What are your confidentiality obligations to prospective clients? New ABA ethics opinion weighs in

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Lawyers owe duties of confidentiality not only to existing and former clients but also to prospective clients. These duties of confidentiality are covered in Model Rules 1.6 (existing), 1.9 (former) and 1.18 (prospective), respectively, of the ABA Model Rules of Professional Conduct.

A prospective client is a person who consults a lawyer about the possibility of forming lawyer-client relationship but then doesn’t form such a relationship. The confidentiality duties owed to prospective clients are not as onerous as that owed to existing or former clients.

However, Rule 1.18(c) provides that a lawyer is prohibited from accepting a new client with interests materially adverse to a former prospective client in a matter that is the same or substantially related to the consultation with the former prospective client. This prohibition applies if the lawyer previously had received information from a prospective client that could be “significantly harmful” to the prospective client.

Formal Opinion 492, released Tuesday by the ABA’s Standing Committee on Ethics and Professional Responsibility, sheds light on when information from a prospective client could be “significantly harmful” to that individual. A press release on the opinion is here.

Under this “significantly harmful” test, the prospective client seeking protection under Rule 1.18 “need not demonstrate that the harm is certain to occur in order to demonstrate a conflict.” Instead, the rule focuses on information that “could be significantly harmful.”

Such information, according to the opinion, could include views on various settlement issues, the prospective client’s strategic thinking on litigation, sensitive and personal information in a divorce case, knowledge of a settlement position, or the possible terms and structure of a proposed bid by one corporation to purchase another corporation.

The opinion cites an example from the Restatement of the Law (Third): The Law Governing Lawyers to illustrate the point. A lawyer meets with a prospective client for an hour about the prospective client’s reasons for filing for divorce and the property interests of the prospective client and his or her spouse. If the prospective client does not hire the lawyer, the lawyer cannot thereafter represent the opposing spouse because the lawyer has acquired “significantly harmful information” within the meaning of Rule 1.18.

Lawyers should warn prospective clients against disclosing detailed information in these initial consultations. The more information that a lawyer acquires during such a consultation, the more likely the lawyer has acquired information that could be deemed “significantly harmful” to the prospective client.

Comment 5 to Rule 1.18 provides that lawyers “may condition a consultation with a prospective client on the person’s informed consent that no information disclosed during the consultation will prohibit the lawyer from representing a different client in the matter.”

If a lawyer has acquired confidential information from a prospective client, that also disqualifies the lawyer’s firm unless the lawyer is screened and both the prospective and affected clients give informed consent in writing.

The opinion also explains that courts or disciplinary authorities may benefit from reviewing documents or having a hearing to assess the credibility of the lawyer and the prospective client invoking protections under Rule 1.18.

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