Sunday, December 31, 2017

ABA issues new ethics opinion on the duty not to use confidential information related to former client; OK, but ...

Two weeks ago, the ABA Standing Committee on Ethics and Professional Responsibility issued a short opinion on the meaning of the phrase "generally known" in reference to the duty of an attorney not to use confidential information related to a former client.  (See Formal Opinion No. 479.) The opinion is short and straightforward and doesn't really say much we did not know (or at least assumed) already.  Yet, I have to say I don't like a little detail on how the issue was framed.  I understand why the drafters expressed the idea the way they did, and I may just be too picky, but I thought I would mention it.

But first things first.  Let's start with the basics.  Model Rule 1.9(c)(1) provides that a lawyer shall not use information relating to a former client’s representation “to the disadvantage of the former client except as [the Model] Rules would permit or require with respect to a [current] client, or when the information has become generally known."

What the opinion does is attempt to clarify how to consider that a certain piece of information has become "generally known."  Using a variety of sources, the Committee concludes as follows:
[T]he Committee’s view is that information is generally known within the meaning of Model Rule 1.9(c)(1) if (a) it is widely recognized by members of the public in the relevant geographic area; or (b) it is widely recognized in the former client’s industry, profession, or trade. Information may become widely recognized and thus generally known as a result of publicity through traditional media sources, such as newspapers, magazines, radio, or television; through publication on internet web sites; or through social media. With respect to category (b), information should be treated as generally known if it is announced, discussed, or identified in what reasonable members of the industry, profession, or trade would consider a leading print or online publication or other resource in the particular field. Information may be widely recognized within a former client’s industry, profession, or trade without being widely recognized by the public. For example, if a former client is in the insurance industry, information about the former client that is widely recognized by others in the insurance industry should be considered generally known within the meaning of Model Rule 1.9(c)(1) even if the public at large is unaware of the information.
Unless information has become widely recognized by the public (for example by having achieved public notoriety), or within the former client’s industry, profession, or trade, the fact that the information may have been discussed in open court, or may be available in court records, in public libraries, or in other public repositories does not, standing alone, mean that the information is generally known for Model Rule 1.9(c)(1) purposes. Information that is publicly available is not necessarily generally known. Certainly, if information is publicly available but requires specialized knowledge or expertise to locate, it is not generally known within the meaning of Model Rule 1.9(c)(1).
There is still some vagueness in this approach but that is inevitable when the standard is based on a notion of reasonableness.  In other words, there will always be some level of interpretation needed to evaluate whether the information should be considered to be generally known, but these paragraphs do a good job of explaining the proper approach to the question.

Now, what is it I did not like?  The opinion starts (from its very title) talking about the generally known "exception" to the rule.  And I understand why the drafters did that:  the way the rule is written it can be interpreted to say there is a duty to not use the information unless it is generally known, and the use of the word "unless" suggests that what comes after it is an exception to the statement of the duty that preceded it.

The problem is that this is wrong.  If the information is generally known, it is not confidential. Period.  By definition.  Thus, there is no duty to keep it secret.  There is no such thing as an exception to the duty.  There is no duty.

In other words, one has to determine if the information is generally known to determine if there is a duty; not to determine if there is an exception to the duty.

You can read the full opinion here (It is only 6 pages long.)

The Law For Lawyers Today has a short comment on the opinion here.

UPDATE (12-31-17):  First of all, Happy New Year to everyone.  Second, someone asked me what difference does it make whether we consider the notion of "generally known" as a exception to the duty.  Well, here is one way in which it makes a difference:

Assume a former client sues a lawyer for damages alleging a breach of a fiduciary duty based on the attorney's use of information.  In such a case, the plaintiff has the burden to support the argument of duty, and therefore, will have to prove that the information is not generally known.  If, on the other hand, we take the position that there is an exception to the duty, the defendant-lawyer would have the burden to show that the information is generally known in support of a defense.  Depending on the evidence available to support the arguments, who has the burden of proof can make a difference.

UPDATE (March 2018):   A new Formal Opinion (No. 480), which is available here, repeats the notion that information that is in the public record can still be confidential and that disclosing it can be a violation of the rules (unless allowed by one of the exceptions to the rule).  This opinion was met with criticism by some who argue that it would be a violation of the first amendment for the state to discipline a lawyer for disclosing information that is in the public record.

I know of only one case that has held this (Hunter v Virginia State Bar).  Opinion 480 addresses the issue and points out other court decisions that disagree with Hunter as well as other secondary sources that address the issue.

I wrote about Opinion No 480 here.

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