Two Hats, One Lawyer:Demystifying Privilege & Confidentiality

Stuart I. Teicher, Esq.

The Basic Definition

Information discussed between a client and a lawyer, told in

confidence, for the purpose of securing legal advice,

not in furtherance of a crime or tort, which has not been waived.

Rule 1.13 Organization As Client

(a) A lawyer employed or retained by an organization represents the organization acting through its duly authorized constituents.

(1) Made for the purpose of legal advice, and your people knew that

(2) At the request of the employee’s supervisor(3) The subject of the conversation must be within the scope

of the employee’s duties and about information not available to the control group and

(4) The conversation must have been limited to people who “need to know”

Rule 4.3 Dealing With Unrepresented PersonIn dealing on behalf of a client with a person who is not represented by counsel, a lawyer shall not state or imply that the lawyer is disinterested. When the lawyer knows or reasonably should know that the unrepresented person misunderstands the lawyer’s role in the matter, the lawyer shall make reasonable efforts to correct the misunderstanding. The lawyer shall not give legal advice to an unrepresented person, other than the advice to secure counsel, if the lawyer knows or reasonably should know that the interests of such a person are or have a reasonable possibility of being in conflict with the interests of the client.

Rule 1.13(f)

In dealing with an organization's directors, officers, employees, members, shareholders or other constituents, a lawyer shall explain the identity of the client when the lawyer knows or reasonably should know that the organization's interests are adverse to those of the constituents with whom the lawyer is dealing.

Minimum Corporate Miranda Warnings

• I owe my loyalty to the company, not you, the employee

• I represent the company• Our conversations will be privileged (ans explain

what that means)• The privilege belongs to the corporation, not the

employee and only the employee can waive it• Tell them about the reason for the interview

1.13 (g) A lawyer representing an organization may also represent any of its directors, officers, employees, members, shareholders or other constituents, subject to the provisions of Rule 1.7. If the organization's consent to the dual representation is required by Rule 1.7, the consent shall be given by an appropriate official of the organization other than the individual who is to be represented, or by the shareholders.

Rule 1.7 Conflict Of Interest: Current Clients(a) Except as provided in paragraph (b), a lawyer shall not represent a client if the representation involves a concurrent conflict of interest. A concurrent conflict of interest exists if:(1) the representation of one client will be directly adverse to another client; or(2) there is a significant risk that the representation of one or more clients will be materially limited by the lawyer's responsibilities to another client, a former client or a third person or by a personal interest of the lawyer.

(b) Notwithstanding the existence of a concurrent conflict of interest under paragraph (a), a lawyer may represent a client if:(1) the lawyer reasonably believes that the lawyer will be able to provide competent and diligent representation to each affected client;(2) the representation is not prohibited by law;(3) the representation does not involve the assertion of a claim by one client against another client represented by the lawyer in the same litigation or other proceeding before a tribunal; and(4) each affected client gives informed consent, confirmed in writing.

Factors that determine if it’s legal advice

• Look at the content of the communication• Consider your role• Consider how your role is viewed if you bring in

OC• Think about the details of your communications• It’s also about the scope of your task• Consider formalities like your title• Other formalities• Consider the request that got you involved in

the first place

RULE 1.6: CONFIDENTIALITY OF INFORMATION 

(a) A lawyer shall not reveal information relating to the representation of a client unless the client gives

informed consent, except for disclosures that are

impliedly authorized in order to carry out the representation,

and except as stated in paragraph (b).

Rule 1.6. Confidentiality of Information

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

(1) to prevent the client from committing a criminal act that the lawyer believes is likely to result in imminent death or substantial bodily harm;  

1.0(d) "Fraud" or "fraudulent" denotes conduct that is fraudulent under the substantive or procedural law of the applicable jurisdiction and has a purpose to deceive.

Fraud is bad.

Rule 1.2 (d) A lawyer shall not counsel a client to engage, or assist a client, in conduct that the lawyer knows is criminal or fraudulent, but a lawyer may discuss the legal consequences of any proposed course of conduct with a client and may counsel or assist a client to make a good faith effort to determine the validity, scope, meaning or application of the law.

Can't assist a fraud.

1.2 Comment [10] When the client's course of action has already begun and is continuing, the lawyer's responsibility is especially delicate. The lawyer is required to avoid assisting the client, for example, by drafting or delivering documents that the lawyer knows are fraudulent or by suggesting how the wrongdoing might be concealed. A lawyer may not continue assisting a client in conduct that the lawyer originally supposed was legally proper but then discovers is criminal or fraudulent. The lawyer must, therefore, withdraw from the representation of the client in the matter. See Rule 1.16(a). In some cases, withdrawal alone might be insufficient. It may be necessary for the lawyer to give notice of the fact of withdrawal and to disaffirm any opinion, document, affirmation or the like. See Rule 4.1.

If you realize you're assisting, you can't continue assisting a fraud.

You must withdraw.

But shouldn't we have to say something?

Old rules gave no exception for financial crimes or frauds. They were protected by confidentiality.

But then along came.....

Enron was awful. It caused a lot of damage. If lawyers knew about the fraud, shouldn't they be required to say

something?

Confidentiality says NO. Congress didn't like that...

Sarbanes-Oxley Act

Sec. 370- SEC Rule: Lawyers must report information about securities fraud to the

highest officials in the organization.

Does that cause us to reveal confidences? No. But...

Congress wanted to go further...

Wanted the “noisy withdrawal”- if the lawyer reported the securities violation to officers but the officer did not act promptly on the internal report,

the lawyer had to withdraw and notify the SEC that it was no longer representing the company

based on “professional considerations.”

The ABA said....COME ON! NO WAY!

And the compromise was ABA 1.6(b) (2) & (3)

Rule 1.6 Confidentiality of Information

(b) A lawyer may reveal information relating to the representation of a client to the extent the lawyer reasonably believes necessary:

(2) to prevent the client from committing a crime or fraud that is reasonably certain to result in substantial injury to the financial interests or property of another and in furtherance of which the client has used or is using the lawyer's services;

(3) to prevent, mitigate or rectify substantial injury to the financial interests or property of another that is reasonably certain to result or has resulted from the client's commission of a crime or fraud in furtherance of which the client has used the lawyer's services;

SCR 20:1.6 Confidentiality(b) A lawyer shall reveal information relating to therepresentation of a client to the extent the lawyer reasonably believes necessary to prevent the client from committing a criminal or fraudulent act that the lawyer reasonably believes is likely to result in death or substantial bodily harm or in substantial injury to the financial interest or property of another.(c) A lawyer may reveal information relating to therepresentation of a client to the extent the lawyer reasonably believes necessary:(1) to prevent reasonably likely death or substantial bodily harm;(2) to prevent, mitigate or rectify substantial injury to thefinancial interests or property of another that is reasonably certain to result or has resulted from the client's commission of a crime or fraud in furtherance of which the client has used the lawyer's services;

Rule 1.13 Organization As Client(a) A lawyer employed or retained by an organization represents the organization acting through its duly authorized constituents.(b) If a lawyer for an organization knows that an officer, employee or other person associated with the organization is engaged in action, intends to act or refuses to act in a matter related to the representation that is a violation of a legal obligation to the organization, or a violation of law that reasonably might be imputed to the organization, and that is likely to result in substantial injury to the organization, then the lawyer shall proceed as is reasonably necessary in the best interest of the organization. Unless the lawyer reasonably believes that it is not necessary in the best interest of the organization to do so, the lawyer shall refer the matter to higher authority in the organization, including, if warranted by the circumstances to the highest authority that can act on behalf of the organization as determined by applicable law.(c) Except as provided in paragraph (d), if(1) despite the lawyer's efforts in accordance with paragraph (b) the highest authority that can act on behalf of the organization insists upon or fails to address in a timely and appropriate manner an action, or a refusal to act, that is clearly a violation of law, and(2) the lawyer reasonably believes that the violation is reasonably certain to result in substantial injury to the organization,then the lawyer may reveal information relating to the representation whether or not Rule 1.6 permits such disclosure, but only if and to the extent the lawyer reasonably believes necessary to prevent substantial injury to the organization.

(d) Paragraph (c) shall not apply with respect to information relating to a lawyer's representation of an organization to investigate an alleged violation of law, or to defend the organization or an officer, employee or other constituent associated with the organization against a claim arising out of an alleged violation of law.

(e) A lawyer who reasonably believes that he or she has been discharged because of the lawyer's actions taken pursuant to paragraphs (b) or (c), or who withdraws under circumstances that require or permit the lawyer to take action under either of those paragraphs, shall proceed as the lawyer reasonably believes necessary to assure that the organization's highest authority is informed of the lawyer's discharge or withdrawal.

RULE 1.6: CONFIDENTIALITY OF INFORMATION (a) Except when permitted under paragraph (b), a lawyer shall not knowingly reveal information relating to the representation of a client.

RULE 1.15 SAFEGUARDING PROPERTYComment [1] A lawyer should hold property of others with the care required of a professional fiduciary.

Understand Anticipate

& Act

“Technology Permissibility Factors” (paraphrased)

1- An attorney’s ability to assess the level of security afforded by the technology, including:

(i) how the technology differs from other media use (ii) whether reasonable precautions may be taken when using the technology to increase the level of security and (iii) Limitations on who is permitted to monitor the use of the technology to what extent and on what grounds

2- Legal ramifications to third parties of intercepting, accessing or exceeding another’s authorized use of the information

3- The degree of sensitivity of the information

4- The possible impact on the client of an inadvertent disclosure, including possible waiver of privileges issues.

5- The urgency of the situation

6- Client instructions and circumstances