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THE ASSOCIATION OF THE BAR OF THE CITY OF NEW YORK
FORMAL OPINION 1994-1
COMMITTEE ON PROFESSIONAL AND JUDICIAL ETHICS
March 21, 1994
ACTION: FORMAL OPINION
TOPIC: In-house attorney; discrimination claim against former employer; confidences and secrets.
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 client.
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 noted that:
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 Corporation's secrets.
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.