UPON THE REQUEST OF A MEMBER OF THE SOUTH CAROLINA BAR, THE ETHICS ADVISORY COMMITTEE HAS RENDERED THIS OPINION ON THE ETHICAL PROPRIETY OF THE INQUIRER’S CONTEMPLATED CONDUCT. THIS COMMITTEE HAS NO DISCIPLINARY AUTHORITY. LAWYER DISCIPLINE IS ADMINISTERED SOLELY BY THE SOUTH CAROLINA SUPREME COURT THROUGH ITS COMMISSION ON LAWYER CONDUCT.
Ethics Advisory Opinion 02-15
"Attorney A" represents “Client” in an employment case. Attorney A’s “Firm” has handled employment cases for Client in the past. "Attorney B" works for Firm and has previously handled employment cases for Client.
"Attorney C" represents “Employee” in the case being handled by Attorney A. Attorney C is also very good friends with Attorney B, and the two socialize together regularly.
Attorney A was surprised when Attorney C insisted on a hearing in their case, because she believed that a direct appeal without a hearing would have been better for Employee, given the evidence in the case. Attorney B later admitted to Attorney A that he had told Attorney C a direct appeal (waiving a hearing) would be best for Employee, because cases are less likely to be overturned if a hearing is held.
A few weeks later, Attorney C told Attorney A that he knew about a prior case Client had settled and asked if Client would be willing to settle the present case with Employee on the same terms. Evidently, Attorney B had settled a case on behalf of Client with “Attorney D” a year earlier on the same terms. That settlement contained a confidentiality clause.
Attorney B denied having discussions with Attorney C about the prior confidential settlement. Attorney C admits that he has interviewed Attorney D and Attorney D’s client about the prior confidential settlement with Client.
QUESTIONS PRESENTED
1. Does Attorney A have a duty to inform Client about the breach of the prior settlement agreement’s confidentiality clause?
2. Does Attorney A have a duty to report Attorney B to his jurisdiction’s disciplinary authority for misconduct?
3. Does Attorney A have a duty to report Attorney D to his jurisdiction’s disciplinary authority for misconduct?
SUMMARY
Attorney A has a duty to keep Client reasonably informed and, therefore, has a duty to inform Client about the breach of the prior settlement agreement’s confidentiality clause under Rule 1.4. Attorney B violated Rules 1.6 and 1.8(b) when he counseled Attorney C on how best to pursue a claim against Client. Pursuant to Rule 8.3, Attorney A has a duty to report Attorney B because his violations raise a substantial question as to his honesty, trustworthiness, and fitness as a lawyer. By participating with his client in an interview regarding the specific details of the confidential settlement agreement, Attorney D may have engaged in conduct violating Rules 8.4(d) and (e). If so, Attorney A would also have a duty to report Attorney D’s misconduct. However, Rule 8.3 requires that Attorney A obtain Client’s consent in accordance with Rule 1.6 prior to reporting them to the appropriate disciplinary authority.
OPINION
Duty to inform Client
Pursuant to Rule 1.4 of the South Carolina Rules of Professional Conduct (Rule 407, S.C.A.C.R.), Attorney A has a duty to keep Client reasonably informed about the status of the pending case, as well as a duty to explain matters to the extent reasonably necessary to permit Client to make informed decisions regarding representation. The comments to Rule 1.4 further indicate that this duty requires Attorney A to inform the client of communications from another party and take other reasonable steps that permit the client to make a decision regarding a serious offer from another party.
Because Attorney A has learned that the confidentiality clause contained in the prior settlement agreement was breached in the context of a settlement demand from Attorney C, Attorney A would have an obligation to inform Client of the breach.
Under the circumstances, Attorney C’s knowledge of the prior settlement is clearly relevant to current settlement negotiations. Client could not make an informed decision about settling the present case without a full understanding of Attorney C’s position. Therefore, in order to fulfill her duty to Client under Rule 1.4, Attorney A would necessarily be required to inform Client that the confidentiality clause contained in the prior settlement had been breached.
Duty to report Attorney B
The issue of whether Attorney A has a duty to report Attorney B for misconduct is governed by Rule 8.3 of the South Carolina Rules of Professional Conduct. Under Rule 8.3(a), A lawyer having knowledge that another lawyer has committed a violation of the Rules of Professional Conduct that raises a substantial question as to that lawyer’s honesty, trustworthiness or fitness as a lawyer in other respects, shall inform the appropriate professional authority.
Based upon the facts presented it appears that Attorney B discussed Employee’s case with Attorney C. If so, Attorney B violated Rule 1.6[1] and Rule 1.8(b)[2] when he counseled Attorney C on how best to pursue a claim against Client. Such advice was based, presumably, upon knowledge gained in his prior representation of Client. The question then becomes whether Attorney B’s violation of Rule 1.6 and Rule 1.8 does, in fact, raise a substantial question as to his honesty, trustworthiness, or fitness as a lawyer.
While Attorney B may not have disclosed “confidential” information to Attorney C, the scope of information protected from disclosure under Rule 1.6 is intentionally broad. Rule 1.6, which is based upon the model rule, has been interpreted by the American Bar Association to cover all information relating to the representation of a client, whatever the source of the information and regardless of when the information is obtained. ABA Formal Op. # 90-358. Therefore, Attorney B’s disclosure of information on how best to pursue a claim against Client is no less a violation of Rule 1.6 than if he had disclosed “confidential” information.
This Committee would submit that such a violation of Rule 1.6 and Rule 1.8 does, in fact, raise a substantial question as to Attorney B’s “honesty, trustworthiness, or fitness as a lawyer.” Without question, loyalty is an essential element in an attorney’s relationship with a client.[3] Attorney B’s advice to Attorney C, his friend, and his admission of the same demonstrates that his loyalties lie with his friend, and not with Client as the Rules of Professional Conduct require. His casual disregard for Client certainly raises a question as to Attorney B’s trustworthiness and fitness as a lawyer. The question is substantial because his conduct constitutes more than a mere technical violation of the Rules of Professional Conduct. In fact, his conduct belies his very purpose as a lawyer. Therefore, Attorney A has a duty report Attorney B’s conduct under Rule 8.3(a).[4]
However, even if Attorney A has a duty to report Attorney B’s conduct under Rule 8.3(a), she may not disclose this information without Client’s consent pursuant to Rule 8.3(c). When the Rules of Professional Conduct were promulgated in 1990, the reporting requirement now embodied in Rule 8.3 was explicitly made subject to Rule 1.6 to protect information relating to the representation of a client.[5] While Client’s consent must be obtained before the violation may be reported, the official comments to Rule 1.6 suggest that Attorney A should encourage Client to consent to disclosure if it would not substantially prejudice Client’s interests.
Duty to report Attorney D
The issue of whether Attorney A has an affirmative duty to report Attorney D’s conduct must also be evaluated according to the test set forth in Rule 8.3 of the South Carolina Rules of Professional Conduct. Again, according to Rule 8.3, Attorney A must report Attorney D’s breach of the confidentiality clause contained in his settlement agreement only if (1) that breach violates the Rules of Professional Conduct and (2) raises a substantial question as to Attorney D’s honesty, trustworthiness, or fitness as a lawyer.
Based upon the facts presented, Attorney D and his client were required to keep their settlement with Client confidential. By participating with his client in an interview regarding the specific details of this “confidential” settlement agreement, Attorney D may have engaged in conduct violating Rules 8.4(d) and (e).
However, even if Attorney A has a duty to report Attorney D’s conduct under Rule 8.3(a), she may not disclose this information without Client’s consent pursuant to Rule 8.3(c) and Rule 1.6. As discussed above, the scope of information covered by Rule 1.6 is construed broadly and would certainly include information pertaining to a confidential settlement agreement and the breach thereof. Rule 1.6 requires Attorney A to consult Client about the breach of the confidentiality and to obtain Client’s consent prior to reporting Attorney D’s conduct to the bar.
[1] According to Rule 1.6(a), “A lawyer shall not reveal information relating to the representation of a client unless the client consents after consultation …”
[2] Rule 1.8(b), reads, in pertinent part: “A lawyer shall not use information relating to representation of a client to the disadvantage of the client unless the client consents after consultation …”
[3] See the official comment to Rule 1.7.
[4] Note that it is unclear from the facts presented whether Attorney B or Attorney D are members of the South Carolina Bar. While the conduct of Attorney B and Attorney D may or may not violate the rules of professional conduct applicable in their jurisdictions (note that South Carolina’s Rules 1.6, 1.8 and 8.4 are substantially the same as the corresponding model rules), this does not relieve Attorney A of her duty under South Carolina’s Rule 8.3. Attorney A is bound by Rule 8.3 to report Attorney B and Attorney D to their respective bars under these facts.
[5] See John Freeman, Reporting Lawyer Misconduct, 5 Jun. S.C. Law. 7 (1994).