080116 CAEO, ETH 2016-195

Docket Nº:ETH 2016-195
Case Date:August 01, 2016
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...

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