ASSOCIATION OF THE BAR OF THE CITY
OF NEW YORK COMMITTEE ON PROFESSIONAL AND JUDICIAL ETHICS
Year 1994 Ethics Opinions
THE ASSOCIATION OF THE BAR
OF THE CITY OF NEW YORK
FORMAL OPINION 1994-1
COMMITTEE ON PROFESSIONAL AND JUDICIAL ETHICS
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March 21, 1994
ACTION: FORMAL OPINION
TOPIC: In-house attorney;
discrimination claim against former employer; confidences and
DIGEST: Former in-house attorney
may sue former employer for alleged discrimination and
participate in the preparation of a class action against the
former employer, provided the attorney does not use or reveal any
confidences or secrets of the former employer or serve as class
representative or class counsel.
CODE: DRs 4-101(A), 4-101(B).
May a former in-house attorney who
claims to have been the victim of discrimination participate in
preparations for a potential employment discrimination class
action against his former employer?
Attorney X was recently discharged
from employment as an in-house corporate lawyer after seventeen
years of service. X believes that his discharge was improperly
motivated by his activities to counter what he believed to be
evidence of racial discrimination within the corporation. X is
considering pursuing individual and class-wide employment
discrimination claims arising under the local and federal civil
rights statutes against his former client and employer, but is
concerned that his participation may violate his ethical
obligations as an attorney.
This inquiry raises a number of
legal, as well as ethical, considerations as a result of X's
desire to participate in a suit against his former client. In
this opinion, we will deal only with the ethical issues and will
not render any advice or opinions on the legal questions raised.
The inquiry is governed by the rules contained in the Code of
Professional Responsibility, which apply to in-house corporate
attorneys in relation to their employers, as well as to private
practitioners in relation to their clients. See Upjohn Co. v.
United States, 449 U.S. 383 (1981).
DR 4-101(B) states that a lawyer
shall not knowingly:
1. Reveal a confidence or secret
of a client.
2. Use a confidence or secret of a
client to the disadvantage of the client.
3. Use a confidence or secret of a
client for the advantage of the lawyer or of a third person,
unless the client consents after full disclosure.
DR 4-101(A) defines a
"confidence" as information protected by the
attorney-client privilege under applicable law and a
"secret" as "other information gained in the
professional relationship that the client has requested be held
inviolate or the disclosure of which would be embarrassing or
would be likely to be detrimental to the client."
An attorney must not only avoid
disclosing the client's secrets but must avoid situations where
the potential for disclosure exists or where it appears such
secrets might be disclosed. Although X represents that he worked
exclusively on corporate and international matters for the last
ten years and does not have any confidential information relating
to employment discrimination matters involving the former
employer, this may be an overly simplistic view of his position
and the access he had to confidential or secret information. Such
information may have come to X as a result of his job as an
attorney, despite the fact that employment issues were not
directly involved in matters he worked on for the company.
Additionally, X should be cautious in this area because the
ethical rule against non-disclosure is broader than the
attorney-client privilege and extends to the broadly defined
"secrets" as well as to "confidences."
Nonetheless, it is our view that the Code does not, per se,
prevent X from personally initiating litigation to redress his
claims of discrimination, presuming X has an adequate basis for
asserting those claims. However, we caution again that care
should be exercised to avoid disclosing the
"confidences" and "secrets" of the former
The question of whether an
in-house counsel may sue his or her employer has been considered
by several courts with mixed results. Where the in-house counsel
was pursuing a statutory right, his or her right to pursue this
remedy against the former employer has been upheld. See Parker v.
M&T Chemicals, Inc., 236 N.J. Super. 451, 566 A.2d 215 (1989)
(upholding in-house attorney's right to sue former employer under
the New Jersey Whistleblowers Act). Similarly, an in-house
attorney may pursue a contractual claim based on a termination in
violation of the procedure set forth in the company's employment
handbook. See Nordling v. Northern State Power Co., 478 N.W.2d
498 (Minn. 1991). In contrast, where the attorney was pursuing a
common law remedy, several courts have not permitted in-house
attorneys to sue former employers for retaliatory termination,
basing their conclusion on the confidential nature of the
attorney-client relationship and the ethical requirements
relating to clients' confidences and secrets. See Eckhaus v.
Alfa-Laval, Inc., 764 F. Supp. 34 (S.D.N.Y. 1991) (granting
summary judgment dismissing former in-house counsel's complaint
of defamation on the grounds that prosecution of such action
would cause the revelation of the client's confidences and
secrets in violation of DR 4-101(B)); Balla v. Gambro, Inc., 145
Ill.2d 492, 584 N.E.2d 104, 105 (1991); Herbster v. North
American Co., 150 Ill. App. 3d 21 (1987); Willy v. Coastal Corp.,
647 F. Supp. 116 (S.D. Tex. 1986), rev'd on other grounds, 855
F.2d 1160 (5th Cir. 1988).
It is our opinion that if an
attorney may bring an action against a former employer based on a
state whistle-blowers statute or an employer's handbook, he or
she would not be ethically precluded from bringing an action
against the former employer for claimed discrimination, since
this involves a much more fundamental right, grounded in numerous
statutes. In fact, in Nordling, 478 N.W.2d at 502, the court
The attorney-client status of
in-house counsel has apparently not precluded an inside attorney
from suing her company employer for employment discrimination.
See, e.g., Bellissimo v. Westinghouse Elec. Corp., 764 F.2d 175
(3d Cir. 1985), cert. denied, 475 U.S. 1035 (1986) (sex
discrimination claim maintained by in-house counsel against her
employer, although attorney-client defense not asserted); Jones
v. Flagship Int'l, 793 F.2d 714 (5th Cir. 1986) (sex
discrimination claim; again, the attorney-client defense not
asserted), cert. denied, 479 U.S. 1067 (1987).
While X is not barred by ethical
rules from prosecuting his own rights based on statutes
prohibiting discrimination, he is precluded from serving as a
class representative by these same ethical considerations. In Doe
v. A Corp., 709 F.2d 1043 (5th Cir. 1983), the court held that an
in-house attorney responsible for rendering legal advice on
employee benefits who, following termination, asserted ERISA
claims against his former employer, could not serve as either a
representative or the attorney for the class in a proposed class
action although he was free to prosecute his own action.
To allow Doe to act as class
representative would create tension between his obligation as
representative to do all he can to vindicate the rights of the
class members and his personal ethical duty to protect A
Id. at 1048.
Finally, we further note that X
not serve as the attorney for a class or a third party in the
prospective discrimination, because that would raise serious
ethical questions under DR 5-108, as well as the rules set forth
above. See Doe v. A Corp., 709 F.2d 1043.
For the foregoing reasons, and
subject to the caveats and limitations discussed above, we answer
the question presented in the affirmative.