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Law Practice,
Ethics/Professional Responsibility

Oct. 17, 2018

ANALYSIS: Rule 1.9 (use of confidential information)

See more on ANALYSIS: Rule 1.9 (use of confidential information)

An interesting aspect of the new rule is the discussion of a lawyer's use of confidential information related to representation of a former client.

Sean M. Selegue

Partner, Arnold & Porter Kaye Scholer LLP

Email: sean.selegue@arnoldporter.com


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NEW RULES OF PROFESSIONAL CONDUCT

Another interesting aspect of the new Rules of Professional Conduct set to take effect in November is Rule 1.9's discussion of a lawyer's use of confidential information related to representation of a former client, even if the lawyer's use does not result in a disclosure.

Current Rule 3-100 prohibits only revelation of confidential information. The statutory duty of confidentiality, Section 6068(e)(1) of the Business and Professions Code, also seems to address only disclosure of confidential information because it requires an attorney to "maintain inviolate the confidence, and at every peril to himself or herself to preserve the secrets, of his or her client."

Consistent with the ABA Model Rules, new Rule 1.9(c)(1) provides that a lawyer may not use confidential information to the disadvantage of a former client except when such use would be permitted as to a current client. This principle is recognized in current California case law in case law addresses breach of fiduciary duty. For instance, a law firm that represented a business breached its fiduciary duty to that business by using confidential information about a former client's business methods to woo the former clients' customers. David Welch Co. v. Erskine & Tulley, 203 Cal. App. 3d 884 (1988).

David Welch held that the law firm's conduct violated the predecessor to current Rule 3-310(E), which new Rule 1.9 will replace. Like the current rule, Rule 3-310(E) prohibits a lawyer, without consent, from accepting "employment" adverse to a former client as to which the lawyer obtained confidential information. Rejecting the law firm's apparent argument that the rule did not literally apply, the court noted that the Rules of Professional Conduct, "together with statutes and general principles relating to other fiduciary relationships, all help define the duty component of the fiduciary duty which the attorney owes to his or her client." 203 Cal. App. 3d at 890-91. The new rule will codify the limitations on an attorney's use of confidential information, making the restriction more apparent and less subject to dispute.

Consistent with the ABA approach, the new rule also clarifies that the prohibition on use ends when "the information has become generally known." However, before relying on that exception, a lawyer should examine carefully whether information can in fact be said to be generally known. The comment to new Rule 1.9 cautions that simply because "information can be discovered in a public record does not, by itself, render that information generally known."

For instance, when as a result of representing a client, a lawyer learns of information in public records that is embarrassing or detrimental to a former client, or which the former client has asked the lawyer to keep confidential, the prohibition on use (or disclosure for that matter) remains in effect. This situation can come up, for instance, when by reason of representing a former client, a lawyer knows of the former client's criminal conviction. While that is a public record, the lawyer's knowledge of it remains subject to the duty of confidentiality.

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