Understanding the Duty of Confidentiality
LACBA Update, March 2000
By John W. Amberg, Secretary, LACBA Professional Responsibility and Ethics Committee. Amberg is a business litigation partner in the Santa Monica office of Bryan Cave LLP. The views expressed are his own.
Almost all lawyers know that they owe a duty of confidentiality to their clients. And most understand that confidential information exchanged between lawyer and client is normally privileged and cannot be discovered by a third party. However, the attorney-client privilege and the duty to preserve the client’s confidences and secrets are not synonymous and derive from different sources. Section 6068 ("Duties of Attorney") of the Business & Professions Code states: "It is the duty of an attorney to do all of the following: ...(e) To maintain inviolate the confidence, and at every peril to himself or herself to preserve the secrets, of his or her client." (Emphasis added.) This duty of secrecy is broader than the confidential information subject to the privilege and includes all information learned during the professional relationship that the client has requested to be inviolate or which would be embarrassing or likely to be detrimental to the client if disclosed. Los Angeles County Bar Opinion No. 452.
The duty of secrecy is owed to present and former clients alike. Commercial Standard Title Co. v. Superior Court (1979) 92 Cal.App.3d 934, 945. Unless compelled by law, or subject to one of several narrow exceptions, a lawyer cannot disclose client secrets to a third party without the client’s informed consent. Commercial Standard Title Co., supra; Los Angeles County Bar Opinion No. 389.
The high value placed on preserving the confidences of clients is enshrined in Evidence Code §950 (the attorney client privilege) and the Rules of Professional Conduct. Rule 3-310(E) provides: "A member shall not, without the informed written consent of the client or former client, accept employment adverse to the client or former client where, by reason of the representation of the client or former client, the member has obtained confidential information material to the employment." Whether information is material to the new employment may be judged by the "substantial relationship" test.
Even the stringent terms of Section 6068(e) are subject to exceptions, however. Section 6202 of the Business & Professions Code authorizes the disclosure of confidences in the arbitration of a fee dispute and subsequent proceedings, and Evidence Code § 958 provides that no privilege will apply when a client accuses its lawyer of a breach of duty arising out of the lawyer-client relationship and a communication is relevant to that issue. If the attorney were barred from using otherwise confidential information relevant to an alleged breach of duty, the client would be able to use the duty of secrecy as a sword, rather than a shield. See Los Angeles County Bar Opinions Nos. 396, 452 & 498.
When a third party, not the client, makes claims against the lawyer, the lawyer’s right to disclose confidential information to defend himself is unsettled. A self-defense exception to the duty of secrecy was recognized under federal law by Judge Tashima in In re National Mortgage Equity Corp. Litigation, 120 F.R.D. 687 (C.D. 1988), and may be found in Rule 1.6 of the Model Rules of Professional Conduct of the American Bar Association. But while the ABA Model Rules may be persuasive, they are not binding in California. See, e.g., State Compensation Ins. Fund v. WPS, Inc. (1999) 70 Cal.App.4th 644, 655-656. To date, no California caselaw or rule recognizes the self-defense exception.
There is also a threatened conflict brewing between California law and the ABA Model Rules on the subject of whistle-blowing by lawyers. Both currently recognize a crime-fraud exception to the attorney-client privilege. Evidence Code §956 states that no privilege exists if the lawyer’s services were sought or obtained to plan or commit a crime or fraud. And Section 956.5 also permits a lawyer to disclose confidential information if he reasonably believes disclosure is necessary to prevent the client from committing a criminal act "that the lawyer believes is likely to result in death or substantial bodily harm." This is closely mirrored in Model Rule 1.6(b)(1), which permits disclosure to prevent "imminent death or substantial bodily harm." However, the ABA is currently debating whether to expand the exception to allow disclosures by lawyers to prevent the client from committing a crime or fraud "that is likely to result in substantial injury to the financial interests or property of another... ."
No counterpart to the proposed ABA rule exists in California. Of course, it is the duty of a member of the State Bar to support the Constitution and the laws of the United States and California (Bus. & Prof. C. §6068(a)), and he or she may not ordinarily advise the violation of any law, rule or ruling (Rule of Prof. Conduct 3-210). If the client is an organization, and the lawyer knows that an agent of the organization acts, intends, or refuses to act in violation of the law, Rule of Professional Conduct 3-600 expressly states that the lawyer shall not violate his duty of secrecy under Section 6068(e). The lawyer cannot be a whistle-blower. Instead, the lawyer must try to dissuade the client from its course of action, and if unsuccessful, must resign. Withdrawal from the representation is mandatory if continued employment will result in violation of the Rule of Professional Conduct or the attorney’s duties under the Business & Professions Code, and is permissive if the client seeks to pursue an illegal course of conduct. Rule of Prof. Conduct 3-700(B)(2) & (C)(1)(b). The withdrawal must avoid reasonable foreseeable prejudice to the client, and must not compromise the confidentiality of the attorney-client relationship. Cal. Rule of Court 376(b). Nevertheless, the lawyer may ethically disclose confidential information if necessary to establish the reasons for the withdrawal, but if so, should seek to present the information to the court in camera. Los Angeles County Bar Opinion No. 498.