all information relating to representation, whatever its source.” Cmt. 3

Client identity

• Suppose (s/) movie star consults L about possible divorce? Confidential?

• What must firm managers, partners do? Recall RPC 5.1.

Probs. 3-1, 3-2 Your dinner with Annapp. 163-67

Scene 1: What can you tell Anna about first day’s work?

Scene 2: Did you say too much? Violate 1.6?• Promise to keep secret? • Relevance that in public place? • Personal need to blow off steam?• Did Anna say too much about Estella, CF?

Rstmt. §60(1)(a): more realistic standard? Pp. 167-68

Prohibits revelation only if “reasonable prospect that doing so will adversely affect a material interest of the C or if C has instructed L not to use or disclose such information”

Cmt. c. (i) defines adverse effects: frustrate C objectives; material misfortune, disadvantage or prejudice; $ or physical harm; personal embarrassment.

Future risk to Joey’s interests?

Permissible discussion with

• Life partner?• Spouse?• Therapist? (psychiatrist, psychologist, social

worker?)• Others in firm?

E-mail pp. 169-70

ABA F. Ops. 99-413 generally needn’t use special encryption 11-459 but if represent employee, caution not to use employer’s server; no expectation of privacy

New 1.6(c) (8/12)

(c) A lawyer shall make reasonable efforts to prevent the inadvertent or unauthorized disclosure of, or unauthorized access to, information relating to the representation of a client.

- lax security- hacking- electronic equivalent of dumpster diving (industrial espionage)

Revised Cmt. 18: Factors for determining Reasonableness of L’s Efforts

- Sensitivity of information- Likelihood of disclosure without safeguards- Difficulty & cost to implement safeguards- Extent to which safeguards adversely affect Ls’

ability to represent clients

Mere disclosure, by itself, does not trigger discipline.

B. Exceptions to duty to protect confidences 1. Revelation of past criminal conduct pp. 170-225

• Nutshell history: MOST CONTROVERSY > NOW LONG LIST OF EXCEPTIONS

“Dead bodies” (70s); Spaulding (‘62)

• Both occurred before ‘83 MRPC; probably Canons (duty: preserve confidence unless C announced intent to commit crime)

• Continued relevance– Evolution of confidentiality duty & exceptions

• Balkanization: jurisdictional differences

– Moral struggle with line-drawing

1. Revelation of past criminal conductpp. 173-79

Prob. 3-3 The missing persons, Scene 1Garrow tells you (Belge) crime details, location of bodies. Clicker: What to do?1. Tell someone where to find bodies. (who,

how? Allowed?)2. Go to site, confirm.3. Do nothing but defend client.

**Clicker Q: Prob. 3-4 The missing persons, Scene 2 pp. 179-80

Susan Petz’s father comes from Chicago to Syracuse, asks Armani: “Can you tell me anything?”1. “I’m so sorry, she is dead.”2. “No.” Try case.3. Attempt plea bargain.4. Other options?

Did Armani & Belge do anything wrong? (law, or poor judgment)

1. Yes, took photos of remains, hid in safe spot. 2. Yes, attempted plea bargain.3. Yes, allowed Garrow to testify.4. Yes, made public statement after trial that knew; bad judgment.5. No, Garrow testified honestly, confessed.6. No, did nothing wrong.

Belge Indicted pp. 181-84Tr. Ct. dismissed, App. Div. aff’d.

Public health laws: duty to report death; decent burial.Tr. Ct.: dismissed; don’t force Hobson’s choice on L’s.

Ethical duty of confidentiality (NY CPR then treated same as ACP) Cat chasing own tail5th Am. of Δ, as relates to L (derivative duty)

App. Div.: troubled with absolute ACP, only issue sufficiency of indictment.

2. The risk of future injury or death Prob. 3-5 The missing persons, Scene 3 pp. 184-85

• Settled medmal suit v. state; transfered to medium security prison.

• Escaped. Hit list in cell.• He told you hiding place.

– 1.6( b) “MAY” • Discretion vs. Duty?• Will you?

Edmond man threatens Newtown-style attack (Jan. 24, 2013)

“Judge & both attorneys do not realize what . . . capable of doing, they need to be careful . . . Capable of doing things along the line of Newton”

Discretion to warn? ABA & OK RPC 1.6(b)(1), cmt. 6 TX: DUTY p. 187, n. 36.

RPC 1.6(b)(1)

(b) A lawyer may reveal . . . to the extent the lawyer reasonably believes necessary:

(1) to prevent reasonably certain death or substantial bodily harm;

***Cmt. 6 . . . overriding value of life and physical integrity . . . if it will be suffered imminently or if there is a present and substantial threat that a person will suffer … harm at a later date if the lawyer fails to take action necessary to eliminate the threat. (**Read with care, possible applications?)

2. The risk of future injury or death pp. 185-200

Spaulding v. Zimmerman (MN 1962)BIG picture? (few sentences)TIME line?Procedural posture? appeal from trial court vacating settlement agreement on behalf of minor, previously approved.Issue? whether abuse of discretion?Holding? Duty of candor? Compare MRPC & OK 3.3; OK improved upon! N.B. 1.0 on fraud; flagged to improve but couldn’t. (cat & tail)

What explains lawyers’ behavior? Current Relevance?

• WHY d/n defense counsel tell π counsel?• WHO did Δ counsel represent? Ins. Co.?

Zimmermans?– Did they consult with their clients about whether to

disclose?• WHY d/n π counsel get Dr. Hannah’s report?• Duty of CANDOR to tribunal (approve settlement)• WHO should adult David sue? • Immoral to withhold information from David &

family? Community reaction when word out?

Enron: game changer

3. Client frauds & crimes causing $$$$$ pp. 201-220

RPC 1.2(d) prohibits from knowingly advising or assisting clients’ crimes & frauds1.0(d) Fraud: “conduct that is fraudulent under the substantive or procedural law of the applicable jurisdiction and has a purpose to deceive.”

Many types: torts, criminal (state & fed’l), contracts . . . No clear or uniform definition; open-ended.

1.0(f) Knowledge: “actual knowledge of fact in question” inferable from circumstances.

Changing rules allow PREVENTION OR MITIGATE $,

property harm . . . .

REMIND OF Subtext: Politics of Prof’L Reg’n & Role of ALI pp. 207-16

About every 10 years another major $$$ scandal >>>> federal

reforms, expand 1.6 confid’y exceptions

Sarbanes-Oxley §307 RULES OF PROFESSIONAL RESPONSIBILITY FOR ATTORNEYS (2009)

SEC shall issue rules, in the public interest and for the protection of investors, setting forth minimum standards of professional conduct for attorneys appearing and practicing before the Commission in any way in the representation of issuers, including a rule— (1) requiring an attorney to report evidence of a material

violation of securities law or breach of fiduciary duty or similar violation by the company or any agent thereof, to the chief legal counsel or CEO; and

(2) if no appropriate response from CLO or CEO L must report the evidence to the audit committee of the board of directors of the issuer or to another [independent] committee of the board or to the board of directors.

The SEC StandardsIs the lawyer covered?

Is reporting required?

Which method of reporting will be used?

Is the lawyer satisfied?

The lawyer has a duty to report when she “becomes aware of evidence of a material violationby the issuer or by any officer, director,

employee, or agent of the issuer.”17 C.F.R. § 205.3(b)

Does the lawyer “appear and practice”according to 205.3?

The Direct, Bypass, or Alternative Method

If yes, then that is likely the end of the matter.

I If not, the SEC Standards require the lawyer to then “report the evidence of a material violation” to the; “audit committee of the issuer’s board of directors;”

another committee of the board composed of independent directors; or the full board of directors.

SEC, Harvey Pitt

Proposed SEC rule: -covered lawyers practicing b/4 SEC -must report securities fraud to highest officials-If no timely & proper response-MUST make “noisy withdrawl” (w/d & notify SEC).ABA pushback > ABA Task Force on Corp. Responsibility . . . HOD approved amendments, current 1.6(b)(2), (3) and 1.13. p. 209 n. 78

Wolas & U.S. v. Benjamin: career ender!

Current status

SEC: Wait & see approach– disqualify (DQ) L from appearing before Only one ($50K fine; recent

grad, generalist, work mile wide & inch deep.

Statutory whistleblower protection WestlawNext: over 350 results, 50 Circuit Cases!

> 2 10th Cir. See, Lockheed Martin Corp. v. Admin. Rev. Bd., Dept. of Labor (‘13) (Amicus: Nat’l CC & Nat’ Employment Ls)

> 2 7th Cir. See, Wiest v. Lynch, Tyco, et al. (‘13); DeGuelle v. Camilli (‘11)

U.S. v. Rybicki (2d Cir. 2003) (L’s conviction mail & wire fraud, kickbacks to insurance, SOX allows up to 20 years in prison) n.4

Larry Fox

Drinker Biddle (Phila. ABA HOD, now Yale Ethics)

Gives NEW meaning to Wacko! When drafted amicus brief on Thompson v. NOLA, SO BAD that JM replied to long list of recipients urging he tone it down, helped.

ABA 1.6(b)(2), (3) discretion

-if reasonable certainty C conduct will or has caused another’s substantial $ or property injury-C is using/has used L’s services in doing so, -may reveal to

(2) prevent C’s crime/fraud or(3) not yet discovered, Victim (Vic)

unaware, to prevent, mitigate or rectify harm

Prob. 3-9 Reese’s Leases pp. 218-20

Important Facts

-ELS (OPM): 60% firm’s revenue Firm papered lease transactions; opinion letters to lenders (recent Colo. Decision)

-In reliance, lenders extended further credit– charged customers less for leases; lease income

less than (<) loan repayments. Go figure…

-C confesses forgery, promises to stop. (Dark & stormy night)

Prob. 3-9 Reese’s Leases pp. 218-20

Clicker: Best option for firm? 1. Accept C’s promise to stop, continue

representing?2. Withdraw (fire the C)? (RPC 1.16(b)(1))3. Tell lenders, perhaps prosecutors?

Look into Crystal Ball … Takeaways from OPM?

• Don’t let firm depend on single client for revenue – INTERFERES WITH INDEPENDENT PROFESSIONAL JUDGMENT

• Carry adequate malpractice insurance (but was this covered or under personal COI exclusion?)

• Recall from LM discussion: Risks of representing friends & family

“Parted amicably”

S/ law school friend calls, “any reason why shouldn’t accept new C?” Role play

E2k improvements: write letter that both Rockwell International & your Grandma understand.

Letter to lender (other crime/fraud victims)

• Notice of w/d• Disaffirm work product, opinions• Substantive disclosure of C’s misuse of

services, fraud• Notice to protect own interests

RULE 4.1: TRUTHFULNESS IN STATEMENTS TO OTHERS: noisy w/d sometimes DUTY to

revealIn the course of representing a C a L sh/n knowingly:(b) fail to disclose a material fact when disclosure is necessary to avoid assisting a criminal or fraudulent act by a C, unless disclosure is prohibited by Rule 1.6.Cmt. 3 . . . Ordinarily [withdrawal avoids 1.2(d) violation] . . . Sometimes . . . give notice of the fact of withdrawal and to disaffirm an opinion, document, affirmation or the like. In extreme cases, substantive law may require L to disclose information relating to the representation to avoid being deemed to have assisted the client’s crime or fraud. ****If the lawyer can avoid assisting a client’s crime or fraud only by disclosing this information, then under paragraph (b) the lawyer is required to do so, unless the disclosure is prohibited by Rule 1.6.

Compare OK RPC 1.6(b)

(2) to prevent C from committing:(ii) SAME as ABA (2)

(3) [SAME as ABA, but proviso] . . . the L has first made reasonable efforts to contact the client so that the client can rectify such criminal or fraudulent act but … unable to do so, or L has contacted the C & called upon to rectify such criminal or fraudulent act and the C …refused or unable to do so.

4. 1.6 Exceptions for “Lawyer Self-interest” pp. 220-25

(b) to the extent reasonably necessary, may reveal

(4) to obtain legal advice about ethical obligations(5) to establish claim or defense in controversy w/ C,

defense to criminal or civil charge, or respond to allegations in any proceeding [re repre’n]

(6) to comply w/ other law or ct order(7) NEW, Ethics 20/20: Conflicts screening lateral

lawyers

C. Use or disclosure of confidential information for personal benefit or to benefit another C.

Pp. 225-27

Prob. 3-10 An Investment ProjectS/Represent Boeing searching for new manufacturing site. You learn developers acquiring adjacent property. May YOU buy for yourself? Sure of C’s decision not to buy?

1.8(b) sh/n use info. to disadvantage of C (unless informed consent (IC), or otherwise (o/w) permitted). Cmt. 5.

S/ Don’t consult. Client relations problems?

Fred Zacharias

• Ls don’t discuss confidentiality with C’s; not frank w/ C’s about limits to it.

• Cs learn about duty from TV, popular culture (egads!!)

• Geeks: require Miranda warnings to C’s – Problems w/ when & how to tell; may discourage

C from disclosing when L’s advice could prevent.– Educate repeat Cs what not to tell next L