An interesting panel at the recent Spring Meeting of the ABA Business Law Section addressed questions of the ethical obligations of business lawyers in various hypothetical situations. Chaired by Ellen Pansky, the panel included Jeff Kraus, Jacqueline Unger and Lois Mermelstein.
Hypo #1 A friend, Bob, tells attorney Anne that his business is in distress. Later, Bob asks Anne for legal assistance and Anne recommends her firm’s bankruptcy department, whom Bob retains. Later still, Anne tells another acquaintance, Charlie, of Bob’s company’s bankruptcy, of which Charlie had been unaware. The panel agreed that a duty of confidentiality is created retroactively once the firm commenced representation of Bob. But the fact that Bob commenced bankruptcy, if generally known, is not confidential; legal communications, not facts, are privileged. No legal advice was revealed that was prohibited under Rule 1.1. However, best practice would be not to reveal anything about a client’s affairs for which the firm is in service, rather than testing whether the matter revealed is already known. This is particularly true because even the fact of the representation of Bob is itself confidential. For example, if during the representation a client reveals she has a felony conviction, that fact (though on record) may not be revealed even after the representation is concluded.
Hypo #2: Client Push negotiates an alternative fee arrangement with attorney Fair on a matter that was represented to be simple and straightforward. In fact, client Push turns difficult, is dissatisfied with the outcome of the representation, posts a negative review on a web site, and refuses to pay the outstanding fee to attorney Fair. The transaction is independently covered in the press in a manner favorable to Fair. Attorney Fair responds to Push’s publicly posted criticisms by truthfully quoting the favorable news article and truthfully saying that client Push still owed the fee. Client Push files a grievance against the attorney. The panel suggested that the client waived any privilege of confidentiality, and that the attorney is entitled to respond factually and in a restrained and narrow way to clarify the facts. The attorney can certainly pursue fees, but may not introduce information regarding the representation outside the fee dispute.
Hypo #3: An attorney using Microsoft XP on an older computer is now without Microsoft-supplied security updates. Has she an ethical duty to switch to newer operating systems? Ms. Mermelstein opined that only if that computer were never connected to the internet would a client’s confidences be appropriately protected. The extent of the duty may be indistinct at this point, but it seems clear that lawyers must take steps to protect client confidences, and placing those confidences on an insecure data system is likely to be found inadequate. If you are going to use technology, then you are charged with a duty to take reasonable steps to understand it and be assured of its adequacy before placing client confidences on it.
Hypo #4: A lawyer sitting in Starbucks communicates to his office and edits files on his home office’s system using Starbucks’ Wi-Fi. He also uses his cell phone to communicate with his office. Has he breached his duty of confidentiality? Some jurisdictions have imposed a duty on the lawyer to investigate the degree of security, mixed with concerns of whether the communication was urgent, whether the information was sensitive, and so on. A question arises, however, whether adverse consequences have ensued from such use, or from the use of a cell phone in an airport, including phones’ identifying information that would place a lawyer in a certain location at a certain time. There seems not (at this point at least) to be a duty to encrypt information sent on publicly accessible networks, but it is a field that necessarily is advancing. One speaker said that her firm’s retainer agreement includes the client’s permission to use electronic communications in the course of representation. And the duty of preventing being overheard when talking to a client on the phone is longstanding and persists.
F. Peter Phillips is a commercial arbitrator and mediator with substantial experience providing consultation on the management of business disputes to companies around the globe.
A cum laude graduate of Dartmouth College and a magna cum laude graduate of New York Law School, Mr. Phillips served for nearly ten years as Senior Vice President of the International Institute for Conflict Prevention and Resolution (CPR Institute). During that time, he earned a reputation as an author, teacher, industry liaison, and systems designer for the avoidance, management and resolution of complex and sophisticated business conflicts.
In 2008, Mr. Phillips formed Business Conflict Management LLC (BCM) in order to offer his direct services as a neutral and a consultant. Through BCM, Mr. Phillips also continues his career as a highly sought-after public speaker, facilitator and instructor.