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Lawyer-client confidentiality

A sacrosanct duty that must be honored

Kevin Mohr

By Kevin Mohr

If there is one duty that is central to a lawyer's ability to represent a client effectively, it is confidentiality. Without the free flow of information from client to lawyer that confidentiality fosters, lawyers would be unable to stand up for, or, as is sometimes required, stand up to their clients. Unfortunately, the ABA Corporate Responsibility Task Force's proposed confidentiality amendments would inhibit that information flow and subvert lawyers' ability to counsel their clients to conform their conduct with the law.

The amendments, which would allow lawyers to disclose confidential client information to third parties to prevent or to rectify fraud, are not new. The ABA's House of Delegates has already rejected identical or substantially similar confidentiality exceptions three times in the last 20 years, most recently in August 2001. We might expect proponents of these rejected changes to the core duty of confidentiality to offer new, compelling reasons for their adoption. Yet they provide no arguments that have not already been before the House in the past.

They do suggest Enron and "Enron-like" scandals require lawyers to be more active in corporate compliance with the law, and point to the specter of federal intrusion in lawyer regulation. But these considerations are not compelling. The other side of the ledger, however, is filled with forceful arguments why the confidentiality proposals are a mistake and should again be refused. I will discuss a few of those.

First, there is no reliable evidence that the proposed exceptions would have significantly altered the lawyers' conduct in the recent scandals, or would do so in the future. For example, Texas, where nearly all the events in Enron took place, has virtually identical confidentiality exceptions. Yet lawyers representing Enron did not come forward. New York, where many events surrounding the Tyco debacle occurred, also allows disclosure, but there was none.

Conversely, states without confidentiality excep- tions for fraud have not experienced an epidemic of corporate failings or corruption. The reason is simple: armed with information their clients freely give, lawyers can effectively counsel them to conform their conduct with the law. That is how lawyers practice: by reasoning with their clients, not by threatening them with disclosure.

Those who would weaken confidentiality ignore these realities and argue there is no empirical evidence that clients would be less forthcoming were the fraud exceptions adopted. On their end, however, they offer only speculation that permitting lawyer disclosure will enhance corporate compliance. That is not sufficient. The Supreme Court recently recognized this in rejecting a challenge to the generally-accepted principle that the attorney-client privilege survives death:

"While the arguments against the survival of the privilege are by no means frivolous, they are based in large part on speculation — thoughtful speculation, but speculation nonetheless — as to whether posthumous termination of the privilege would diminish a client's willingness to confide in an attorney." Swidler & Berlin v. United States, 524 U.S. 399, 410, 118 S.Ct. 2081, 2088 (1998). Those who would lessen confidentiality must offer more than mere speculation that their proposals will not diminish client candor.

Second, the proposed amendments bear little relation to the problems highlighted by the recent corporate scandals. In many instances, lawyers are alleged to have assisted their clients' criminal acts. (See Jason Hopping, In a First for Feds, General Counsel Is Indicted for Fraud, The Recorder (June 6, 2003), reprinted at ( 1052440840504); Kara Scannell and Laurie P. Cohen, Charges Against Tyco Ex-CounselĀ  Expand to Include Grand Larceny, Wall Street Journal, page A3 (Feb. 4, 2003).) That conduct is already prohibited by Model Rule 1.2(d). Rather than weaken confidentiality, more attention should be focused on enforcement of that rule and corresponding rules (e.g., DR 7-102(A)(7) in Model Code states).

Third, not only do the exceptions miss the mark, they are overly broad. The task force was charged with expediting the ABA's participation in the corporate responsibility debate. Yet the amendments do not differentiate between lawyers for corporations and lawyers for individuals. They would weaken confidentiality in every lawyer-client relationship — despite a dearth of evidence they would significantly enhance corporate compliance.

Fourth, the proposals are at best premature. The task force has made 12 specific recommendations on corporate governance structure and has also recommended requiring lawyers to report misconduct up-the-ladder within the corporate client. Rather than allow these reforms to work their course, however, the Task Force has urged authorizing disclosures outside the client entity. At a minimum, the ABA should monitor the effectiveness of the less intrusive reforms before attempting to turn the lawyer-client relationship on its head.

Finally, it has been suggested that unless the ABA acts on confidentiality, the SEC or some other federal agency will usurp state oversight of the profession and federalize lawyer regulation. That is no reason for the pre-eminent lawyer organization in our country to countenance such radical changes to confidentiality. If the price of retaining state regulation of the profession is relinquishment of a strong confidentiality duty, the profession will have realized at best a Pyrrhic victory. Without a vibrant duty of confidentiality, we will not have a profession much worth regulating at all.

• Kevin Mohr, a professor at Western State University College of Law, is the current chair of the State Bar Committee on Professional Respon-sibility and Conduct and consultant to the State Bar's Special Commission for the Revision of the California Rules of Professional Conduct. The views expressed here are solely the author's.

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