Lawyer's Duty of Confidentiality vs. Lawyer's Duty of Candor

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HONOLULU · HILO · KONA · MAUI · GUAM · LOS ANGELES1

September 18, 2014

Lawyer's Duty of Confidentialityvs.

Lawyer's Duty of Candor

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A Tale of Two Law Firms

by James Polish

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The Duty of Confidentiality

“Your secret’s safe with me, Frank.” — Hawkeye, M*A*S*H

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• Hawaii Rule 1.6(a):Without client consent, “[a] lawyer shall not reveal information relating to the representation of a client . . . .”

• Automatic: Client need not request confidentiality

• Broader than attorney-client privilege– No matter the source– Information obtained before or after

representation– Public information

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– In re Anonymous, 654 N.E.2d 1128 (Ind. 1995)(lawyer violated Rule 1.6 by disclosing information that "was readily available from public sources and not confidential in nature"); Nevada Ethics Opinion 41 (2009) (same). Contra Harris c. Baltimore Sun Co., 330 Md. 595, 625 A.2d. 941 (1993)(must be potential for harm to client).

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• ABA Model Code 4-101:Prohibits revealing a client's confidence or secret.– Applies to information protected by the attorney-

client privilege, information gained in a professional relationship that client requested be held inviolate or disclosure of which would likely be detrimental to client. DR 4-101(B)

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• Principal Hawaii exceptions– "disclosure is impliedly authorized in order to carry

out the representation"– disclosure is necessary to prevent client from

committing a criminal or fraudulent act likely to result in death, substantial bodily harm, or substantial injury to another’s financial interests or property

– Disclosure is necessary to rectify consequences of client’s crime or fraud in furtherance of which lawyer’s services have been used

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• Principal Hawaii exceptions– proceeding concerning the lawyer's representation

of the client (e.g., malpractice claim, fee dispute, disciplinary complaint, third-party claim)

– disclosure is required to comply with other law or a court order

• Extends to former clients. ABA Model Rule and Hawaii Rule 1.9(c)(2).

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The Duty of Candor -Third Parties

• Hawaii Rule 4.1:– Lawyer may not knowingly (1) "make a false

statement of material fact or law to a third person" or (2) fail to disclose a material fact when necessary to avoid assisting client's crime or fraud.

– Cf. Rule 8.4(c) (prohibits conduct involving dishonesty, fraud, deceit, or misrepresentation)

– Misleading statements or omissions can be the equivalent of an affirmative false statement. Haw. Rule 4.1, Cmt. [1].

– "[N]o affirmative duty to inform an opposing party of relevant facts." Haw. Rule 4.1, Cmt. [1].

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The Duty of Candor -Third Parties

• Withdrawal may not be enough.– May be necessary to disaffirm a document or

opinion. Haw. Rule 4.1, Cmt. [3]; In re Williams, 314 Or. 530, 840 P.2d 1280 (1992) ("A misrepresentation can be made by making an assertion that is not in accordance with the truth when made … or by failing to correct a representation that, although true when made, is no longer true in light of information later acquired.").

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The Duty of Candor - Examples

• Failure to disclose changes in draft contract– Wright v. Pennamped, 657 N.E.2d 1223, 1231 (Ind.

App. 1995), rehrg. denied, 664 N.E.2d 394 (Ind. App. 1996); Illinois Advisory Opinion 95-10 (1995)

• Failure to disclose client's death before settlement agreement fully executed– ABA Formal Opinion 95-397 (1995) (continued

communication with opposing counsel constitutes an implicit representation that the client is alive)

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• Settling without correcting misunderstanding re amount of insurance– State ex rel. Nebraska Bar Ass’n v. Addison, 412

N.W.2d 855 (Neb. 1987)• Inadvertent omission of contract provision

– ABA Informal Opinion 86-1518 (1986)• Failure to disclose mathematical error

– Stare v. Tate, 21 Cal.App.3d 432 (1971) (settlement agreement reformed)

– But see Brown v. County of Genesee, 872 F.2d 169 (6th Cir. 1989) (no duty absent fraud or misrepresentation)

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• Failure to disclose statute of limitations expired– ABA Formal Opinion 94-387 ("[T]he Model Rules …

do not require a lawyer to disclose weaknesses in her client's case to an opposing party, in the context of settlement negotiations or otherwise.")

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Duty of Candor - Courts

• Hawaii Rule 3.3 prohibits, inter alia, knowingly:– making false statements of material fact or law– failing to disclose material fact when necessary to

avoid assisting client's criminal or fraudulent act– offering false evidence or failing to take remedial

measures when falsity discovered• Duty to take remedial action continues until

conclusion of the proceeding. Haw. Rule 3.3, Cmt. [13].

knowingly:

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Tips

• Do not assist client in misleading the court or a third party, even by omission

• Try to convince client to do the right thing (make the necessary disclosures)– Organizations – Hawaii Rule 1.13.

• Withdraw if necessary• Consult with ethics counsel

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September 17, 2014

Application of the Attorney-Client Privilege and Work Product Doctrine to Communications That

Serve a Dual Purpose

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The Attorney-Client Privilege

• Hawaii Rule of Evidence 503:(1) where legal advice of any kind is sought (2) from a professional legal adviser in his [or her] capacity as such, (3) the communication relating to that purpose, (4) made in confidence (5) by the client, (6) are at his [or her] instance permanently protected (7) from disclosure by himself or by the legal adviser, (8) except the protection be waived.– Applies to communications from and to attorneys.

Rule 503(b)

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The Attorney-Client Privilege– Does not apply to communications made to an

attorney for the purpose of seeking business advice.

Metzler Contracting Co. LLC v. Stephens 642 F.Supp.2d 1192, 1202 (D. Haw. 2009)

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The Attorney-Client Privilege

• Privilege waived where:– voluntary disclosure of any significant part of the

privileged matter unless disclosure is itself privileged. Haw. R. Evidence 511.

• Privilege protects "communications", not facts. Haw. R. 503; Upjohn Co. v. United States, 449 U.S. 383 (1981).

• State privilege law applies in federal court in cases governed by state substantive law. Fed. Rule of Ev. 501.

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Dual purpose communications

• Jessup v. Superior Court In & For Santa Clara County, 151 Cal.App.2d 102 (1957)– Dominant purpose test

• Costco Wholesale Corp. v. Sup.Ct. (Randall), 47 Cal.4th 725, 734-736 (2009) (a letter containing both legal advice and a factual recitation was entirely privileged because the “dominant purpose” was legal)

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• In re Kellogg Brown & Root, Inc., 756 F.3d 754 (D.C. Cir. 2014)– primary purpose test– “In general, American decisions agree that the

privilege applies if one of the significant purposes of a client in communicating with a lawyer is that of obtaining legal assistance.” 1 Restatement (3d) Law Governing Lawyers § 72

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• Other tests. See Phillips v. C.R. Bard, Inc., 290 F.R.D. 615 (D. Nev. 2013).– "Primary purpose" v. "because of" standard– "Primary purpose" standard without the Kellogg

Brown gloss– Communications sent concurrently to lawyer for

legal advice and to non-lawyer for business purpose

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• Hawaii Rule of Evidence 503:(1) where legal advice of any kind is sought (2) from a professional legal adviser in his [or her] capacity as such, (3) the communication relating to that purpose, (4) made in confidence (5) by the client, (6) are at his [or her] instance permanently protected (7) from disclosure by himself or by the legal adviser, (8) except the protection be waived.

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The Work Product Doctrine

• Hawaii Rule of Civ. Procedure 26(b)(4)– Documents and things prepared in anticipation of

litigation or for trial by a party or by or for a party's representative (including the other party’s attorney, consultant, surety, indemnitor, insurer, or agent)

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The Work Product Doctrine

• In re Grand Jury Subpoena (Mark Torf/Torf Environmental Management), 357 F.3d 900, 910 (9th Cir. 2003)Doesn't depend on whether litigation was the primary or secondary motive.Look at totality of the circumstances to see if “… the document was created because of anticipated litigation, and would not have been created in substantially similar form but for the prospect of that litigation."

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Tips

• Split projects where possible• Have attorney direct investigations• Use outside counsel• Clearly identify purposes• Mark documents as "Confidential and

Privileged"• No unnecessary disclosures• Best if all communications go through an

attorney• Factual and legal advice intertwined

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The End