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ASSOCIATION OF THE BAR OF THE CITY OF NEW YORK COMMITTEE ON PROFESSIONAL AND JUDICIAL ETHICS
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THE ASSOCIATION OF THE BAR OF THE CITY OF NEW YORK

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FORMAL OPINION 2001-1

OBLIGATIONS OF LAW FIRM RECEIVING UNSOLICITEDE-MAIL COMMUNICATIONS FROM PROSPECTIVE CLIENT

TOPIC: Duty to Preserve Confidences of a Prospective Client (Pre-retention Communication); Conflict of Interest.

DIGEST: Information imparted in good faith by a prospective client to a lawyer or law firm in an e-mail generated in response to an internet web site maintained by the lawyer or law firm where such information is adverse to the interests of the prospective client generally would not disqualify the law firm from representing another present or future client in the same matter. Where the web site does not adequately warn that information transmitted to the lawyer or firm will not be treated as confidential, the information should be held in confidence by the attorney receiving the communication and not disclosed to or used for the benefit of the other client even though the attorney declines to represent the potential client.

CODE: DR 4-101 [22 N.Y.C.R.R. § 1200.19]; EC 4-1; DR 5-105(A) [22 N.Y.C.R.R. § 1200.20]

QUESTIONS: May an attorney who receives an unsolicited communication from a prospective client represent another client in the same matter against the prospective client? May the lawyer disclose the unsolicited information to the existing client or use it against the prospective client?

OPINION

A law firm has received an unsolicited written communication from a potential client containing confidential information about a potential dispute with, or transaction relating to, another company which is an existing client of the law firm. Before learning that it concerns an existing client of the firm, the communication has been read by an attorney at the receiving law firm. It contains confidential information that would be of use to the existing client and harmful to the interest of the potential client if it were disclosed. We understand that the would-be client was acting in good faith in transmitting the information and was genuinely seeking to consult the law firm in response to the firm‚s web site listing. [1]

The law firm receiving the unsolicited written communication poses the following inquiries: (1) whether the receipt and review by a lawyer at the law firm of the information unilaterally transmitted to it precludes the law firm from representing its existing client in the same matter; and (2) whether the law firm may disclose to its existing client or use for its benefit the information contained in the communication or disclose the fact that the communication had been reviewed.

DISCUSSION

It is apodictic that the Code of Professional Responsibility requires an attorney to preserve the confidences and secrets of a client. DR 4-101 [22 N.Y.C.R.R. §1200.19]. But, neither the Code of Professional Responsibility nor the Model Rules addresses the protection, if any, to be accorded information received from potential or would-be clients. [2] EC 4-1 states that both the "'fiduciary relationship existing between lawyer and client and the proper functioning of the legal system require the preservation by the lawyer of confidences and secrets of one who has employed or sought to employ .... [the attorney].'" Leisman v. Leisman, 617 N.Y.S. 2d 807 (App. Div. 2d Dep't 1994) (quoting EC 4-1) (emphasis added) . In this same vein, the scope section of the Model Rules provides that the duty of confidentiality embodied in Rule 1.6 may attach when the lawyer "agrees to consider whether a client-lawyer relationship shall be established." Model Rules of Professional Conduct, Rule 1.6 (1983) (emphasis added).

The American Bar Association concluded in Formal Opinion 90-358 that an attorney is obligated "to protect information imparted by a would-be client seeking to engage the lawyer‚s services even though no legal services are performed and the representation is declined." [3]

Disqualification by the Firm is not Mandated by the Receipt and Review of an Unsolicited Communication

It does not follow, however, that the duty of confidentiality that may apply to a prospective client necessarily mandates that a law firm be disqualified from representing an existing client in the matter whose interests are adverse because a prospective client unilaterally transmits confidential information to the law firm. We agree with ABA Formal Opinion 90-358 that "in most circumstances, balancing the interest of the existing client against those of the would-be client demands that the representation of the existing client continue as long as the lawyer believes that the representation would not be materially limited and this belief is reasonable." We believe that this applies with special force where, as in this case, a prospective client unilaterally elects to transmit information to a law firm with which no prior attorney-client relationship exists.

The law firm in this case did not request or solicit the transmission to it of any confidential information by the prospective client. The fact that the law firm maintained a web site does not, standing alone, alter our view that the transmitted information was unsolicited. The fact that a law firm's web site has a link to send an e-mail to the firm does not mean that the firm has solicited the transmission of confidential information from a prospective client. The Committee believes that there is a fundamental distinction between a specific request for, or a solicitation of, information about a client by a lawyer and advertising a law firm's general availability to accept clients, which has been traditionally done through legal directories, such as Martindale Hubbell, and now is also routinely done through television, the print media and web sites on the internet. Indeed, Martindale Hubbell has put its directory on-line, with links to law firm web sites and e-mail addresses, facilitating unilateral communications from prospective clients.

To be sure, there are circumstances where information communicated even before an attorney-client relationship has been formed may preclude a law firm from accepting an engagement adverse to a prospective client, even on behalf of an existing client. Increasingly, clients are interviewing more than one lawyer or law firm before selecting counsel. Absent appropriate precautions by lawyers participating in these so-called "beauty contests," the communication of confidential information by a prospective client may preclude the law firm from accepting an engagement from another present or future client adverse to the prospective client in the matter even though the lawyer is not retained. See e.g., Bridge Chemicals Products, Inc. v. Quantum Chemical Corp., No. 88 C 10734, 1990 U.S. Dist. LEXIS 5019 (N.D. Ill. 1990); see also Buys v. Theran, 639 N.E.2d 720 (Mass. 1994); see generally, Report of the Committee on Professional Responsibility, Association of the Bar of the City of New York, "Ethical Issues in Beauty Contests," 48 The Record 1003; B. Kirman & M. Ramey, "When A Beauty Contest Turns Ugly," Business Law Today, March/April 1992.

We believe, however, that there is a vast difference between the unilateral, unsolicited communication at issue here by a prospective client to a law firm and a communication made by a potential client to a lawyer at a meeting in which the lawyer has elected voluntarily to participate and is able to warn a potential client not to provide any information to the lawyer that the client considers confidential. Indeed, this basic distinction is recognized by the ABA Ethics 2000 Commission's Proposed Rule 1.18 addressing the duties to a prospective client. Significantly, a "prospective client" is defined to be "[a] person who discusses with a lawyer the possibility of forming a client-lawyer relationship with respect to a matter. . . ." As significantly, in explaining Proposed Rule 1.18, the Comments note that

Not all persons who communicate information to a lawyer are entitled to protection under this Rule. A person who communicates information unilaterally to a lawyer, without any reasonable expectation that the lawyer is willing to discuss the possibility of forming a client-lawyer relationship, is not a "prospective client" within the meaning of paragraph (a).

Id., comment 2.

Similarly, the Restatement of the Law Governing Lawyers, which defines a lawyer's duties to prospective clients, limits those duties to situations in which "a person discusses with a lawyer the possibility of their forming a client-lawyer relationship." Restatement (Third) of the Law Governing Lawyers, §15(1) (2000) (cited hereinafter as "Restatement §__"). Limiting the trigger to "discussions" between a lawyer and client provides the lawyer with the opportunity to avoid receiving disqualifying information, which is not the case when the information is unilaterally sent: "In order to avoid acquiring disqualification information, a lawyer deciding whether or not to undertake a matter may limit the initial information. . . ." Id., comment c. In these limited circumstances, "as a result of the lawyer's duty to protect the information relating to the representation of the would-be client, the lawyer's representation of the existing client may be materially limited" in which event disqualification under DR 5-101(A) [22 N.Y.C.R.R. §1200.20] (and Model Rule 1.7(b)) could be warranted. Id.

In the case of a beauty contest, the lawyer is able to determine whether to converse with the prospective client, has at least acquiesced to a communication with the prospective client and has an opportunity to apprise the potential client of possible conflicts and specifically warn against disclosure of confidential information. In this context, if the lawyer fails adequately to take appropriate action to avoid the disclosure of confidential information, disqualification may be warranted.

In contrast, where, as here, a prospective client simply transmits information to a law firm providing no real opportunity to the law firm to avoid its receipt, the Committee concludes that the law firm is not precluded from representing a client adverse to the prospective client in the matter. In considering a lawyer's confidentiality obligation to a prospective client in the context of beauty contests, this Association concluded that "applying these rule to attorneys who participate unsuccessfully in a client-sponsored beauty contest stretches the confidentiality responsibility to the limits." 48 The Record at 1003. We agree, and conclude that to extend these rules still further to disqualify a lawyer who receives an unsolicited communication would transgress the boundaries of ethics or common sense. Where the potential conflict is thrust on a law firm by virtue of an unsolicited written communication, we agree with Professor Hazard:

A [prospective client] who tells a lawyer that he wants to sue XYZ . . . can properly be charged with knowledge that lawyers represent many different clients, and hence that there is a possibility that the immediate lawyer or her firm already represents XYZ Corp. It follows that the client cannot impose on the lawyer the risk that a preliminary discussion will later be the basis of a disqualification motion against the lawyer.

Hazard, January 29, 1996.

In other situations that precede the formation of an attorney-client relationship, in which the lawyer voluntarily participates, such as in preliminary meetings, including beauty contests, or telephone conversations, the lawyer can and should apprise the prospective client that no information the client considers confidential should be imparted, because it will not necessarily be treated as confidential, unless and until conflicts are cleared and the lawyer accepts the matter. In the event that no such warning is given and the lawyer does receive confidential information before an attorney-client relationship is formed that could be significantly harmful to the client, the lawyer will be precluded from representing a client whose interests are materially adverse to the prospective client in a substantially related matter unless the lawyer actually reviewing the information is screened or consent is obtained. [4] Restatement §15(2); Cumming v. Cumming. 695 N.Y.S.2d 346 (App. Div. 1st Dep't 1999); see also McCook Metals L.L.C. v. ALCOA, 99 C 3856, 2001 U.S. Dist. LEXIS 497 (N.D. Ill. Jan. 18, 2001) (allowing firm to continue to represent client in litigation against company which became firm client through new partners' joining firm where new partners were screened from those representing original client in litigation); compare Leisman, 617 N.Y.S.2d at 807, in which court disqualified plaintiff wife's attorney where the husband had a preliminary consultation with the wife's attorney regarding the prior action between the husband and the former wife which could bear a substantial relationship to the present litigation. Proposed Model Rule 1.18, ABA 2000 Ethics Commission, contains a screening provision which enables the "firm" to continue to represent the existing client, but not the personally disqualified lawyer who has received "significantly harmful" information. Proposed Model Rule 1.18(d) states that: "Representation is permissible if both the affected client and the prospective client have given informed consent, confirmed in writing, or: (1) the disqualified lawyer is timely screened from any participation in the matter and is apportioned no part of the fee therefrom; and (2) written notice is promptly given to the prospective client." (emphasis added).

Unsolicited Information May Not Be Disclosed or Used Against the Interests of the Would-Be Client

Having determined that the law firm is not precluded by the receipt of an unsolicited communication from an engagement against the prospective client, we now address the issue of whether the lawyer may use the confidential information against the would-be client.

Any analysis of an attorney's duty to maintain confidential information imparted to him in the course of his professional duties must begin with DR 4-101, which 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(B) [22 N.Y.C.R.R. §1200.19]. A "confidence" is defined as "information protected by the attorney-client privilege under applicable law," and "secrets" comprise "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 likely be detrimental to the client." DR 4-101(A) [22 N.Y.C.R.R. §1200.19]. The information unilaterally transmitted to the law firm via e-mail in the instant situation can only be protected, if at all, as a confidence because no attorney-client-or professional-relationship had been formed between the law firm and the prospective client at the time the information was sent, and therefore it was not "imparted to him in the course of his professional duties." Thus, the law firm's duty to maintain as confidential any information disclosed to it by the prospective client is defined by the contours of the attorney-client privilege.

In New York, the attorney-client privilege has been codified at CPLR 4503, which defines an attorney-client privileged communication as "a confidential communication made between the attorney or his employee and the client in the course of professional employment." CPLR 4503(a) (McKinney's 2001). The privilege protects not only communications between a lawyer and client, but also communications between a lawyer and one who "sought to become a client." People v. Belge, 59 A.D.2d 307, 308, 399 N.Y.S.2d 539 (4th Dep't 1977) (quoting United States v. United Shoe Machinery Corp., 89 F. Supp. 357, 358 (D. Mass. 1950)). Accordingly, initial statements made when a prospective client in good faith intends to employ a lawyer are privileged even though the lawyer ultimately declines the engagement. United States v. Dennis, 843 F.2d 652, 656-57 (2d Cir. 1988); see also United States v. Devery, 93 Cr. 273 (LAP), 1995 WL 217529, at *5 (S.D.N.Y. Apr. 12, 1995); Bennett Silvershein Assocs. v. Furman, 776 F. Supp. 800, 803 (S.D.N.Y. 1991); McCormick, Evidence §88 (5th Ed. 1999) ("communications in the course of preliminary discussions with a view to employing the lawyer are privileged even though in the upshot the employment is not accepted"). "Such information should be protected because frank disclosure is required before an intelligent decision on the retainer can be made." Weinstein, Korn and Miller, New York Practice, ¶4503.12 (Matthew Bender & Co. 2000) (citing 8 Wigmore, Evidence §2304 (McNaughton rev. 1961)).

However, the landscape changes where the client could not reasonably have been seeking to employ the attorney because, for example, the attorney has already declined the representation in question or the prospective client knows the lawyer is representing an adverse party. In situations such as these, it is well-established that no privilege attaches to communications made to an attorney, because the prospective client cannot reasonably have believed that the communication was made in furtherance of seeking the advice of an attorney. Dennis, 843 F.2d at 657 (citing 8 Wigmore § 2304 (McNaughton rev. 1961)); People v. O'Connor, 85 A.D.2d 92, 96, 447 N.Y.S.2d 553, 557 (4th Dep't 1982).

Thus, in the situation presented here, we believe that prospective clients who approach lawyers in good faith for the purpose of seeking legal advice should not suffer even if they labor under the misapprehension that information unilaterally sent will be kept confidential. Although such a belief may be ill-conceived or even careless, unless the prospective client is specifically and conspicuously warned not to send such information, the information should not be turned against her. Indeed, we see no reason that the other client should be benefitted by the fortuitous circumstances that the lawyer approached by the prospective client turned out to be the same lawyer retained by the adverse party. Nor do we believe that zealous advocacy compels a different result. After all, there are many circumstances where a lawyer comes into possession of an adverse party's information and cannot use it. We recognize that this solution may not be a perfect one, and that there exists the possibility that the prospective client could still suffer at least some residual harm from the transmission of confidential information because the bell cannot be unrung and the lawyer cannot unlearn the information. However, the result is no different from other circumstances where an adversary lawyer gains inadvertent access to privileged information such as inadvertently produced privileged material. American Bar Association Formal Opinion 92-368 (1992) on the inadvertent disclosure of confidential materials instructs against the literalistic reading of the black letter Model Rules. ABA 92-368 states: "there are many limitations on the extent to which a lawyer may go 'all out' for the client." The opinion also notes that "first, [inadvertent] disclosure to counsel does not have to result in disclosure to counsel's client. Second, there is a significant difference between a lawyer's knowing the contents of documents and the lawyer's being able to use them, for example, at trial either as a basis for questions or by presentation to them to a fact finder." As Professor Hazard writes:

[T]he [prospective] client should not have to take the risk that the lawyer will convey the preliminary information to the lawyer‚s existing clients. Accordingly, the position taken in the Restatement of Law Governing Lawyers, Sec. 27 (Tentative Draft No. 5) is that such preliminary information is confidential. This is the exception to the general rule that a lawyer must make use of all available information for the benefit of his clients. . . . The confidentiality accorded to preliminary conversations responds to a similar necessity, this being the integrity of protecting against conflicts of interest in the independent practice of law.

Hazard, Jan. 29, 1996.

We recognize that our conclusion conflicts with that which would be required by the ABA Ethics 2000 Commission's Proposed Rule 1.18, which squarely addresses the duties owed to a "prospective client." Significantly, Rule 1.18 specifically extends confidentiality protection to "prospective clients" by mandating that "a lawyer who has had discussions with a prospective client shall not use or reveal information learned in the consultation. . . ." Proposed Model Rule 1.18. On its face, however, Rule 1.18 limits this extended confidentiality protection only to a "prospective client who actually discusses with a lawyer the possibility of forming an attorney-client relationship. . . . " Rule 1.18(a)-(b). The stated purposes for defining a "prospective client" is to "limit[] circumstances to which the Rule applies". Id., explanation [1]. Any doubt that prospective clients who unilaterally communicate with a lawyer without any prior discussion are intended to be excluded is dispelled by comment 2:

Not all persons who communicate information to a lawyer are entitled to protection under this Rule. A person who communicates information unilaterally to a lawyer, without any reasonable expectation that the lawyer is willing to discuss the possibility of forming a client-lawyer relationship, is not a "prospective client" within the meaning of paragraph (a).

Application of Rule 1.18 here would lead us to conclude that the law firm receiving the disclosed information could use it against the prospective client. Indeed, it could be reasonably, if not forcefully, argued that the prospective client's cavalier treatment of her own information undermines any bona fide claim that others should be required to afford it confidentiality protection, and the lawyer's obligation of zealous advocacy would suggest that a lawyer should be able to exploit the prospective client's mistake and make available to another client everything he learns.

In the final analysis, however, we believe that the strong policy of encouraging clients to seek legal advice, fortified by the New York rule generally protecting pre-retention communications, warrants protecting the information in this case-especially given the absence of any warning against the disclosure of confidential information posted on the web site.

Situations in which Confidential Information May Be Used

In other situations, however, the policy of encouraging clients freely to seek legal advice must yield to other considerations. As discussed above, in situations where it is apparent to the prospective client that she cannot retain the lawyer -either because of awareness that the lawyer already represents an adverse party or an admonition from the lawyer that she will not represent the prospective client -no attorney-client privilege attaches to the communication.

In this connection, in dealing with law firm web sites, we note that an adequate disclaimer -one that prominently and specifically warns prospective clients not to send any confidential information in response to the web site because nothing will necessarily be treated as confidential until the prospective client has spoken to an attorney who has completed a conflicts check [5] -would vitiate any attorney-client privilege claim with respect to information transmitted in the face of such a warning. [6] If such a disclaimer is employed, and a prospective client insists on sending confidential information to the firm through the web site, then no protection would apply to that information and the lawyer would be free to use it as she sees fit. [7]

CONCLUSION

Notwithstanding disclaimers, especially those whose warnings are insufficient, there can be instances where prospective clients have revealed confidential information involving potential disputes with an existing client. "You’ve got mail" can be a problem. If an e-mail intended as confidential is received and assuming it was sent in good faith, the Committee believes it should be treated for confidentiality purposes as if it were a pre-retention discussion with a potential client. Under those circumstances, as explained herein, the e-mail must be treated as confidential and must not be disclosed to the existing client.

Dated: March 1, 2001



[1] Certainly, if the prospective client was aware, or had any reason to believe, that the law firm to which the information was transmitted was currently representing a client whose interests are in conflict in the same or another matter, it could not expect that its communication would be confidential. See ABA 90-358 (1990); Geoffrey C. Hazard, "Ethics, The Would-Be-Client," Nat'l L. J., Jan. 15, 1996 at A19 ("taint shopping describes the behavior in which someone purporting to be seeking legal assistance interviews a lawyer or law firm for the purpose of disqualifying them from future adverse representation.").

[2] See Geoffrey C. Hazard, "Ethics, The Would-be-Client," Nat'l L. J., Jan. 15, 1996 at A19, Jan. 29, 1996 at A19 (cited hereinafter as "Hazard, Jan. __, 1996").

[3] Proposed Model Rule 1.18(b) of the ABA Ethics 2000 Commission states that "even when no client-lawyer relationship ensues, a lawyer who has had discussions with a prospective client shall not use or reveal information learned in the consultation, except as Rule 1.9 would permit with respect to the information of the former client." The reporter states that the new rule is "in response to the Commission's concern that important events occur in the period during which a lawyer and prospective client are considering whether to form a client-lawyer relationship. For the most part, the current Model Rules [and the Code] do not address that pre-retention period." Model Rules of Professional Conduct of Ethics 2000 Commission, Rule 1.18, Reporter's Explanation of Changes (discussion draft 2000). Confidentiality is required under proposed Model Rule 1.18 according to the Explanation "no matter what right the lawyer or law firm may have to undertake later adverse representation." Id.

[4] The Code of Professional Responsibility and the Model Rules do not provide for screening. Hazard, January 29, 1996. Several jurisdictions and courts have adopted rules to screen lawyers who have received confidential information from disclosing that to other attorneys and as a means of not disqualifying the entire law firm. ABA Opinion 90-358 recommends that the recipient of the confidential information be screened: "In litigated matters where the information disclosed by the would-be client is not extensive or sensitive, this mechanism [screening] may avoid disqualification of other lawyers in the firm from representing another client in whose representation the information might prove useful." A New York case cautions, however, that if the attorney actively examined a file from the prospective client, the examining attorney would be disqualified from representing a client adverse to the prospective client. Desbiens v. Ford Motor Co., 439 N.Y.S.2d 452, 453 (App. Div. 3d Dep't 1981)("an attorney must avoid not only the fact but even the appearance of representing conflicting interests.").

[5] An optional web site disclaimer that the web site viewer may choose to read prior to sending an e-mail and which merely states that an attorney-client relationship cannot be established by e-mail is not as effective as a large print, prominently placed warning that e-mails with potential clients will not be treated as confidential. Such a disclaimer becomes even more effective if it appears in a "dialogue box" which materializes upon the website viewer's clicking the firm's link to its e-mail address and which requires that the viewer click "OK" before composing and sending an e-mail.

[6] One way to minimize the risk that a firm will be disqualified by viewing such a haphazard confidential communication is to create a firm procedure that e-mail originating from the firm's web site should be reviewed with caution. Specifically, the reviewing lawyer should not read the entire e-mail if it becomes apparent that the message contains confidential information or if a conflict is revealed.

[7] In this same vein, lawyers representing corporations, whether as inside or outside counsel, frequently encounter situations in which employees of the corporation communicate information to the attorneys expecting that information to be held in confidence. But communications to a corporation's lawyer by an employee of the corporation are not afforded the same protection as those made to independent, unrelated attorneys. The privilege with respect to communications to a corporation's attorneys generally belongs to the corporation. United States v. Int'l Brotherhood of Teamsters, 119 F.3d 210, 215 (2d Cir. 1997). Indeed, it is apparent that the attorneys represent the corporation, and not the individual employees. Nevertheless, courts have allowed employees to assert privilege with respect to conversations with the corporation's inside or outside counsel, but only in circumstances which make it clear that the employee is seeking advice on personal matters. Teamsters, 119 F.3d at 215. In order to invoke the attorney-client privilege for such communications, employees must demonstrate that "they approached counsel for the purpose of seeking legal advice, . . . when they approached counsel they made it clear that they were seeking legal advice in their individual rather than in their representative capacities, . . . counsel saw fit to communicate with them in their individual capacities rather than in their representative capacities, . . . their discussions were confidential . . . [and] the substance of their conversations with counsel did not concern matters within the company or the general affairs of the company." Id. (quotations omitted). We conclude that unless all these criteria are met, a unilateral communication from an employee to her employer corporation's counsel need not be maintained in confidence by the attorney in question.

Issued: March, 2001

 


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