C.F.T.C. v. WEINTRA UB: A D'AMATO AND EBERLE ANALYSIS

C.F.T.C. v. WEINTRA UB: A D'AMATO AND EBERLE ANALYSIS

By Robert R. Jespersen*

I. Introduction

The theory that the relationship between a lawyer and his client is confidential in character may be traced to Roman antiquity.' During the Elizabethan Period it became a matter of honor that a lawyer would not divulge information that his client gave to him.2 Later, it evolved that the matter of an individual's "honor" was not the critical consideration but rather the effective administration of justice. The question then became what would better serve the administration of justice: confidentiality or a lack of confidentiality between lawyer and client? At first, the scales were tipped in the direction of allowing the lawyer-client privilege to bar the lawyer from uttering that which was given to him in confidence. Over the years that delicate balance has been adjusted to the point that today our courts proceed on a case-by-case basis in weighing the benefits versus the detriments in the administration of justice in either allowing information to be revealed or to be forever kept a secret. In the case of C.F.T.C. u. Weintraubs the Supreme Court has finally resolved the conflict that existed in t.he circuits with respect to "whether the trustee of a corporation in bankruptcy has the power to waive the debtor corporation's attorney-client privilege with respect to communications that took place before the filing of the petition in bankruptcy."' Part I1 of this paper will discuss the history of the subject case a t trial, appellate, and Supreme Court levels. In Part 111, the case will be analyzed with respect to

* Professor, College of Business Administration, University of Arkansas at Little Rock

1. Radin, The Privilege of Confidential Communication between Lawyer and Client, 16 CALIF. L. REV. 487, 488 (1928).

2. 8 J. WIGMORE, 3 2290 Evidence (J. McNaughton rev. 1961) (History of the Privilege).

3. 471 U.S. 343 (1985). 4. Id. at 345.

10 The Journal of the Legal Profession

three models contained in the D'Amato and Eberle a r t i ~ l e . ~ Part IV will examine the case in terms of the Model Code of Profes- sional Responsibilitye (hereinafter Model Code), the Model Rules of Professional Conduct7 (hereinafter Model Rules), and The American Lawyer's Code of Conduct8 (hereinafter Lawyer's Code). Part V is devoted to a critique of the preceding parts.

11. C.F.T.C. v. Weintraub

Messrs. Frank and Andrew McGhee were officers and stockholders in Chicago Discount Commodity Brokers, Inc. (CDCB). The corporation was a discount commodity broker registered with the Commodity Futures Trading Commission (CFTC) as a futures commission merchant. CFTC filed a complaint on 27 October 1980 against CDCB in the U.S. District Court for the Northern District of Illinois alleging violations of the Commodity Exchange Act.9 On the same day CFTC signed a consent decree with CDCB which froze the assets of CDCB, and appointed a receiver. The decree also recognized that CFTC would be permitted to conduct an investigation of CDCBYs affairs. John K. Notz was appointed receiver.1° Within one week, Notz filed, under Chapter 7, a voluntary petition in bankruptcy." The bankruptcy court appointed Notz in- terim and later Permanent Trustee of CDCB.

In connection with its investigation, CFTC served a subpoena duces tecum upon Gary Weintraub. Mr. Weintraub, an attorney, had formerly represented CDCB. Weintraub was deposed on 26 and 27 February and 26 August 1981. He answered approximately 800 questions but failed to answer 23 other questions. His ground

5. D'Amato & Eberle, Three Models of Legal Ethics, 27 ST. LOUIS U.L.J. 761 (1983).

6. MODEL CODE OF PROFESSIONAL RESPONSIBILITY (1981) [hereinafter MODEL CODE].

7. MODEL RULES OF PROFESSIONAL CONDUCT (1983) [hereinafter MODEL RULES].

8. Comm'n on Professional Responsibility, THE AMERICAN LAWYER'S CODE OF

CONDUCT (The Roscoe Pound-American Trial Lawyers' Found. 1982) [hereinafter LAWYER CODE].

9. 7 U.S.C. $ 6d(2) (Supp. 111, 1979). 10. C.F.T.C. v. Weintraub, 722 F.2d 338 (7th Cir. 1983). 11. In re Chicago Discount Commodity Brokers, Inc., No. 80B 14472 (Bank'r

N.D. Ill.).

C.F.T.C. v. Weintraub 11

for refusal was the attorney-client privilege.12 On 15 December 1981, CFTC filed a motion to compel answers to those questions. Subsequently, on 11 March 1982, Mr. Notz in his capacity as Per- manent Trustee of CDCB waived the attorney-client privilege as to 6 6 any communications or information occurring or arising on or before October 27, 1980."13

The U.S. Magistrate granted CFTC's motion to compel answers to questions on 26 April 1982. The magistrate based his action on having reached the conclusion that Weintraub had acted properly in 1981 but the situation had changed in 1982 based upon Notz's waiver of the privilege. On 6 May 1982, Weintraub filed an objection to the order. The order was upheld on 9 June 1982.

Messrs. Frank and Andrew McGhee intervened on 30 June 1982. Frank McGhee was president of CDCB. Andrew McGhee had served as an officer and director of CDCB until 21 October 1980. Thus Frank McGhee remained an officer, director, and stockholder of CBCB. The district court order of 9 June 1982 was clarified on 27 July 1982 by stating "[rlespondent shall respond to specific questions a t issue without asserting an attorney-client privilege on behalf of Chicago Discount Commodity Brokers, Inc."14 The McGhees moved to stay the order on 21 September 1982. The motion was denied by the Seventh Circuit on 18 October 1982. Wein- traub and the McGhees appealed the district court's order of 27 July 1982.

The appeal was heard by Pel1 and Coffey, Circuit Judges, and Seigel, District Judge, on 8 April 1983. The issue, as framed by the Seventh Circuit, was "whether the trustee of a bankrupt corporation may waive the attorney-client privilege on behalf of the corporation."16 The court began its analysis with the federal general rule on all privileges which states that "the privilege of a witness . . . shall be governed by the principles of the common law as they may be interpreted by the courts of the United States in light of reason and experience."16 Thus, the rule encourages courts to proceed case-by-case.17 In proceeding on that basis, courts will use a balance test weighing whether "the benefits derived from encouraging

12. C.F.T.C. v. Weintraub, 722 F.2d at 339. 13. Id. 14. Id. 15. Id. at 340. 16. FED. R. EVID. 501. 17. See Upjohn Co. v. United States, 449 U.S. 383 (1981).


communications outweigh the costs of keeping information from other parties."18

The difficulty with respect to this case was the problem of who controlled the attorney-client privilege after a corporation enters the bankruptcy court: its officers or directors on one hand or the trustee in bankruptcy on the other? A further difficulty is if one should assume, arguendo, that the trustee controls the privilege, the next question is whether the trustee has the power to waive the privilege? The Seventh Circuit Court examined a Second Circuit case,'@ and an Eighth Circuit case.20 The courts in both cases upheld the power of the trustee to waive the privilege. In the former case, the corporation's officers and directors had resigned, thus the only person with any authority to act for the corporation was its trustee in bankruptcy. In the words of the court, "the crucial fact . . . that there has been no board of directors . . . in existence during the tenure of the trusteeHz1 became the critical factor. In the latter case, the district court ruled that the trustee did not have the power to waive the privilege but the Eighth Circuit Court reversed. That court cited no authority in so ruling other than an unpublished district court order.22 The Seventh Circuit was not persuaded by this case because it did not discuss the policy factors which favor full disclosure. The court then addressed the four policy considerations on which it based its decision:

1. The trustee in bankruptcy does not "replace" the corporation, and the trustee does not "replace" the officers and directors of the corporation. The corporation exists until it is dissolved. The trustee may obtain power over the property of the corporation but not over other rights held by the corporation.

2. Bankrupt and non-bankrupt corporations ought to be treated equally, and corporate debtors and individual debtors ought to be treated equally. Provided there is a board of directors in existence, bankrupt and non-bankrupt corporations ought to have the same body control the privilege. Likewise, since trustees are appointed in individual bankruptcy, to allow control of the

18. Note, Attorney-Client Privilege for Corporate Clients: The Control Group Test , 84 HARV. L. REV. 424, 425 (1970).

19. In re O.P.M. Leasing Services, Inc., 670 F.2d 383 (2d Cir. 1982). 20. Citibank, N.A. v. Andros, 666 F.2d 1192 (8th Cir. 1982). 21. O.P.M. Leasing, 670 F.2d at 386 n.19. 22. In re Continental Mortgagor Investors, No. 79-593-5, slip op. at 2 (D.

Mass. July 31, 1979).


privilege to pass from the debtor to the trustee would create the absurd situation of a trustee desiring certain information from a debtor's attorney "waiving" the attorney-client privilege in order to elicit the information from the attorney. If a court would be unwilling to allow an individual debtor to undertake such a risk, there is no good reason to allow a corporate debtor to do so.

3. To allow a corporate debtor to waive the privilege by action of the trustee would discriminate against bankrupt corporations on the basis of economic status.

4. Perhaps the most important policy reason to reject the proposition that the trustee can ex-post facto waive the attorney-client privilege is the "chilling effect" it would have on the attorney- client relationship. The trust between attorney and client. would justifiably be weakened. "Corporate clients will be wary of commu- nicating fully with their attorneys for fear that sensitive information could subsequently be disclosed due to bankruptcy. Free in- terchange between attorney and client is the cornerstone of effective legal repre~enta t ion."~~

A year to the day after the case was decided by the Seventh Circuit, the United States Supreme Court heard oral argument. Justice Marshall, writing for a unanimous court,24 framed the issue as "whether the trustee of a corporation in bankruptcy has the power to waive the debtor corporation's attorney-client privilege with respect to communications that took place before the filing of the petition in bankrup t~y . "~~ The court noted that certiorari was granted to resolve the conflict among the circuits.26 The court further noted that the privilege applied to corporations as well as in- d i v i d u a l ~ , ~ ~ and that in U p j ~ h n ~ ~ the privilege was expanded from between counsel and top management to include, under certain circumstances, counsel and "lower-level employees." In this case, the court must decide who speaks for the corporation. There was no question as to who speaks for a "solvent" corporation; i t is the

23. C.F.T.C. v. Weintraub, 722 F.2d at 343 n.10 (emphasis added). 24. Justice Powell took no part in the consideration or decision. 25. Weintraub, 471 U.S. at 345. 26. Id. at 1990 (referring to In re O.P.M. Leasing Services, Inc., 670 F.2d 383

(2d Cir. 1982); and Citibank, N.A. v. Andros, 666 F.2d 1192 (8th Cir. 1981)). 27. Upjohn, 449 U.S. at 389. See also Trammel v. United States, 445 U.S. 40,

51 (1980); Fisher v. United States, 425 U.S. 391, 403 (1976). 28. 449 U.S. 383.


board of directors and the agents designated by the board.29 Also, when control of a corporation has been wrestled away from previ- ous management, it is the new management that has the power to waive the attorney-client p r i ~ i l e g e . ~ ~ The issue here is who controls the privilege during a bankruptcy proceeding? Weintraub and the McGhees placed great reliance on a particular section of the Bank- ruptcy Code. That section states, inter alia: "Subject to any applicable privilege . . . the court may order an attorney . . . to disclose . . . information to the tru~tee."~'

Thus, they argued that the lawyer can't be compelled to divulge information that was given to him in confidence. Further, the "language would be superfluous if the trustee had the power to waive the corporation's pr i~i lege ."~~ The court disagreed. Quite simply, the statute does not speak to the power of the trustee to waive the privilege. The facts of the case reflect that the court did not order Weintraub to answer the 23 questions until 26 April 1982. Therefore, it is not a question of the court ordering disclosure over any applicable privilege, but rather the court ordering disclosure because the applicable privilege had been waived. The court, for the first time, makes a difference concerning the person asserting the privilege: "privileges of parties other than the corporation would still be 'applicable' as against the trustee. For example, consistent with the statute, an attorney could invoke the personal attorney-client privilege of an individual manager."3s What the court appears to be saying, in a rather confused way, is that Weintraub must answer the 23 questions with respect to CDCB but may continue to refuse to answer those questions which may pertain to information in his possession that was obtained in his capacity as attorney for an "individual manager." I t is the use of the representative noun "manager" with the adjective "individual" that creates some difficulty. The decision would be a great deal easier to interpret if the court had merely used the term "individual." But apparently that is what the court meant to say. If so, the information in Weintraub's possession would have to be revealed if, during his communications with the McGhees, neither one of

29. Weintraub, 471 U.S. at 348. 30. Id. 31. 11 U.S.C.A. 1 542(e) (West Supp. 986). 32. Weintraub, 471 U.S. at 350. 33. Id.


them consulted him as private persons but rather solely as corporate officers and directors. Legal commentators elsewhere have addressed the difficult problem of sorting out "clients" for entity law- y e r ~ . ~ ' I shall not attempt to address that subject in this paper.

The court examined the legislative history of the statute and discovered that it was not the Congressional intent to allow the board of directors to win a fight with the trustee during the pendency of the bankruptcy proceeding.

"The extent to which the attorney-client privilege is valid against the trustee is unclear under current law and is left to be determined by the courts on a case to case basis."96 Thus, the court interprets the "subject to any applicable privilege" phrase in the Bankruptcy Code as a directive to the courts to decide questions of privilege. The problem, of course, is if that were so the language in the Bankruptcy Code would be redundant, for that is exactly what Section 501 of the Federal Rules of Evidence already says.3e Lastly, the court says that the legislative history of the section re- flects that it was the intention of Congress to restrict and not ex- pand the ability of lawyers to deny information to the trustee. But that is an interpretative gloss that does not relate to the legislative history cited which says that: "[the] new provision . . . deprives accountants and attorneys of the leverage they ha[d] . . . under state law lien provisions, to receive payment in full ahead of other creditors when the information they hold is necessary to the administration of the e~tate."~' In other words, it is a classic non sequitur.

The court then shifted ground away from the Bankruptcy Code to a straight-forward analysis of the roles played by the board and the trustee during the pendency of a bankruptcy proceeding in order to ascertain "which is most analogous to the role played by the management of a solvent corporat i~n."~~ The court, of course, focused on the adjective "solvent" because without i t the present board of directors is most analogous to the past board of directors. Under the bankruptcy statute, however, it is the trustee

34. Hazard, G., Ethics in the Practice of Law, 1978 YALE UNIV. PRESS 47-57. 35. 124 CONG. REC. 32400 (1978) (remarks of Rep. Edwards); id. at 33999 (re-

marks of Sen. DeConcini). 36. FED. R. EVID.. 37. S. Rep. No. 95-989, p. 84 (1978); H.R. Rep. No. 95-595, pp. 369-370

(1977). 38. Weintraub, 471 U.S. at 351.


who has all corporate property, the duty to maximize the value of the estate, investigate the debtor's financial affairs, sue officers and directors on behalf of the estate, and sell or lease property of the estate.3B Thus, the court concludes that the trustee is given broad and sweeping management-like authority.'O The role of the board of directors is limited to turning over the property of the corporation to the trustee and to provide information to the trustee. The court cites the legislative history of Chapter 11 to express the intent of Congress with respect to Chapter 7.41 The court concludes that the trustee of an insolvent corporation is analogous to the board of directors of a solvent corporation.

The court saw the trustee having the power to waive the attorney-client privilege as advancing the very valuable federal interest of maximizing the value of the estate by allowing the trustee to investigate the conduct of the board of directors. The court at- tempts to explain how that important goal would be accomplished by allowing the trustee to waive the privilege by applying the logic that an attorney's files might contain information that could lead the trustee to discover hidden assets or fraudulent transfers. "Without control over the privilege, the trustee might not be able to discover hidden assets or looting schemes, and therefore might not be able to make the necessary showing [of fraud]."42 The court fails to address the important point that if, in its analysis, it at- tempts to show that the trustee of an insolvent corporation is most analogous to the board of directors of a solvent corporation, no ra- tional board of directors would knowingly waive the attorney-client privilege in order to allow their attorney to supply information that will ultimately prove that the corporation committed fraud.

Weintraub and the McGhees argued that the trustee's loyalty

39. Id. (citing 11 U.S.C.A. $5 323, 363(b). 541, 547(b)(4)(B), 548, 704(2), $ 704(4) 1106(a)(l) & 1106(a) (West 1979 & Supp. 1986)).

40. The court uses the term "management authority" but that is really mis- placed. This is a Chap. 7 case and not Chap. 11, thus the trustee does not have the power to operate the business. There is no management of the day to day affairs of a corporation in a Chap. 7 proceeding. The overriding duty of the trustee is to liquidate the business.

41. In H.R. Rep. 95-595, pp. 220-221 (1977), Congress said that when a trustee is appointed in a Chap. 11 case, he then controls the business and the debtor's board of directors is "completely ousted." But in a reorganization case, the business continues to operate and, therefore, someone must make management decisions. In a liquidation case, however, there is nothing to manage.

42. Weintraub, 471 U.S. a t 354.


is to the creditors of the corporation and only secondarily to its stockholders. I t is the creditors who elect the trustee, not the stockholders. The court disagreed. The trustee's fiduciary duty is to stockholders as well as creditor^.'^ The court left open future attack on similar facts to the trustee's waiver of the attorney-client privilege as a breach of the fiduciary duty owed to stockholders. The court said that the trustee's loyalty is to creditors first and stockholders last, precisely because of the hierarchy established in the Bankruptcy Code." The court strictly limited its decision to corporate debtors and not individual debtors because the former is inanimate and must rely on agents. It left the door open, however, to reaching the same result when applied to individuals: "An individual . . . can act for himself; there is no 'management' that controls a solvent individual's attorney-client privilege. If control over that privilege passes to a trustee, it must be under some theory different from the one that we embrace in this case."46 The court dismissed the "chilling effect" argument by relating the effect of this decision with that of a solvent corporation in which one group loses control to a new group. The new group will then control the privilege and may choose to waive it. The economic discrimination argument is likewise dismissed because, by definition, debtor corporations in bankruptcy are treated differently than non-debtor corporations. Lastly, the court failed to be persuaded by the argument that upholding the waiver of the trustee in this case will result in a reduction in the number of voluntary bankruptcies and an increase in the number of involuntary bankruptcies. But since Congress provided for both forms, the argument was rejected as inconclusive. The court held that "the trustee of a corporation in bankruptcy has the power to waive the corporation's attorney-client privilege with respect to pre-bankruptcy comm~nicat ions."~~

111. D'Amato and Eberle

In 1983, Professor Anthony D'Amato of the Northwestern University School of Law and Edward Eberle, Esq., member of the

43. Id. at 355. The court does not cite statutory authority but two rather obscure lower court rulings: I n re Washington Group, Inc., 476 F. Supp. 246, 250 (M.D.N.C. 1979)), and I n re Ducker, 134 F. 43, 47 (6th Cir. 1905).

44. Id. (citing 11 U.S.C.A. 3 726(a) (West 1979). 45. Id. at 356-357 (emphasis added). 46. Id. at 358.


Chicago, Illinois Bar wrote an article4' for the St. Louis University Law Journal which applied three "models" of legal ethics to the problem of attorney-client confidentiality. The models were autonomy, socialist, and deontological. The autonomy model defines legal ethics from the perspective of "the lawyer as a facilitator of his client's autonomy within the legal system. Personal autonomy . . . is the key to human dignity."48 This position is advocated by Monroe Freedman4e and Charles Fried.6o

The socialist model defines legal ethics from the perspective of the state, "law . . . is an expediency designed to carry out state objectives and even legal theory is evaluated from the standpoint of its utility in serving state and public interest^."^' The U.S.S.R. is the best example of this model.62 The authors assert that much of the philosophical discussion of legal ethics has focused on the dichotomy of pitting those two schools against one another. D'Amato and Eberle, however, view both of them as utilitarian and thus more alike than unlike.63 That is why they have included a third model for examination. The deontological model "says that some acts are morally obligatory regardless of their consequences for human happines~."~' Immanuel Kant, of course, is the modern father of this school of philosophy." John Rawls, more recently, has identified himself as a student of Kant: "The theory [of justice] that results is highly Kantian in nature. Indeed, I must dis- claim any originality for the views I put forward."66

47. D'Amato & Eberle, supra, note 5. 48. Id. a t 764. 49. M. FREEDMAN, LAWYERS' ETHICS IN AN ADVERSARY SYSTEM (1975); Freed-

man, Personal Responsibility in a Professional System, 27 CATH. U . L. REV. 191 (1978); Freedman, Professional Responsibility of the Criminal Defense Lawyer: The Three Hardest Questions, 64 MICH. L. REV. 1469 (1966).

50. Fried, The Lawyer as Friend: The Moral Foundations of the Lawyer- Client Relation, 85 YALE L.J. 1060 (1976).

51. D'Amato & Eberle, supra, note 5, at 770. 52. See H. BERMAN, JUSTICE IN THE U.S.S.R. 68, 81 (rev. ed. 1963). 53. D'Amato & Eberle, supra, note 5 at 763. 54. Id. a t 772. 55. I. KANT, CRITIK DER REINEN VERNUNFT (CRITIQUE OF PURE REASON) (1781)

CRITIK DER URTHEILSKRAFT (Critique of Judgment) (1790); see also H. PATON THE CATEGORICAL IMPERATIVE (1947).

56. J. RAWLS, A THEORY OF JUSTICE viii (1971).


A. Autonomy.

The authors state that "the autonomy model places an extremely high value on total confidentiality in the attorney-client relationship. Clearly, if the client believes that whatever they tell their attorney will be kept in strict confidence, the client will be more encouraged to utilize the services of attorney^."^' Placing the facts of this case into the autonomy model results in the conclusion that the Seventh Circuit was correct and the Supreme Court wrong, on philosophical grounds. If corporate officers, directors, and other agents know that, should the corporation at some time in the future enter either Chapter 7 or Chapter 11 of the Bank- ruptcy Code? Also all that has passed between them and their attorneys will be subject to being revealed provided the trustee in bankruptcy should waive the privilege, it will place a "chilling effect" upon the relationship. Those same officers, directors, and agents, however, run the same risk if their corporation is to change management in a merger, acquisition, or other corporate takeover. If we are to view a lawyer as a fiduciary for his client, it can be seen that the autonomy model most closely meets the definition of that term. The term fiduciary is derived from Roman law.b8 I t means to act selflessly for the benefit of another.6B Thus, the attorney will not divulge information that was given to him in confidence as long as the client does not waive the privilege. But who is the client? When it is an individual person it is quite simple to apply the rule. When the client is a corporation, an artificial "person," it is quite another matter. A corporation is a legal, as opposed to a natural person. I t is created by the state. If a corporation is a legal fiction, then how does it do business? It does business through its agents. Agents can be other artificial persons, but ultimately they must be natural persons. Thus, if one takes a narrow view of the corporation as client, then whomever the law recognizes as agent for the corporation has the power to waive the privilege. Under this reading, even the autonomy model could be used to justify Weintraub in divulging the information. Under a more liberal reading of a corporation as a client, it could be argued that the artificial person as well as some selected natural persons could be considered the client. That is an unsatisfactory method to

57. D'Amato & Eberle, supra note 5, at 769. 58. BLACK'S LAW DICTIONARY 753 (4th ad. 1968). 59. Haluka v. Baker, 66 Ohio App. 308, 34 N.E.2d 68, 70 (1941).


use because it is latently ambiguous. Fried has written that the lawyer becomes a "friend" of the client.60 But how can one become a friend of an inanimate object? Such analysis is foolishness. Crit- ics have argued that such a theory reduces the lawyer to an amoral chara~ te r .~ ' Freedman, on the other hand, has argued that a known strength of the autonomy model is that it preserves the cornerstone of our legal system: adversary justice.62 I t is extremely difficult to argue with that proposition. Freedman argues that it is through the encounter of two adversaries that truth, as we know it in our legal system, emerges. That may be true in the litigation process but much lawyering goes on outside the courtroom. Freed- man, however, escalates the adversary battle from between two lawyers in a courtroom to one lawyer battling the police power of the state. Leaving aside the possible paranoia of this example, it clearly reinforces the autonomy model.

Under such an interpretation of the autonomy model, an attorney would never acquiesce in divulging confidential information because the state, acting through its courts, allowed a lawyer to "narc" on his former client. Here, the adversary is the state. Ac- cordingly, we return to the original position that the autonomy model would agree with the Seventh Circuit and disagree with the Supreme Court. Lastly, the Fried-Freedman autonomy model notes that, in the long run, "it best serves the interests of society."es D'Amato and Eberle make a strong point when they analo- gize this last point to the "invisible hand" theory developed by Adam Smith:

But the annual revenue of every society is always precisely equal to the exchangeable value of the whole annual produce of its industry, or rather is precisely the same thing with that exchangeable value. As every individual, therefore, endeavors as much as he can both to employ his capital in the support of domestic industry, and so to direct that industry that its produce may be of the greatest value, every individual necessarily labors to render the annual revenue of the society as great as he can. He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. By

60. Fried, supra note 50. 61. See Dauer & Leff, Correspondence: The Lawyer as Friend, 86 YALE L.J.

573 (1977). 62. See generally Freedman, supra note 49. 63. D'Amato & Eberle, supra note 5, a t 765.

C.F.T.C. v. Weintraub

preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part his intention. Nor is it always the worse for the society that it was no part of it. By pursuing his own interest he frequently promotes that of society more effectively than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good. I t is an affectation, indeed, not very common among merchants, and very few words need be employed in dissuading them from it."04

Thus, if every client's lawyer seeks his own advantage, either in or out of the courtroom, never intending to achieve justice but only to "win" or achieve the greatest advantage, he participates in a calculus in which the public interest is ultimately best protected. The lawyer is led by an "invisible hand" to promote justice in the long run, even though he never intended it. As Alan Dershowitz has observed, "Nobody really wants j u ~ t i c e . " ~ ~ f that is so, the invisible hand paradigm is an excellent way of looking at how justice is achieved within our legal system. But what of this new class of lawyers who have entered the profession in the last few years: the "public interest" lawyers? Does Smith's guidance apply to them as well? Do they purport to "trade for the public good?" One com- mentator has observed that:

Instead of advancing the cause of a client who has selected the lawyer as his advocate, the public interest lawyer selects the client and advances his own cause. He pretends to serve an invisible client, the public interest . . .. Inevitably the lawyer is driven to identify his predilections with the public interest. That is unctuous.00

Is the autonomy model helpful in analyzing this case? First, i t is not helpful to describe the lawyer as the "friend" of his client. The authors say that, "There is certainly something strange about

64. 4 A. SMITH, AN INQUIRY INTO THE NATURE AND CAUSES OF THE WEALTH OF

NATIONS 194 (E. Cannan ed. 1937). 65. A. DERSHOWITZ, THE BEST DEFENSE, XI1 (1983). 66. Rifiind, The Lawyer's Role and Responsibility in Modern Society, 30

THE RECORD 534 (1975).


an instant friend whose friendship is purchased by paying a re- tainer."67 Does one have to be a friend in order to be an effective advocate? I doubt it. On the other hand, if one who is a lawyer is a friend of his client, wouldn't he be more willing to "bend" the rules in order to better assist his friend? I think so. Friendship has no place in a discussion of legal ethics. How many times have individuals been asked to lie for their friends? Does that place friendship on a higher plane than truth or just on a different plane? In the case a t hand, how could Weintraub have been a friend of a corporation? He couldn't have been because it is a physical impossibil- ity. But he could have been a friend of either or both of the McGhees. So what? I t simply does not help us in analyzing the case ethically to use the notion of friendship.

On the other hand, it is helpful to see that one of the virtues of the autonomy model is to link it to our adversary system of justice. But here we must be totally honest about the adversary system and say that it has just about as much relation to the truth as military music does to classical music. They may each use the same or similar symbols but they each have different objectives. As one author has observed, "I don't see why we should not come out roundly and say that one of the functions of the lawyer is to lie for his client and on rare occasions, as I think I have shown, I believe i t is."68 AS Judge Rifkind has observed elsewhere: "With some trepidation, I should like to render the suggestion that in actual practice the ascertainment of the truth is not necessarily the target of the trial, that values other than truth frequently take prece- dence, and that, indeed, courtroom truth is a unique species of the genus truth, and that it is not necessarily congruent with objective or absolute truth, whatever that may be."6e The authors argue that there are limits to the zealousness expected of advocates within an adversary system, thus weakening the autonomy argument. They use the marvelous example that it is not cricket for counsel to put a drug into the other counsel's coffee cup. I t is a strong point. It is a moral point. We play the game by certain rules and those rules are established by our own sense of morality. Lastly, the authors criticize the "invisible hand" theory of jurisprudence by observing that our modern economy is not laissez-faire but rather a "mixed"

- -

67. D'Amato & Eberle, supra note 5, at 765. 68. Curtis, The Ethics of Advocacy, 4 STANFORD L. REV. 7-8 (1951). 69. Rif'kind, supra note 66, at 536.


economy with elements of free enterprise mixed with those of socialism. Thus, to conclude that the Supreme Court's decision in this case is not supported by the autonomy model is certainly not a valid criticism. The authors conclude that "The autonomy model . . . is not really a set of ethical requirements so much as it is legislation reflecting the self-interest of practising attorneys."'O Frankly, the more an attorney is viewed by society as seeing no evil, speaking no evil, and hearing no evil, the more likely he is to be hired.

B. Socialist

In the autonomy model, the focus is on the individual and his alter-ego lawyer. On the other hand, in the socialist model it is one hundred and eighty degrees the other way. In the socialist model, the lawyer is the alter-ego of the state. Neither Marx nor Engels discussed the role of law in the Communist Manifesto published in 1848. The socialist legal system, therefore, was not established until 1917. The system that ultimately developed was designed to eliminate private property rights. Citizens were to serve the state until the state "withered away." There is a limited right to representation by an attorney in the Soviet Union. It wasn't until 1958, however, that defendants were allowed an attorney a t a preliminary investigation. Today, only juveniles have an absolute right to a lawyer in the Soviet Union. In general, no rules of evidence limit the judge other than the rule of relevance. "Law in a socialist state is an expediency designed to carry out state objectives, and even legal theory is evaluated from the standpoint of its utility in serving state and public interest^."^' The lawyer's job is as an agent for the state. "Thus, a person who may have broken the law may expect that his attorney will notify the state authorities of the trans- gression. The attorney cannot be expected to keep the matter confidential, since so doing would be conspiring with the client's de~iationisrn."'~ The decision of the Supreme Court clearly is in congruence with the socialist model. The court said "we find no federal interests that would be impaired by the trustee's control of the corporation's attorney-client privilege with respect to pre-

70. D'Amato & Eberle, supra note 5, at 794. 71. Id. at 770. 72. Id.


bankruptcy comm~nicat ions."~~ The court states that an "important goal" of the Bankruptcy Code is to uncover causes of action against officers and di re~tors '~ and to discover inside fraud. Ac- cordingly, the decision in this case will make it easier to accom- plish those goals. D'Amato and Eberle rightly criticize the socialist model because "it elevates the state above the dictates of moral- it^."^^ Does that mean that the decision in this case is immoral? Certainly not. The Supreme Court applied the classic balancing test. On one hand was the sanctity of the confidentiality between attorney and client. On the other hand was the desire to discover causes of action against officers and directors who may have defrauded creditors. I t does not help the discussion to call the decision immoral. I t may be amoral, however. That line of reasoning will not be pursued in this paper. Eroding the rule of confidentiality, however, clearly strengthens the state, as opposed to the individual. In that sense the decision is not a sound one if one accepts the premise that if our society is a "zero sum game," to take away from one is to give to the other. The authors conclude with the observation that "apart from any judgment one might want to make about the desirability of the socialist model, for present pur- poses i t suffices to point out that eliminating confidentiality will greatly reduce the role of the attorney in the system."76

C . Deontological Model

The authors tell us that the deontological model explains some acts as "morally obligatory regardless of their consequences for human happines~."~' They cite the now famous Kantian example of a person who wants to murder your sister and asks you if your sister is a t home. If, in fact, she is at home, Kant would require that you answer truthfully, i.e., "Yes, she is a t home." They dismiss Kant's position by saying that it is too rigid. Admittedly, Kant does take the absolutist position. Kant merely says "Thou shall not lie."78 The authors miss the mark by including deontology with autonomy and socialism. Actually, the latter two are political

73. Weintraub, 471 U.S. at 353. 74. Id . (citing 11 U.S.C.A. $ 3 704(4), 547, 548 (West 1979 & Supp. 1986). 75. D'Amato & Eberle, supra note 5, at 771. 76. Id. 77. Id. at 772. 78. This is not a quote from Kant, but a paraphrase.


theories best left to that realm. Deontology is best discussed with its philosophical opposite: ut i l i tar iani~m.~~ The authors accept deontology in general but dismiss Kant. In so doing, they accept the W.D. Ross view that one cannot operate in the real world by de- manding universal validity to moral rules.80 Thus, they adopt a form of deontology in which "moral rules cannot be eclipsed by nonmoral ~onsiderations."~' Those nonmoral considerations would be the principles espoused in the other two models: autonomy and socialism. The authors state that to the extent that one adopts the deontological model, it will be a t the risk of reducing the sphere of the attorney-client privilege. They next postulate that the value of a lawyer to a client is in direct proportion to the degree of confidentiality that exists between lawyer and client. Applying the test that moral rules are not to be outweighed by considerations of the client's autonomy or the interests of the state to the case a t hand produces no ready answer. What moral rules are we going to apply? Confidentiality may be considered a moral rule. Are there others than one can apply to the facts of the case? What if Wein- traub had been told, in confidence, that bodily harm would come to a third party in the future? Another moral rule would enter the picture in which the moral rule of maintaining a confidence would clash with the moral rule to prevent harm to others. Thus, we have the question of prioritizing moral rules before we contrast the rule that emerges as more important with nonmoral criteria. Most would agree that preventing bodily harm to others would outweigh the maintenance of confidentiality. Accordingly, if Weintraub had received that sort of knowledge, he would have broken the confi-

79. I am aware that D'Amato and Eberle view autonomy and socialism as both examples of utilitarianism. I do not believe that that clarifies the situation, however. Thus, in my scheme of analysis the autonomy model would become liberarianism and, as such, would be contrasted with the socialist model. That discussion would be political. On the other hand, I would juxtapose deontology with teleology or, more properly, intuitionism with utilitarianism because what D'Amato and Eberle are really describing is not deontology, for that is too general, but rather they make a plea for intuitionism. Also, to describe only utilitarianism as concerned with consequences is to oversimplify the problem. All ethical theories must address themselves to consequences. It is just that some theories link the consequences with the action while others act in spite of the consequences.

80. See W. Ross THE RIGHT AND THE GOOD (1930); W. Ross, THE FOUNDATION OF ETHICS (1939).

81. D'Amato & Eberle, supra note 5 at 773.


dence and informed a third party. Since those facts are not in the case, we may safely exclude them. What if he had received information that a third party would be defrauded in the future? Under the D'Amato-Eberle neo-deontological model, Weintraub would have to have weighed the breaking of the confidence with the non- physical harm to a third person. Which would win? It is impossible to predict precisely because of individual differences in the psyches and temperaments of individual persons. I think the authors act too quickly in jettisoning Kant for their Ross-like model. Kant told us that one should: "Act only on that maxim whereby thou canst at the same time will that it should become a universal law."82 Others have noted that under either construct little guidance is given to those of us who have to make concrete choices every day.83 Although neither D'Amato nor Eberle would agree, what they are really putting forward is a brand of intuitionism: "I shall think of intuitionism in a more general way than is customary: namely, as the doctrine that there is an irreducible family of first principles which have to be weighed against one another by asking ourselves which balance, in our considered judgment, is the most Rawls sums up his view of intuitionism with this unintended criticism of D'Amato and Eberle: "The distinctive feature, then, of in- tuitionistic views is not their being teleological or deontological, but the especially prominent place that they give to the appeal to our intuitive capacities unguided by constructive and recognizably ethical riter ria."^^

Therefore, to consider the impact of this decision in terms of abstract philosophical theories is really begging the question. Tak- ing the following advice from the authors, let us move on to a study of the three codes to which lawyers may look to guide them in their practice: "Given confidentiality's asserted value, it is hardly surprising that exceptions to the general rule have been recognized under the codes only in the face of truly compelling coun- tervailing concerns.

82. I. KANT, supra note 55. 83, S. BOK, LYING: MORAL CHOICE IN PUBLIC AND PRIVATE LIFE, 56 (1979). 84. J. RAWLS, supra note 56, at 34. 85. Id. at 40. 86. D'Amato & Eberle, supra note 5 at 779. Also in all due respect to

D'Amato and Eberle, I must say that their article also discusses the three codes that I discuss in the next part of this paper. I simply chose to discuss the codes without reference to their gloss.

C.F.T.C. v. Weintraub

IV. The Codes

A. American Lawyer's Code of Conduct

In May 1982, the American Trial Lawyers' Association published the Lawyer's Code. The then ATLA presidente7 made it clear that the Lawyer's Code was not to be considered either as an appendix to the Model Code or even of equal dignity, but rather "as an alternative to the old Code of Professional Responsibil- it^."^^ The American Bar Association was a t that time developing the Model Rules. ATLA's motivation in developing their own doc- ument is explained quite clearly: "It was dissatisfaction with both of these ABA products that got us going on this Code, and kept us going."89 ATLA lists its first difference with the ABA as the matter of client confidentiality. "Our first principle remains that a client must be able to confide absolutely in a lawyer, or there may be little point in anyone's having a lawyer.""O The Lawyer's Code spe- cifically rejects the proposition "that lawyers have a general duty to do good for society that often overrides their specific duty to serve their ~lients.""~ The Lawyer's Code makes it completely clear that serving clients is the sine qua non for a lawyer's existence. There is no question but that the ATLA model is autonomy-based. ATLA lambasts the ABA's Model Rules which "sees lawyers as ombudsmen, who serve the system as much as they serve clients. This is a collectivist, bureaucratic ~oncept.""~ Thus, ATLA views the Model Rules as the closest to the socialist model.sg The Law- yer's Code "seeks to maximize individual liberty within a rule of law,"B4 u The lawyer therefore serves the most basic individual

right, that of personal autonomy: the right to make those decisions that most affect one's own life and values.""" The Lawyer's Code relates the autonomy of the individual with the importance of the adversary system in the administration of justice.

87. Theodore, I. Koskoff. 88. LAWYER'S CODE, supra note 8, Preface. 89. Id . 90. Id. (emphasis added). 91. Id. 92. Id . 93. Professor Monroe Freedman served as co-reporter for the Commission on

Professional Responsibility which drafted the Lawyer's Code. 94. LAWYER'S CODE, supra note 8, Preamble. 95. Id.


Chapter I is devoted to "The Client's Trust and Confidences." It recognizes that any information which comes into the possession of a lawyer as a result of the lawyer-client relationship is confidential and, therefore, shall not be revealed. I t allows four exceptions to the general rule:

1. If a lawyer is "required to do so by law, rule of court, or court order, but only after good faith efforts to test the validity of the law, rule, or order have been exhausted."@"

2. If a lawyer "knows that a judge or juror in a pending proceeding in which the lawyer is involved has been bribed or sub- jected to extortion."@'

3. If a lawyer needs to defend himself or his associates "against charges of criminal, civil, or professional misconduct asserted by the client . .

4. If a lawyer "reasonably believes that divulgence is necessary to prevent imminent danger to human life."@@ Applying these rules to the facts of the case, one can see that as bold as the rhetoric was in the preface and the preamble under 1, supra, the Lawyer's Code would have allowed Weintraub to divulge information contained in the answers to those 23 questions. Neither the second, third, nor fourth rules apply. The comment to the rules states that "This Code rejects permitting violation of confidentiality in all cases of future (or continuing) crimes."100 This stands in distinction to rule 4, supra, if the imminent danger to human life involves a crime.

B. Model Code of Professional Responsibility

The Model Code consists of both ethical considerations and disciplinary rules. The former are aspirational, whereas the latter are mandatory.lo1 Canon 4 states that "A lawyer should preserve the confidences and secrets of a client." In terms of that which is aspirational, the Model Code suggests that confidences and secrets be maintained.loa I t also mentions that even though a lawyer

96. Id. § 1.3 (The exception is not made mandatory since 'may' is used instead of 'shall').

97. Id. 5 1.4 (The exception is not made mandatory). 98. Id. 5 1.5 (The exception is not made mandatory). 99. Id. § 1.6 (The exception is not made mandatory). 100. Id. comment ch. 1. 101. Preamble and Preliminary Statement, Model Code. 102. Id. EC 4-1. A "confidence" is that which is protected by the rules of

evidence, whereas a "secret" is protected by the rules of legal ethics.


should protect client confidences and secrets, they may be divulged if the client consents after full disclosure, or "when necessary to perform his professional employment, when permitted by a Disci- plinary Rule, or when required by law."lo9 A lawyer may provide "limited information from his files to an outside agency necessary for statistical, bookkeeping, accounting, data processing, banking, printing, or other legitimate purpose^"'^' provided the agency keeps the information confidential. Thus, under the Model Code Weintraub could have answered the questions since they were "required by law." Alternatively, if any of the information requested in the 23 questions could have been answered by providing mate- rial from his files, he may have been justified in providing it if he could have been informed that the information would have been kept confidential.

On the other hand, under the disciplinary rules, a lawyer may reveal a confidence or secret "with the consent of the client . . . after full disclosure . . ."lo5 when ". . . required by law or court order,"loe when his client intends "to commit a crime and the information is necessary to prevent the crime,"lo7 or when "necessary to establish or collect his fee or to defend himself or his employees or associates against an accusation of wrongful conduct."lo8 Apply- ing these mandatory rules to the facts of the case, it is clear that if a court orders disclosure the lawyer must obey. A much earlier ABA opinion did not rest the case on as many exceptions as the Model Code: "[A lawyer] may not divulge confidential communications, information, and secrets imparted to him by the client or acquired during their professional relations, unless he is authorized to do so by the client."108

The Model Code created some conflicts for lawyers because Canon 7 said that "A lawyer should represent a client zealously within the bounds of the law." If the canon had read that a lawyer should represent a client zealously, then it was quite possible for a lawyer to never divulge a confidence or secret given to him by his

103. Id. EC 4-2. 104. Id. EC 4-3. 105. Id. DR 4-101(~)(1). 106. Id. DR 4-101(~)(2). 107. Id. DR 4-101(~)(3). 108. Id. DR 4-101(c)(4). 109. ABA Comm. on Professional Ethics and Grievances, Formal Op. 202

(1940).


client. However, since the lawyer had to restrict his zeal to within the bounds of the law, he would be forced to divulge information if a court ordered him to do so. Nevertheless, the lawyer is to aspire to serve a client in such a way as to resolve any doubts as to the bounds of the law in favor of his client.l1° Also, if one could analo- gize a corporate debtor to an incompetent person, an attorney, under the facts of this case, could reveal the information since an attorney "must look to [the legal] representative for those decisions which are normally the prerogative of the client to make.'"''

The disciplinary rules are not helpful in this regard since they require a lawyer to reveal a fraud, but only if he can do so without breaking a privileged c o m m ~ n i c a t i o n . ~ ~ ~ Under the Model Code, therefore, there would be no problem under the facts of this case if Weintraub had revealed the information after the court had ordered him to do so, whereas under the Lawyer's Code Weintraub's actions were more proper since he challenged the power of the court to so rule.

C. Model Rules of Professional Conduct

The Model Rules sum up the problem explored in this paper rather well: "Virtually all difficult ethical problems arise from conflict between a lawyer's responsibilities to clients, to the legal system, and to the lawyer's own interest in remaining an upright person while earning a satisfactory living."l13 That is precisely the trilemma the lawyer is faced with in this case. If the lawyer were to adhere to the autonomy model, he would not divulge the information contained in the answers to the 23 questions, but even under the Lawyer's Code he would ultimately be forced to divulge the information. If the lawyer were to adhere to the socialist model, he would divulge the information under the first two codes. And if he advocated the deontological model, he would convert a policy question into a moral one of balancing moral questions against one another and once having judged that which is more "moral," balancing that against the nonmoral considerations exemplified by the autonomy and socialist models. As I intend to prove later, the con- version of a policy question into a moral question does not advance

110. MODEL CODE EC 7-3. 111. Id., EC 7-12. 112. Id., DR 7-102(B)(l). 113. MODEL RULES Preamble.

C.F.T.C. v. Weintraub 3 1

the intelligent discussion of that which is professionally responsi- ble conduct under the circumstances.

The Model Rules approach the problem in terms of policy and "prescribe terms for resolving such conflict^."^^' A scope note in- forms us that:

clients are entitled to expect that communications within the scope of privilege will be protected against compelled disclosure . . . the client has a reasonable expectation that information relating to the client will not be voluntarily disclosed and that disclosure of such information may be judicially compelled only in accordance with recognized exceptions to the attorney- client and work product privileges.l16

The operative rule states that the lawyer shall not reveal in- formationlle with three exceptions:

1. If the client consents after con~ultation."~ 2. Without the client's consent in order "to prevent the client

from committing a criminal act that the lawyer believes is likely to result in imminent death or substantial bodily harm."@

3. Without the client's consent in order "to establish a claim or defense on behalf of the lawyer in a controversy between the lawyer and the client, to establish a defense to a criminal charge or civil claim against the lawyer based upon conduct in which the client was involved, or to respond to allegations in any proceeding concerning the lawyer's representation of the ~l ient .""~

In applying this rule to the facts of the case, one might inaccu- rately predict that the lawyer would not have to follow a court order to divulge the information because the rule does not directly address that point. Unfortunately, that would be jumping to a conclusion. Other than suffering the indignity of being found to be in contempt of court for failing to obey a lawful order, the comments to the rule cover the point precisely: "The lawyer must comply with the final orders of a court or other tribunal of competent ju- risdiction requiring the lawyer to give information about the cli-

114. Id. 115. Id. Scope. 116. The distinction between "confidences" and "secrets" is eliminated. 117. MODEL RULES Rule 1.6(a). 118. Id. Rule 1.6(b)(l). 119. Id. Rule 1.6(b)(2).


ent."120 Thus, under the facts of this case all three models would require divulging the information. Furthermore, in all three cases a "bootstrap" approach must be used that requires the use of a

-

double legal fiction. First, the client is a corporation. Second, the agent for the corporation is the Trustee in Bankruptcy. However, the Trustee's powers in bankruptcy are limited "to draw the debtor's assets together, liquidate them, and distribute proceeds thereof to creditors and other claimants in a one-shot proceeding."121 In this case, the agents representing the board of directors do not waive the privilege but the court recognizes that, for the first time in American jurisprudence, the trustee not only receives the property but the power to waive the privilege as well. The trustee is a creature of statute and the statute does not give him that power.

The Model Rules added a new rule that was not covered directly in the Model Code. The rule discusses an organization as the ~ 1 i e n t . l ~ ~ The rule states that "a lawyer employed or retained by an organization represents the organization acting through its duly authorized c o n s t i t ~ e n t s . " ~ ~ ~ It is interesting to note that an earlier draft of the rule said that "A lawyer employed or retained to represent an organization represents the organization as distinct from its directors, officers, employees, members, shareholders, or other constituent^."'^^ Thus, one could argue that it is the intention of the final draft of the rule that the penumbra of the rule would include the agents as well as the entity. If that were correct, Weintraub was acting ethically by refusing to answer the 23 questions. The comments say that "when one of the constituents of an organizational client communicates with the organization's lawyer in that person's organizational capacity, the communication is protected by Rule 1.6."12'

The Model Rules provide for a client with a di~abi1ity. l~~ A comment states that "the lawyer should ordinarily look to the [le-

120. Id. Rule 1.6, comment. 121. R. SPEIDEL, R. SUMMERS & J. WHITE, COMMERCIAL AND CONSUMER LAW, p.

72 (1974). 122. MODEL RULES Rule 1.13. 123. Id. 124. Id. at Editor's Note. 125. MODEL RRULE Rule 1.13 comment. 126. Id. Rule 1.14.


gal] representative for decisions on behalf of the client."127 Thus, following a similar analogy to that which was discussed under the Model Code, a lawyer faced with the trilemma (whether he should protect his client, the state, or himself) is provided with a superb rationalization when the trustee waives the privilege. The insolvent corporation is analogous to a client "under a disability." The legal representative for a debtor corporation is the permanent trustee. Voila, no longer is there a trilemma. The Model Rules provides the calculus for resolving the problem.

The Model Rules require that the lawyer be candid toward the t r i b ~ n a 1 . l ~ ~ There is authority in the comments which would allow a lawyer to "take reasonable remedial measure"129 if a client should offer false evidence. The rule would allow a lawyer to disclose the client's deception to the court. Accordingly, under the facts of the case, if the McGhees gave evidence that Weintraub knew was false, he would have ha8 a duty to inform the court. Not to do so would have made him a party to defrauding the court. Lastly, another rulelS0 places a duty on the lawyer to be truthful in statements to third persons. This rule is related to the rule on confidentiality but as we have seen, that rule is subject to many exceptions. Under the Model Rules, therefore, there is no problem with the court's decision in this case. Of the three codes, it moves the furthest from the autonomy model toward the socialist model.

V. Critique

The autonomy model does not exist in the reality of the system of the administration of justice, nor in the three codes that were examined. Although the Lawyer's Code comes closest, i t is far from reflecting the true autonomy model. The socialist model's in- fluence is growing as exemplified by the greater role it plays in the Model Rules compared with the Model Code. The deontological model, favored by D'Amato and Eberle, which "elevates the dictates of morality above both the client and society"131 merely begs the question. Unless one is willing to accept Kant's categorical imperative to "act only on the maxim whereby thou canst a t the same

127. Id. Rule 1.14, comment. 128. Id. Rule 3.3. 129. Id. Rule 3.3 comment. 130. Id. Rule 4.1. 131. D'Amato & Eberle, supra note 5, at 798.


time will that it should become a universal law"lSa then one's position is really not deontological. Actually, Rawl's "original position"lSS is more helpful in advancing a plausible deontological position. I t is not helpful to use the Ross approach which says that moral rules cannot be overcome by nonmoral considerations. If moral rules were ever to be overcome by nonmoral considerations there would be no need to have moral rules. A t least one knows where one stands with Freedman's autonomy model. It is not a question of morality. It is a question of being an advocate for one's client even to the point of bending the truth:

. . . the criminal defense attorney, however unwillingly; in terms of personal morality, has a professional responsibility as an advocate in an adversary system to examine the perjurious client in the ordinary way and to argue to the jury, as evidence in the case, the testimony presented by the defendant.ls4

Legal ethics is not a question of private morality but it is a question of professional responsibility. Private confidences and secrets may or may not be kept depending on the private rules of morality we all live by. If a friend confides in me that he has just killed someone, I may or may not report his admission to the proper authorities. But, as a lawyer, I must follow rules of professional responsibility, not private morality. We live in a society where, because of the increasing complexity of modern life, laymen must consult lawyers to advise them. Therefore, the legal system should reinforce the sanctity of confidences and not find technicalities, as the Supreme Court did in this case, to reduce the privilege to the point of having attorneys tell their clients: "Anything you tell me will be held in the strictest confidence, unless, in the judgment of a court, society will benefit by breaking my promise to you and divulging i t in open court." In the case at point, it may be unjust for CDCB to have made some voidable preferences or, even worse, some fraudulent transfers, but there is an argument to be made that it is even more unjust to use legal coercion to force a lawyer to break his promise that that which was either told to him or given to him in the form of documentary evidence with the understand- ing that it would never be revealed would be disclosed to the pub-

- - - -

132. S. BOK, supra note 83. 133. J. RAWLS, supra note 56. It is beyond the scope of this paper to discuss

the "original position." 134. M. FREEDMAN, LAWYER'S ETHICS IN AN ADVERSARY SYSTEM 40-41 (1975).


lic. Could this action of the court be considered arbitrary? I t is hard enough to get clients to trust their lawyers now. This decision will not help in the future. This decision does not interpret the law, it makes law. There was no opportunity for public debate. The lawyer and the client entered into a contract that was broken, not because of either party, but because the power of the state intervened and changed the rules midstream. Is that fair? The decision may be justified on utilitarian grounds. It could be defended that society benefits if, as a result of this decision, the greatest net balance of satisfaction will be created by summing the reaction on the part of all individuals who make up society.lS6 Thus, the good is defined irrespective from that which is right. That which is right is defined as that which maximizes the good. This decision, therefore, would be right if, of all the alternatives, it produces the most good. Since more people who might find themselves in a similar situation to the facts of this case would not participate in either voidable preferences or fraudulent transfers, then the decision is right. D'Amato and Eberle, in fact, develop a model based upon intuitionism in which moral rules win out over nonmoral ones, obvi- ously, and where when one moral rule conflicts with another moral rule there is no method that can be used to prioritize the conflict- ing rules. Therefore, one is left to one's own intuition as to which one is superior to the other. They say that the Model Rules are more deontological because they would allow disclosure of a confidence if that is the only way to prevent harm to a third person. But that is certainly not true. The same could be said for the Model Code in which a lawyer may, not shall, reveal a confidence in any one of four situations.1se Even the Lawyer's Code would allow a lawyer to reveal a confidence in any one of four situation^.'^^ Therefore, the deontological model is really not reflected in any one of the three codes: they are all utilitarian. So we are left with the question: Of what use are these three codes of ethics? Do they not act as "shields" allowing the professionals who adhere to them to justify their actions as "moral"?

VI. Conclusion

The case of C.F.T.C. u. Weintraub was examined with respect -- - - - - - -

135. See H. SIDWICK, THE METHOD OF ETHICS (7th ed. 1907). 136. MODEL CODE DR 4-101(c)(l), (2), (31, & (4). 137. MODEL CODE Rules 1.3, 1.4, 1.5, and 1.6.


to the three models of legal ethics discussed by D'Amato and Eb- erle and the three codes of legal ethics. Although D'Amato and Eb- erle view the Model Rules as deontological, I have tried to show that all three codes are utilitarian with respect to how each would resolve the problem contained in the case. Not only are the three codes utilitarian, but the decision itself is based upon utilitarian principles. This is merely a philosophical way of saying that the decision is based on policy grounds. The Supreme Court was quite right when it said "complications in the application of the privilege arise when the client is a corp~ration." '~~ These complications, of course would not arise if, in 1962, a federal court had been affirmed when it held that a corporation was not to be granted the privilege, but it was reversed upon appeal.lgB The court in this case applied the principle established by Dean Wigmore:

the privilege remains an exception to the general duty to disclose. Its benefits are all indirect and speculative; its obstruc- tion is plain and concrete . . . It is worth preserving for the sake of general policy; but it is nonetheless an obstacle to the investigation of the truth. It ought to be strictly confined within the narrowest limits consistent with the logic of its principle.140

This decision was firmly based on policy.

138. Upjohn Co. v. United States, 449 U.S. 383, 389 (1981). 139. Radiant Burners, Inc. v. American Gas Ass'n, 207 F. Supp. 771 (N.D. Ill.

1962). 140. 8 J. WIGMORE, supra note 2, at 3 2291.

Documents

C.F.T.C. v. WEINTRA UB: A D'AMATO AND EBERLE ANALYSIS