ETH 2016-195
Formal Opinion No. 2016-195
California Ethics Opinions
State Bar of California Standing Committee on Professional Responsibility and Conduct
August 1, 2016
ISSUE:
What duties does a lawyer owe to current and former clients
to refrain from disclosing potentially embarrassing or
detrimental information about the client, including publicly
available information the lawyer learned during the course of
his representation?
DIGEST:
A lawyer may not disclose his client’s secrets, which
include not only confidential information communicated
between the client and the lawyer, but also publicly
available information that the lawyer obtained during the
professional relationship which the client has requested to
be kept secret or the disclosure of which is likely to be
embarrassing or detrimental to the client. Even after
termination of the attorney-client relationship, the lawyer
may not disclose potentially embarrassing or detrimental
information about the former client if that information was
acquired by virtue of the lawyer’s prior
representation.
AUTHORITIES
INTERPRETED:
Business and Professions Code section 6068(e)(1).
Evidence
Code sections 952 and 954.
Rule
3-100 of the Rules of Professional Conduct of the State Bar
of California.[1]
STATEMENT
OF FACTS
Lawyer
is hired by Hedge Fund Manager to defend him against a fraud
claim brought by several of his investors. The investors
alleged that Hedge Fund Manager was operating a Ponzi scheme
or similar financial fraud. During the representation, Hedge
Fund Manager acknowledged in confidence to Lawyer that
earlier in his career he had taken certain liberties with his
investors’ money, but assured Lawyer he had been
completely above board in his dealings with the investors who
now were suing him.
While
the lawsuit was pending, Lawyer interviewed several former
investors in Hedge Fund Manager’s fund, including
Former Investor. Former Investor told Lawyer that, several
years earlier, she had accused Hedge Fund Manager of fraud in
connection with the fund, and that Hedge Fund Manager paid
her $100,000 to resolve their dispute before she filed a
lawsuit. After they spoke, Former Investor forwarded Lawyer a
link to a blog post she had written about her accusations
against Hedge Fund Manager. Lawyer forwarded the link to
several friends, saying only “interesting
reading.”
After
exchanging a limited amount of discovery, Hedge Fund Manager
settled the lawsuit by paying each of the 16 investor
plaintiffs $250,000. The parties documented the settlement in
a non-confidential settlement agreement, which was submitted
to the court in connection with a motion for determination of
good faith settlement. After the court granted the motion,
the lawsuit was dismissed, and Lawyer’s representation
of Hedge Fund Manager concluded. The settlement was reported
in a small article in a local newspaper, but not picked up by
the national press.
Several
months after the settlement and the conclusion of
Lawyer’s representation, Lawyer read an interview with
Former Investor in the Wall Street Journal in which Former
Investor recited the details of her prior dispute with Hedge
Fund Manager. In response, Lawyer wrote a letter to the
editor of the Journal, noting he represented Hedge Fund
Manager in connection with the recent investor lawsuit, and
stating, “I did a great job of getting Hedge Fund
Manager out of the lawsuit for only a seven-figure
settlement.”
Several
years after the second investor lawsuit settled, Hedge Fund
Manager was arrested for driving under the influence of
alcohol. Lawyer commented on the arrest on his Facebook page,
stating, “Drinking and driving is irresponsible.”
DISCUSSION
1.
The Duty of Confidentiality and the Attorney-Client
Privilege
One of
the most important duties of an attorney is to preserve the
secrets of his client. “No rule in the ethics of the
legal profession is better established nor more rigorously
enforced than this one.” (Wutchumna Water Co. v.
Bailey (1932) 216 Cal. 564, 572 [15 P.2d 505]
(“Wutchumna”).) “A member’s
duty to preserve the confidentiality of client information
involves public policies of paramount importance.”
(In re Jordan (1974) 12 Cal.3d 575, 580 [116
Cal.Rptr. 371].) Preserving the confidentiality of client
information contributes to the trust that is the hallmark of
the client-lawyer relationship.” (Rule 3-100,
Discussion paragraph [1].)
Business
and Professions Code section 6068, subdivision (e)(1) states
that it is the duty of an attorney “[t]o maintain
inviolate the confidence, and at every peril to himself or
herself to preserve the secrets, of his or her client.”
(Bus. & Prof. Code § 6068(e)(1).)[2]As this Committee has
explained, “Client secrets means any information
obtained by the lawyer during the professional relationship,
or relating to the representation, which the client has
requested to be inviolate or the disclosure of which might be
embarrassing or detrimental to the...
