Ethics Opinion 299
Duty of Confidentiality to a Corporate Client That Has Ceased Operations
* [NOTE: See how Opinion 299 has been substantively affected by the amendments to the D.C. Rules of Professional Conduct that became effective on February 1, 2007]
The duty of confidentiality under Rule 1.6 encompasses the attorney-client privilege and continues after the termination of the client-lawyer relationship. Therefore, unless one of the exceptions to Rule 1.6 applies, an attorney must preserve the client's confidences even though the corporate client has ceased operations.
- Rule 1.6 (Confidentiality of Information)
The inquirer provided legal advice concerning federal government contracts to a non-profit corporation organized under the laws of the jurisdiction in which the corporation operated (not the District of Columbia). Approximately four years ago, the inquirer terminated the representation of the corporation due to nonpayment of fees. Since then, the corporation has ceased operating, and its current legal status is unknown. Former officers of the corporation have been indicted for offenses that may relate to or concern matters within the scope of the inquirer's former representation. Counsel representing an indicted former officer has contacted the inquirer and requested information relating to the inquirer's representation, including matters that the inquirer believes are covered by the attorney-client privilege. The inquirer requests our advice regarding his duty of confidentiality to the former corporate client that has ceased operations.
The inquirer has informed us that counsel for a former officer of a corporate client seeks information covered by the attorney-client privilege—one of the oldest recognized privileges for confidential communications. Swidler & Berlin v. United States, 118 S. Ct. 2081, 2084 (1998), citing Upjohn Co. v. United States, 449 U.S. 383, 389 (1981); Hunt v. Blackburn, 128 U.S. 464, 470 (1888). The privilege is intended to encourage full and frank communication between attorneys and their clients regarding embarrassing or legally damaging information because clients can expect that such information will be protected from disclosure. See Upjohn, 449 U.S. at 389. The privilege also applies when the client is a corporate entity. Id. at 391.
The principles underlying the attorney-client privilege are incorporated into Rule 1.6, which provides that "a lawyer shall not knowingly reveal a confidence or secret of the lawyer's client" except in certain circumstances delineated under paragraphs (c) and (d) of the rule. "Confidence" refers to information protected by the attorney-client privilege under applicable law. Rule 1.6(b). "Secret" refers to 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." Rule 1.6(b). The inquirer's duty to preserve the client's confidences and secrets survives the termination of the inquirer's representation of that client.1 See Rule 1.6(f); Comment  to Rule 1.6 ("The duty of confidentiality continues after the client-lawyer relationship has terminated"); D.C. Bar Op. 180 (same). Accordingly, unless one of the exceptions to the duty of confidentiality provided in paragraphs (c) or (d) of Rule 1.6 is applicable, the inquirer may not disclose the requested information. Cf. Swidler & Berlin, 118 S. Ct. at 2081 (generally the attorney-client privilege survives the death of the client). Paragraph (c) of Rule 1.6 allows a lawyer to reveal a client's confidences or secrets, "to the extent reasonably necessary to prevent a criminal act that the lawyer reasonably believes is likely to result in death or substantial bodily harm" or "to prevent the bribery or intimidation" of persons "involved in proceedings before a tribunal." The inquirer has not provided us with any facts that suggest that either circumstance is presented here.
Paragraph (d) of Rule 1.6, on the other hand, allows a lawyer to reveal client confidences or secrets: "(1) with the consent of the client affected, but only after full disclosure to the client," or (2) when permitted by another Bar Rule or required by law or court order.2 The inquirer informed us that the corporation (the former client) has ceased operations, but its legal status is unknown. The Committee cannot determine on the basis of the limited facts presented in the inquiry whether the corporate client still exists or whether another entity has succeeded to its management. However, we infer from the inquiry that the former officer, whose counsel contacted the inquirer, cannot consent to the disclosure of the client's confidences on behalf of the corporation because, even if he had such authority when the corporation was in operation, he no longer has any management authority as a former officer. If some entity has assumed managerial control of the corporation, the inquirer may reveal the requested information if the successor management consents. To obtain permission to disclose information, the inquirer must fully disclose all relevant facts to the successor management to allow it to make an informed decision as to whether to allow the lawyer to reveal confidential information. See, e.g., Maleski v. Corporate Life Ins. Co., 641 A.2d 1, 3 (Pa. Commw. 1994), and cases cited therein (authority of successor management to act on corporation's behalf).3
Even if the corporate client no longer exists and no one is authorized to consent to the disclosure of the corporation's confidences,4 the former officer still may have recourse to the corporation's confidences if he or she seeks and obtains a court order compelling disclosure of the information sought. See Rule 1.6(d)(2)(A). When such an order is received, the inquirer's duty of confidentiality to the client would be overridden by the order, and the inquirer may comply with the order. See Comment  to Rule 1.6 ("The lawyer may comply with the final orders of a court or other tribunal of competent jurisdiction requiring the lawyer to give information about the client. But a lawyer ordered by a court to disclose client confidences or secrets should not comply with the order until the lawyer has personally made every reasonable effort to appeal the order or has notified the client of the order and given the client the opportunity to challenge it"). Likewise, the former officer also may be able to petition a court to appoint a receiver or trustee for the corporation to decide whether to exercise the corporation's right to consent to the disclosure. See Discussion above on Rule 1.6 (d)(1).
1. Accordingly, our analysis would be no different if the inquiry involved the client’s “secrets” instead of “confidences.”
2. No other Bar Rule apparently applies to the facts of this case. Likewise, the other exceptions in Rule 1.6 (d)—(1) disclosure when the lawyer is responding to a criminal charge, disciplinary charge, or civil claim; (2) disclosure when the lawyer believes that the client has given implicit authorization to carry out the representation; or (3) disclosure necessary to establish or collect a fee—are not applicable.
3. Such a result is consistent with Rule 1.13, which “makes clear that, when a lawyer is retained to represent a corporation, the lawyer’s client is the corporation only, acting through its duly authorized constituents (such as officers and employees).” D.C. Bar Op. 269 (italics in original and footnote omitted).
4. See Maleski, 641 A.2d at 1; see also FDIC v. Amundson, 682 F. Supp. 981 (D. Minn. 1988) (dissolved corporation ceases to exist and no entity retains management authority to act on its behalf); FDIC v. McAtee, 124 F.R.D. 662 (D. Kan. 1988) (same).